Has the Virus Beaten the Corporate Immune System?
Leading Beyond the Crisis
The COVID-19 pandemic is changing everything. As it does, it is speeding up digitization, collaboration across ecosystems, reshaping customer behavior and removing barriers of access to resources. Traditional structures and practices may no longer apply.
By Daniel Sunde-Hansen and Maarten Oonk, April 3, 2020
But are companies really transforming? Has the virus beaten the corporate immune system? And how do you think about the future when you are standing on the edge? Events like the current pandemic are increasing the pressure on business performance to unprecedented levels. Driven by fear and uncertainty, this results in a focus on the here and now. Even so, as the security of cash flow, assets, social structures and governance vanishes, experimenting and risk-taking are more likely to be given the green light. Doing nothing is now viewed as the more dangerous alternative.
The pandemic as a catalyst for innovation
As a result, we see a sudden urgency to explore new ways of overcoming the challenges presented by the pandemic. People experiment, collaborate and innovate like it is our second nature. The pressure on traditional structures has increased, and this new reality drives many organizations towards digital technologies and solutions. Others are being forced to change their business practices.
Across the world, organizations and individuals are connecting on digital platforms. New and unexpected alliances being formed, as if the barriers preventing access to resources have been dissolved. Governance processes are modified to make them more agile. Are these the signs of forces at work to redesign the traditional organizational structures? Are companies starting to shift towards the edge as their core business shut down?
“It is essential that we take measures to support the immediate needs. But this is also a time to develop a new perspective – and a strong foundation - for the longer term.”
The core business is no longer working
With the implications of the coronavirus pandemic yet to be fully understood, overwhelmed executives may believe their only option is to control costs. Some are focusing their efforts on maintenance and capital investments. But there is a more pressing challenge: Can we activate our ability to rethink and reinvent our future?
As the stability of core businesses disappears, the advantage once enjoyed by large companies, efficiently running traditional core operations at a massive scale, has become a disadvantage. Beyond mere incremental changes, companies are being compelled to implement real transformation. Break with assumptions and conventions. And unlearn in order to acquire new knowledge. The crisis is fast-tracking new solutions to old problems. Start-ups are organizing themselves to become the new corporates, while mature companies are behaving more like start-ups. As new alliances and partnerships emerge, ideas and initiatives flourish. Speed has become more crucial than ROI.
You don’t have to look far to see this corporate reinvention in action:
- Fine dining restaurants change into take-away outlets
- Hotels turn their rooms into short stay officee
- Airlines make charting a cargo plane as easy as renting out a car
- Bicycle shops transition into rental companies
But are we seeing examples of transformation or just a way of staying in business?
Barriers of access to resources are eroding
The barriers that once limited access to knowledge, resources and assets are eroding faster than ever. In the face of a shared challenge, people are coming together and learning how to respond more quickly.
The pressing question is: What can we learn from this? First of all, valuable collaboration is built on a shared call to action. Secondly, it isn’t enough to simply connect with anyone that may help. Now more than ever, we need to organize and coordinate resources, selecting only the most relevant ones to unite enough complementary assets to get started. And thirdly, we need to test our hypothesis quickly to successfully navigate the new normal.
Has the virus beaten the corporate immune system?
Large organizations and institutions are not designed for a rapidly changing world, but for stability, efficiency and avoiding risk. Something as simple as getting access to a digital tool can take months, even years. In the current crisis, however, this process is being reduced to weeks and even days in some cases. As one surprised employee recently phrased it, the Department of No has become the Department of Go for it!
However, the corporate immune system is not necessarily gone as a result of the current crisis. It consists of people intending to do what they believe is best for the company. In some areas, the immune system response may now be stronger than ever.
New initiatives that may provide great value in the long term have to pass the scrutiny of a CFO on a mission to cut costs. Will top executives making decisions on how their company will survive the next weeks, have the mental bandwidth to support new, long-term initiatives?
Are companies reinventing themselves?
In the current phase it is essential that we take measures to support the immediate needs. What questions should leaders be asking to not only navigate in the current crisis, but also enable to look beyond it?
We believe that normal as we knew it is gone. Leaders that demonstrate a bunker mentality have adopted the wrong approach, as we are all in this together. While many companies are now applying digital technologies, it is most likely with the intent of supporting struggling core businesses. Many might perceive these changes as a temporary measure only. New initiatives on the ‘edge’ of their organizations may help them through the crisis. But how many leaders are hoping to return to the traditional way of doing business once that crisis has passed?
The new future requires a different mindset and a compelling narrative. What could our business look like? What should our role be? How will this change the way we work, what new jobs will it create, what structures and coalitions should we expect? And above all, how can we reinvent ourselves to actively shape the new future?
There are still certainties
The path to success lies in a clear articulation of our direction and vision - our zoom-out - to people, to partners, and to society.
The companies in the strongest position to formulate this zoom-out are those who hold a long-term vision, who work towards a purpose beyond their own business, and who are prepared to shape their own particular industry or domain. And let’s not forget the real assets in times of crisis: people. People who are equally as committed to reinventing themselves.
In spite of the turmoil around us, a number of certainties remain. Certain shaping trends are still defining the future. Consumer behavior is still moving ever more quickly towards convenience. Societies are still becoming connected, smart, and information-driven.
Digitization has been going on for over 50 years and will continue to make personalization and customization increasingly relevant. We might only now be getting a glimpse of what that future looks like.
A narrative for beyond the crisis
Whatever the future holds, the last few weeks have shown what we are capable of achieving. History illustrates that we can adapt quickly, change the way we operate, and use technology to overcome challenges.
We have seen that people with untraditional mindsets can create value – as long as they can access the resources they need. And we have seen creativity bloom when people from diverse backgrounds come together to solve a common challenge.
Going forward we should continue to learn fast, mobilizing our ecosystems to support each other. We should continue to unlearn just as quickly, reinventing the way we work.
Together, we can achieve amazing things and create sustainable value for everyone. But first we need a strong call to action, one built not on fear but on hope and belief. We need a shared zoom-out, a clear and coherent narrative that takes us beyond the crisis.
Reframe, rethink, reinvent
For well over a decade, the Deloitte Center for the Edge has been doing research on what companies can learn from the emerging opportunities at the edges of business and technology. This is not new, but it might be much more sudden than we anticipated. You are capable of reframing and creating a new perspective for the future. However, it needs the right mindset. We are all on the edge, but not necessarily the edge of a cliff. It can also be the edge of a forest, where a new landscape unravels.
We urgently need to learn from the companies and institutions that are now reframing their business and operating models. If you have examples to share, or in other ways want to support our mission to accelerate impact, let’s connect.
1. John Hagel and John Seely Brown, Zoom out/zoom in: An alternative approach to strategy in a world that defies prediction, Deloitte Insights, May 16, 2018. View in article
Written by: Maarten Oonk and Daniel Sunde-Hansen
The authors would like to thank our Center for the Edge colleagues Peter Evans-Greenwood, Peter Williams and Duleesha Kulasooriya for their efforts in shaping this perspective.
In addition, we are grateful for the input and support of our colleagues: John Hagel, Wassili Bertoen, Bastiaan Walenkamp, Erik Bouwens and Carolien de Bont.
A Norwegian tech entrepreneur had an idea: What if we had a platform to organize people with an immunity to the coronavirus? Sharing the idea on Twitter, he drew interest from epidemiologists, tech start-ups, companies and organizations. Together, they established an initiative called Wemunity. Using instant messaging, video chat groups and online platforms for agile development, they are developing an open source solution to help recovered people provide assistance in keeping up critical societal functions.
Coronavirus highlights the need to transform traditional supply chain models
COVID-19 respons: Guide til søknad om kontantstøtte