Save-To-Thrive
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Save-to-thrive Enterprise transformation and performance improvement strategies during the COVID-19 pandemic August 2020 Save-to-Thrive | Enterprise transformation and performance improvement strategies during the COVID-19 pandemic Contents Executive summary 4 About the survey 9 Key global insights 17 Coping with COVID-19: Respond-Recover-Thrive 23 The “Next Normal”— New business conditions after COVID-19 29 Industry sector analysis 35 Save-to-Thrive 39 Conclusion 42 Appendix 47 Save-to-Thrive | Enterprise transformation and performance improvement strategies during the COVID-19 pandemic Foreword The COVID-19 pandemic is reshaping the global business landscape and fundamentally changing how people around the world live and work. To better understand the short- and long-term impacts of the crisis—and what companies around the world are doing about it—we recently conducted a special mid-cycle version of our regular biennial survey of global cost management practices and transformation trends. Actions that companies are taking right now to address COVID-19 do business). Now, in response to COVID-19, we are seeing that can have a major impact on their long-term competitiveness and transformation mindset evolve into “Save-to-Thrive,” with the performance. As such, it is crucial for decision-makers to understand crisis shining extra light on the talent lever and accelerating key how the crisis is unfolding from a business perspective, and what the transformation actions such as automation and remote work that future is likely to hold. can help companies thrive once the virus is contained and the next normal emerges. The results of this mid-cycle survey include responses from 1,089 executives with direct involvement in their companies’ cost In contrast to the downturn that began in 2008, which was structural management and enterprise transformation efforts, and represent a in nature, the current crisis was triggered by external factors and is broad range of industries and global geographies—with particularly demand-driven. As such, although two-thirds of our respondents strong representation from countries that have been highly impacted expect at least one more wave of COVID-19 relapses to occur, by COVID-19. companies around the world are generally optimistic about the future and intend to bounce back as quickly as possible, adopting In this report, we discuss the key survey findings using a three-stage a Save-to-Thrive mindset that can help them make strategic shifts framework (Respond-Recover-Thrive) to analyze companies’ actions to their operating models, products and services, and customer and expectations as they cope with the pandemic and position engagement capabilities. themselves for the post-crisis world (the “next normal”). We hope you find the insights in this special report useful, and look 1 Our 2019 global survey , which was conducted prior to COVID-19, forward to hearing your thoughts and feedback. found the prevailing mindset for strategic cost management was “Save-to-Transform” (using the strategic levers of cost, growth, talent, technology and digital enablement to transform how companies Omar Aguilar Sam Balaji Strategic Cost Transformation Global Consulting Leader Global Market Offering Leader Deloitte Touche Tohmatsu Limited Deloitte Consulting LLP 1. “Save-to-Transform as a catalyst for embracing digital disruption: Deloitte’s second biennial global cost survey,” Deloitte, 2019 3 Save-to-Thrive | Enterprise transformation and performance improvement strategies during the COVID-19 pandemic Executive summary Expectations for COVID-19 is boosting Cost structure is COVID-19 financial The crisis is driving positive revenue the focus on cost considered the top impacts are demand- more companies to growth have declined reduction. Relative to internal challenge. driven. The top pursue aggressive significantly due to pre-COVID-19 levels, Inability to adjust cost external challenges cost reduction COVID-19. Compared the likelihood of structure to meet reported globally are: targets. Globally, to pre-COVID-19 undertaking cost demand is the top drop in consumer the percentage of expectations, the reduction initiatives internal challenge globally demand (74%); shift respondents pursuing percentage of increased globally and in all regions. Inability in consumer behavior cost reduction targets respondents globally by 74% (28 percentage to meet employee (67%); cyber security greater than 10% expecting positive points). Two of three safeguards, and inability vulnerabilities (65%), increased by 61% revenue growth is companies globally to satisfy increased and supply chain (25 percentage points) down 40 points. (66%) now expect to demand round out the challenges (65%). compared to pre- pursue cost reduction top three. COVID-19 levels. Two over the next 12 of three companies months, up from just Inability to rapidly globally (66%) now 38% reported before address cost structure have cost reduction COVID-19. to meet demand: 78% targets that exceed 10%. Regionally, the Inability to meet percentage of companies higher measures with those aggressive related to employee targets is highest in safeguards: 74% LATAM (83%) and lowest Inability to satisfy in the US (59%). increased demand or increased sales opportunities: 71% Lack of liquidity or credit to ensure business continuity: 69% 4 Save-to-Thrive | Enterprise transformation and performance improvement strategies during the COVID-19 pandemic Coping with COVID-19: Respond-Recover-Thrive Required actions to address the COVID-19 crisis can be divided into three major stages: respond, recover and thrive. These three stages are interspersed with two additional interim stages (“respond to recover” and “recover to thrive”, and culminate in a long-term operating environment we call the “next normal.” The global focus for Revenue growth Automation is the Working through all the COVID-19 crisis is expectations are very top transformation stages is expected shifting from respond positive in the thrive action arising from the to require about a year to recover. Most stage. Expectations for COVID-19 crisis. Globally and a half. Although the companies globally have revenue growth, although and across all regions, expected durations for effectively responded down from pre-COVID-19 roughly two of three each stage vary widely to the immediate crisis levels, remain somewhat companies expect to by region, on average and are now starting to positive in the respond pursue automation respondents globally focus on recovery. The stage (55%) and recover in all three stages of expect the respond majority of companies stage (58%). In the Respond-Recover-Thrive. stage to last about surveyed (59%) now thrive stage, the vast three months, the see themselves in the majority of companies recover stage about six “respond to recover” or globally (74%) and in all months, and the thrive “recover” stages. regions have a positive stage about 10 months. revenue outlook. 5 Save-to-Thrive | Enterprise transformation and performance improvement strategies during the COVID-19 pandemic The “Next Normal”— New business conditions after COVID-19 When mapping out strategies to respond, recover, and thrive, it helps to have informed insights about the future business environment. In the wake of the 2008 financial crisis, many people called the resulting business environment the “new normal.” However, every new normal eventually gets replaced by a new new normal, so in our view it makes sense to call the post-COVID business environment the next normal. Revenue sources will IT infrastructure, Top product strategies Next normal customer Cybersecurity and be fundamentally remote work and for the next normal engagement strategies cloud will be the key different in thenext digital channels are focus on innovation, will be driven by digital technologies. normal. expected to be the health and safety channels and flexible According to the survey, Due to practices such top operating model measures, and customer experiences. the most relevant social distancing and priorities. In a post- customization. Globally, the most technologies in the shelter-in-place that crisis, increasingly digital Globally, the top product popular strategies for next normal will be restrict access to the world, IT infrastructure strategies to compete customer engagement cybersecurity solutions physical world, the and digital channels will in the next normal are: will be: shift most (80%) and cloud COVID-19 crisis has be key. Also, remote adjust, redesign transactions to digital computing (80%). greatly accelerated work will likely remain or innovate your channels (75%), and the shift from physical popular now that the product/service increase flexibility to digital channels. It COVID crisis has proven offering to expand before and after the has also revealed the its viability. Globally, the to adjacent and/or sale (73%). limitations and risks of top operating model new markets (74%); globalization and global priorities during the next leverage new health supply chains, leading normal are expected and safety measures many companies to to be: enhance IT by redesigning your re-prioritize domestic infrastructure (78%); current product/ operations over enable remote work service offering international operations. (76%); and enable pre- (73%); and customize Meanwhile, COVID- sale, sale, and post- products or services driven changes to how sale activities through to meet new customer people live and work are digital channels (72%). and/or government boosting demand