Emerging Stronger

We are living in a phase of uncertainty, caught between health constraints and economic considerations, which in some respects appear to be irreconcilable. At global level, the major economies are facing the consequences of Covid-19. Italy, one of the countries most affected by the pandemic, has entered a phase of recession with GDP expected to fall by 8.9% in the 2020. In this difficult moment of transition, with the resurgence of the pandemic and a vaccination campaign riddled with uncertainty, both in terms of schedule and roll out methods, companies are left with no other choice but to review their business models and plan strategic actions to face the new normal. The imperative for firms is to make the most of the experience developed so far and to take advantage of the Next Generation EU programme. Only in this way can they consider themselves ready for the phase we, in Deloitte, define as “Thrive”, a phase of rebirth in which organisations have developed a new DNA and are ready to face the new normal.

The journey to resilience which businesses are called upon to undertake will have to be structured based on a strategic plan geared towards innovation. A plan that simultaneously involves all C-suite executives actively and is coherent with the purpose of the company. To start this journey, now and without hesitation, and to emerge the pandemic storm stronger than before, companies must use the current time window to build on the experience gained in terms of crisis management, adapt their strategic vision to the contingency, and develop plans that leverage the opportunities opened by Next Generation EU. As we await for the production and wide-scale distribution of the vaccine – key precondition for the return to some form of normality – the following represent the essential steps of the so-called Emerging Stronger phase. Such steps must be taken today by those firms that want to be ready for the new normal that will come once the vaccine is widespread and Next Gen EU is launched.

RESILIENT STRATEGY: identify the changes and innovate the strategy for recovery
If there is one lesson that Covid-19 has left us, it is that a change of pace is needed in company management: organisations must make the most of the lessons learnt during the pandemic and recalibrate their strategic goals, adjusting them to the changes that have occurred, many of which are irreversible and structural. In this regard, businesses must tend increasingly towards medium-to-long-term innovative approaches. What will be crucial is the awareness that success in the new normal will pertain to companies capable of tearing down corporate boundaries and opening up to new forms of collaboration with external parties (e.g. research centres and start-ups) with whom both challenges and objectives are shared, taking advantage of network economies and innovative ecosystems.

RESILIENT CAPITAL: capital at disposition to support operations and innovations
According to Deloitte’s latest CFO survey, 4 out of 10 Italian companies intend to reduce their capital expenditure to reinvigorate their reserves.  Furthermore, there is a marked tendency to make use of the support tools approved by the government. In this context, the CFO is called upon to develop a financial plan for liquidity management that is integrated into plans of risk management and of operational continuity, but also of progressive development towards the new normal. To achieve this, the CFO must guarantee the complete alignment of working capital, liquidity, and capital structure, to support the strategic vision and make the best use of investments and incentives linked to Next Gen EU for new initiatives and innovations.

RESILIENT GROWTH: interpret the change of consumers and markets in a “human-centred” logic
The pandemic has brought about historic changes in consumer behaviour. According to our research, presented during the Innovation Summit 2020, the restrictions on mobility imposed by Covid-19 have meant that more than one in three Italians (34%) have tried online shopping for the first time. Above all, digitalisation has involved all age groups: even 59% percent of pensioners have understood that digital innovations are not that difficult to use. At the same time, during this period we have understood that it will not always be possible to fully digitalise products and services, doing without contact and physical experiences between people: according to our research, in fact, the continuous use of technology has increased the desire for human contact for 55% of those interviewed. Innovation must therefore put humans and their interrelations at the centre: it has to be “human-centred”. Hybrid solutions could therefore be the perfect response to this evolution of the sensitivity of consumers and markets.

RESILIENT OPERATIONS: innovate strategic processes by opening to the ecosystem
Analysis of the adequacy of the organisational model of operations and flows governing critical processes is an essential activity in a context of profound changes. As Covid-19 has taught us, we have to ensure that businesses become part of increasingly open and efficient ecosystems and embrace the paradigm of open innovation (by also leveraging promising start-ups) and of collaboration to ensure that innovation drives the process of adapting operations and the supply chain.

RESILIENT TECHNOLOGY: accelerate digitalisation in a human-centred direction
The acceleration of the digital transformation process is one of the changes brought about by the pandemic. According to our study presented during the Innovation Summit, 58% of Italians think that innovation should provide small practical solutions to real everyday life needs rather than focus on revolutionary changes. Companies must carry out a careful evaluation of the digitalisation course taken in order to steer it in an increasingly human-centred direction. Technology, in fact, needs to be “light and flexible”, cloud-based and designed around the user experience. It must be increasingly simple and intuitive: created by and for a human, so that it can truly respond to the needs of people and their daily requirements.

RESILIENT WORK: use the innovation of work contexts for a hybrid work model
With the progressive and relentless spreading of the pandemic, many firms have fully adopted new ways of working, with the aim of reducing the risks and possibilities of contagion to a minimum, ensuring business continuity. In Italy, according to the Smart Working Observatory of the Polytechnic University of Milan, the number of remote workers reached 6.58 million during the lockdown and, at the end of the emergency, it could settle at 5.35 million. In the post-Covid world, businesses will have to keep this dynamic in mind, tending towards hybrid work models, in which the physical and virtual dimensions balance each other in the interests of businesses and of people’s life.

RESILIENT SOCIETY: grasp the changes in the social context in a logic of sustainability
Sustainability, economic growth, and innovation are the guidelines that will have to direct companies in the “Thrive” process. The growing sensitivity and attention to environmental impact and the proper structuring and management of relationships with investors and stakeholders in fact represent one of the greatest opportunities of economic but also ethical development for companies, especially in terms of generating social value. Therefore, if we know how to combine sustainability and growth, we will be able to create that human-centred innovation that can guide us towards a new era, respectful of the needs of people and capable of ensuring solid and resilient economic development.