Pandemic drives transformation: How companies can reinvent themselves

The Corona pandemic has hit the economy hard. But at the same time, important future topics such as digitization, more flexible working and sustainable business models have accelerated. In most companies, this newfound agility is to be maintained. These are - in brief - some of the results of virtual panels with a total of around 3,000 CEOs and executives from more than 1,000 companies worldwide, which the international management consultancy Bain & Company has conducted since the beginning of the Corona crisis. According to the results, more than 90 percent of top personnel are convinced that now is the right time for a fundamental strategic realignment.

The pandemic is therefore driving the transformation. Top executives now have the task of incorporating the insights gained so far into day-to-day business and establishing more efficient ways of working in the long term. Around three-quarters of the CEOs surveyed by Bain want to drive this forward energetically. The following five lessons were drawn from the CEO forums and show where the need for strategic action is greatest.

1. maintain speed of change

As a result of the pandemic, a number of companies had to adapt quickly to developments. Changes that would previously have taken years were suddenly made in just a few months or weeks. This did not only apply to the flexibilization of work. There was also progress in digitization, the use of artificial intelligence and the implementation of sustainable business ideas. At the same time, a high level of learning and adaptability was evident in many places. The workforce often acted more entrepreneurially and with more personal responsibility. Thomas Lustgarten, Chairman of Bain & Company in Switzerland, explains: "This pace of change and the new freedom of action must now be anchored in the corporate culture in the long term. This requires agile working across hierarchical and departmental boundaries." In addition, companies should keep their core business stable and up-to-date, but in parallel create separate units that develop new business ideas.

2. combine economies of scale and agile entrepreneurship

Established companies in particular should combine their economies of scale with a mindset similar to that of more mature start-ups. The formula for success is a combination of size as well as speed, enriched by creativity and customer focus. "Today's top dogs must become their own challengers," emphasizes Walter Sinn, head of Bain Germany. "In doing so, they must not get caught up in the pitfalls of everyday life, but should reduce complexities and keep the unifying business purpose of both worlds as simple as possible." Many CEOs have understood that incremental progress is no longer enough, but that larger strategic throws are required. The target picture should be developed "future back," aligned with the long-term and sometimes disruptive trends of an industry.

3. from purpose to action

The mission departure must have its starting point at the top of the company. It is no longer just the business perspective that plays a role. Instead, a core team of key executives looks at the deeper meaning of the company's actions and develops concrete guidelines. In addition, it clearly defines where no compromises will be made. "Those who can clearly answer the question of the corporate mission have a natural competitive advantage," Bain partner Lustgarten is convinced. "The purpose must be transported into day-to-day business and shape behavior there." CEOs, he says, are aware that their companies must deliver today and in the future. This is the only way they can become true "citizen firms" that remain attractive to new generations of customers and employees.

4. sustainability as a strategic must

Issues around ESG (Environmental, Social, Governance) principles are the next big topic for the global economy after digitalization. The recently tightened targets for CO2 neutrality will necessitate fundamental changes in many places. The pressure to act is also increasingly being exerted by capital markets and investors. In a recent Bain study entitled "From attitude to action," sustainability is the top strategic priority for 90 percent of top executives in Germany in the wake of the pandemic. Environment is ahead of social and governance issues - climate neutrality is translated into concrete goals as well as actions. "Given the central importance of the transformation, more and more CEOs are themselves taking on de facto or formal responsibility for the sustainability portfolio," says Walter Sinn. "Top management, regardless of the industry, sees itself here as a driver, communicator and conductor, but also as a reminder."

5. increase resistance

The resilience of supply chains, for example, was hardly questioned during the years of globalization. As a result of the pandemic, many companies are now working on protective mechanisms to better arm themselves against unexpected upheavals and imponderables. The current semiconductor shortage is a good example of the vulnerability of entire industries. What is needed is a holistic approach to greater resilience. This requires CEOs to consider not only the financial aspect but also strategic, operational, organizational and technological risks such as the massive increase in cyber attacks.

It's not just the pandemic that's driving transformation....

"We live in a complex, highly dynamic world," sums up Bain Germany CEO Sinn. "On the one hand, climate change presents us with enormous challenges; on the other, there are numerous opportunities for those who move forward boldly and decisively." To be sure, it won't get any easier for top executives around the world to keep their companies on track for success in the post-Corona era, or to steer them back there. But Switzerland Chairman Lustgarten is also certain: "Those who follow the five lessons and create a sustainable roadmap can make their own organization fit for the future today."

Source and further information: www.bain.de, www.bain-company.ch