It’s time to act, not react, warn McKinsey researchers.
Transformation with a capital T
McKinsey argues that organizations “going all-in on transformation can change the odds in their favor and will accelerate out of this crisis.” Put another way, bold and rapid change presents your best chance of emerging strong and profitable in the months ahead.
To make that possible, McKinsey recommends the following:
Companies doing transformation right have an all-in mentality, writes McKinsey: “Incremental change is not their story.”
Rather than cost-cutting, layoffs, slash-and-burn strategies, companies that will thrive post-crisis are those focused on growth initiatives.
“When it comes to transformation, speed is your friend,” adds McKinsey. Speed is also one of the main characteristics of successful business transformations.
“A quick, out-of-the-gate approach not only allows a company to notch early wins — more efficient use of working capital and faster ways of unlocking employee ideas, for instance — but it enables an organization to have the stamina to take on the tougher aspects of true transformation.”
Focus on high-impact actions.
This will vary for each organization, of course. For many, it will include “technology-enabled next generation operations” — which brings us to the next point.
You’ll need to take a hard look at your technology investments and “reset them for value and speed,” advises McKinsey. Instead of working through your technology backlog, wipe the slate clean as you budget for 2021. Next, tie tech capabilities with customer value and fast-changing customer behaviors.
Note that rightsizing your IT infrastructure means you’ll both spend and cut costs at the same time. “Many companies have found they have the potential to free up as much as 45% of their IT costs over the course of a year,” writes McKinsey. “The right balance will vary by industry, but under any scenario, rightsizing should expose much needed investment capacity as quickly as possible to fund [a 90-day digital acceleration plan].”
While you were dragged into a crisis against your will, you do choose how to react, said Sameer Sharma, global manager for smart cities and transportation at Intel, as reported by Government Technology. You might be tempted to close your eyes and wish the crisis away, but you can’t bring things back the way they were.
Sharma concludes the time is now to rethink through your infrastructure “so when the next crisis hits — and it will, that’s just a reality of life — [you] are better prepared for it.”
All things considered, the courage to act big, bold and fast is your best chance to drive and sustain growth post-pandemic.