What might a “new normal” look like in the midst of a pandemic? With COVID-19 and its effects expected to reverberate well into 2021, business leaders and consultants are faced with the conundrum of how to predict the unpredictable. At this stage, prognoses for 2021 and beyond are tenuous at best. But while it’s advisable to reduce planning horizons for now, businesses can take steps to ensure their survival for the next three to six months with an eye on the here-and-now.
First and foremost, it’s crucial to recognize that every individual has been affected differently by the pandemic. For some, the freedom of working from home has made for an uptick in productivity. Others have found their workload increasing to intolerable levels with the added stress of child care and online schooling.
Likewise, every organization has also borne the change differently. Some businesses have only had their success amplified by a remote workforce and heightened demand for online services. Meanwhile, others have seen their business wane due to health concerns and government restrictions, suffering 90%+ reductions in demand almost overnight. Many workforces have seen lay-offs in the tens of millions, whilst others took the opportunity of the surge in available talent to upgrade staff at market rates. Disruptions in the supply chain have also impacted customer service levels, shaking up many an established customer base.
With such broad transformations still underway, anticipating the business environment has become a more dangerous game than ever. Many traditional models for projecting revenue are now archaic given the current circumstances. Basing revenue projections for the next few periods off of past experience simply doesn’t work anymore. And with customer demand in flux, polling offers little clarity. Now is not the time for benchmarking or attempting to replicate the performance of competing organizations.
Instead, businesses must look to their own unique context when developing strategies for the long run. Rather than rely on outdated assumptions, businesses should take recent successes and failures as their guide to the next three to six months. Adaptability is key. Strategies and operating models should be reworked and revamped as needed, addressing changes as they arise. As temporary measures like remote work are converted into permanent realities, perpetual adjustment will help ease the transition.
One strategy to help businesses navigate the near future is to model different scenarios that may pan out. By planning different operations tailored to different possible outcomes, businesses can prepare themselves for any likely eventuality. Sophisticated modeling should take into account potential variations in supply and demand, revenue and profit, cash flow, and inventory levels, among other significant factors. Businesses will also want to know how to respond immediately to changes in mix and distribution channels or government regulations should they occur. Mapping out the potential risks and opportunities that may arise keeps businesses alert and poised for action. This may well be the winning strategy to manage the disruption and make it through the next three to six months intact.
By Ellis Bledsoe, Principal Owner ECB Solutions, LLC