Over the past 6 weeks, The Change Consulting Group facilitated a community of practice with Board members, business leaders, and HR and organisational change agents in four countries on four continents. We used our online Global Change Academy to achieve this ambitious goal. These conversations provided a powerful set of reflections and a unique historical record of the COVID disruption, as well as an understanding of the possibility for positive political, socio-economic and organisational change in South Africa and globally.
The following is a summary of the discussions, which quickly evolved over the period 27 April to 1 June 2020, as different countries moved through the various lockdown stages implemented by respective governments. As is now becoming clear, the submission approach to pandemic management has had a dramatic impact on the economy, particularly given the dramatic initial phase of zero trading for all real world businesses, followed by a slow process of opening up.
As a responsible approach to the lockdown in South Africa, we have advised organisations to move quite carefully through three phases of managing the COVID disruption:
- Save Lives and Cashflow: A focus on implementing and maintaining COVID safety protocols such as social distancing, hand and environment hygiene and wearing of masks.
- Business Consolidation: A focus on identifying areas of breakdown in the legacy operating model and supply chain network of your organisation. This stage might also unfortunately include retrenchments and subsequent organisational re-design to accommodate this.
- Innovate, Re-Invent and Grow: A focus on identifying opportunities for horizontal and vertical strategic and operational growth and innovation. This might include everything from Distributed Work (a combination of work from home and office work, as appropriate to your business), launch of online products or stores, operating model re-design to accommodate changes to organisational strategy or mandate, and changes to corporate culture and employee engagement models to accommodate changes in customer requirements or organisational working patterns.
Phase 1: Save Lives and Cashflow focusses on implementing safety protocols to protect employees, vendors, suppliers, customers/clients/students and the general public.
The operational factors that company leadership (and HR executives in particular) have had to manage has depended very much on the organisational design and operating structure of the business concerned. Organisational change issues and protocols to be considered include management of organisational workspaces, with separate standard operating procedures and protocols being necessary for Head Office, distribution centres, stores, fleet management, employee benefits and sick leave, changes to employment contracts, supply and distribution of protective gear, soap and sanitiser, and policy formulation and implementation of distributed work.
Distributed work is a complex matter from an operational and organisational change perspective. As we have written before, distributed work requires careful reflection on the nature of a particular business, and establishing the right balance between Work From Anywhere and the need for teams to sit together for creation, innovation and teamwork that is not easily achieved via a screen.
It is our belief that phase 1 of this model will not fully complete for some time, for two main reasons.
First, we are possibly 12-18 months away from a safe vaccine and in that period we will have to maintain current health protocols and slowly adapt to an easing up on these protocols as the health scare subsides.
Second, many companies are still struggling to achieve this initial goal. In South Africa, we have seen that so-called “hotspots” are concentrated within both certain geographical areas but also within certain sectors of the economy that face particular challenges with respect to social distancing (retail is a particular example). This has an impact on brand, both in terms of how safe employees deem an employer to be, as well as how safe customers or clients feel within the trading environment. We believe this will have ongoing consequences and cannot be underestimated in terms of impact on the attraction and retention of talent as well as the view customers have of these brands and their willingness to shop there.
In terms of saving cashflow, we have seen various responses from our clients. Those who have performed best over the past four months display a strongly entrepreneurial culture that supports distributed leadership, trust, an ability to make decisions quickly, and a higher appetite for risk. This supports agility and rapid learning and iteration of solutions during a time of crisis. This notwithstanding, the vast majority of companies we have engaged with over the past four months remain concerned about trading conditions and the socio-economic impact (and collateral damage) of the hard lockdown strategy that is becoming clearer.
There are also increasing examples of companies that are required to prioritise cashflow management over growth, as in the case of one of South Africa’s largest banks, Absa. At 4 June 2020 Absa Annual General Meeting, Absa Board chairperson, Wendy Lucas-Bull, spoke to the economic impact of COVID-19 on many businesses: “As a result of Covid-19, our strategy has moved from a growth strategy to one that prioritises capital preservation and liquidity near-term.”
CCG believes that the pandemic will result in contracted growth in most sectors and regions for at least the next 12 months. Our view is that a key trading period is December 2020 to June 2021. This is both to watch for any possible resurgence of the virus and to understand the real economic and commercial impact of the response to the pandemic on a country by country and global basis.
Phase 2: Consolidation: Our experience is that companies have probably managed this part of the process most easily. Consolidation focusses on short-term operational and technical fixes to internal value chains (e.g., succession planning for sick leadership or critical subject matter experts, broken supply chain either via global or national supply routes, and supplying employees with technical support for distributed work, like appropriate laptops, bandwidth, online security protocols, work office space, etc.)
What we do foresee is that organisations will be more aware of the need to conduct ongoing risk analysis on all aspects of their operational value chain. The purpose of this exercise is to identify areas of particular risk and to build mitigation strategies should a risk event unfold.
This work has a different level of focus depending on commercial sector and operating environment. Certain sectors remain heavily impacted (car manufacturing for example, with challenges with respect to supply chain), while others have traded well (healthcare and online entertainment, mainly gambling, music and movies, are examples here).
Phase 3: Innovate, reinvent, grow: This is probably the space that requires most thought and has the possibility to reap long-term benefits for organisations and social systems as a whole. Organisations are increasingly aware that they function as an interlocking set of systems (as opposed to siloed functional areas), that are interdependent and require systemic strategic and operating model solutions prior to execution.
Leadership plays a critical role in this work. Where leaders are visionary and courageous, the COVID disruption serves as a perfect moment to implement change that was not possible 6 months ago. Areas of particular interest is the potential to reinvent a company brand, product or service offering (either vertical or horizontal intermediation); rethinking employee brand proposition; operating model re-design; organisational redesign (based either on necessary retrenchments to survive the times or to operationalise the possibility of new product or service lines.
There is also enormous potential to integrate digital solutions into your organisation, to support process and task automation and derive benefit from data scraping and analytics. There is also an increasing appetite to build capability in machine learning, artificial intelligence (AI), robotics, and we should see an increase in the use of holograms in the next 3-5 years to support virtual meetings and conferences. The list goes on.
Our primary work as change agents, whether as leaders, HR professionals, or internal and external influencers, is to contain the change process for the organisations that we support. This is often about supporting leaders in an effort to pivot mindsets away from fear and crisis, towards reflection and focus on opportunity and innovation.
The Change Consulting Group hopes that this moment in history is utilised for productive, efficient and sustainable organisational change, that develops workspaces that are more productive, inspiring and safe.
May we make good decisions and choices in the weeks and months ahead.