- Date : 10/10/2020
- Read: 8 mins
Everyone today is coming to terms with the new challenges post COVID-19. As an entrepreneur, you too will have to do so.
Last December, the sight of a waiter at a restaurant wearing a protective mask would have likely alarmed you; today, in all probability, it will leave you feeling reassured about the management’s commitment to enforcing safety measures.
This is the new normal in a post-COVID-19 world, where concepts like “social distancing” and “virtual approach” are fast becoming a way of life. And in this new normal, the business community – like the anecdotal restaurant – too will see fundamental changes in the way they operate.
Basically, everyone today is coming to terms with the new normal. You too will have to, in your daily life as an individual, and in your business if you are an entrepreneur. Global consultancy McKinsey & Company has brought out a series of reports on some likely changes and opportunities that could unravel on the business front; let us consider a few of these.
How will the 'new normal' change customer behaviour?
In a report titled Meet the next-normal consumer, McKinsey cautions us that “the period of contagion, self-isolation, and economic uncertainty will change the way consumers behave, in some cases for years to come.” This is somewhat akin to the hypothetical situation at the notional restaurant cited earlier, ‘before’ and ‘after’ the COVID-19 outbreak; it is also something you have to reckon with in your business.
According to McKinsey, it is highly likely that COVID-19 “will accelerate the trend toward digital” among consumers in a developing market like India; the “blistering pace” at which consumers adopted digital lifestyle during the lockdown points to that, the report argues.
McKinsey feels behaviour will change across “every aspect” of a consumer’s life in “broad shifts” till the “next normal”. “How long they stick will depend on a range of factors including satisfaction with new experiences, demographics, infrastructure, and the severity of the recession,” says the report.
Consequently, “companies must rethink how and where they connect with consumers”, keeping in mind that the “overall consumption is shrinking”.
What this means is that as consumer taste and behaviour evolves, so will your business strategy. You have to be on top of constantly changing consumer sentiments – and adapt accordingly. (A good example of this can be seen in the way food aggregators Zomato and Swiggy changed tactics; when take-outs dwindled over fears of contamination, they started delivering groceries.)
How will the offices run differently in the post COVID-19 world?
Changing consumer behaviour will also affect how your office is run. For instance, life before COVID-19 meant employees had to attend office daily, but after the lockdowns began, working from home gained traction.
However, this may not always be possible, especially outside the metro cities. Many people prefer the atmosphere and facilities – such as AC or uninterrupted power – that come with an office. McKinsey recognises this, saying “it is all too tempting to revert to what was in place before the pandemic.”
In a second report titled Reimagining the office and work life after COVID-19, it advises organisations to identify and “re-envision” the most important processes in its operations, and preferably, by involving its employees – to see what works best. As an example, it talks of how meetings are held traditionally: people meet physically at one place and brainstorm.
However, in its re-envisioned format, the brainstorming can be digitally conducted in an “asynchronous” manner, across the organisation, and then fine-tuned over videoconferencing.
The report says COVID-19 has paved the way for companies to “reimagine and reconstruct their processes and practices”, and create a foundation of an improved operating model that leverages the best of both at-office and remote (from home) work.
It adds, “Organisations could start by assuming that processes will be reconstructed digitally and put the burden of proof on those who argue for a return to purely physical pre-COVID-19 legacy processes.”
Will remote working continue for long?
As more and more employees get comfortable with the idea of working from home, and you discover it won’t hurt your productivity if you allow a certain number of employees to work remotely in future, you may consider a smaller office premise for your needs. This will bring down real estate costs, and contribute to lowering of fixed costs – another area that can be looked at post-COVID-19, which we shall discuss later.
But before you move to a new, smaller office, you can take some more tips from McKinsey’s Reimagining the office report; as per its recommendations, you should ideally identify which operations can be done remotely and which roles must be carried out in person in office – and to what degree.
For this, you can reclassify roles into employee segments – as per the value they can deliver by working remotely – in the following breakup, as suggested by McKinsey:
- People who will bring positive value working remotely, maybe even from a different city;
- People who are equally productive working at office and working remotely;
- People who are usually non-productive from home, but may be employed remotely if needed;
- Those not eligible for remote work (say, receptionists).
The first two sets of employees may need upskilling, but the strategy allows you to attract talented people who could live in a town or city of their liking, and visit the head office when the need arises.
What would a future office look like?
If you do move to a new, smaller office, there is another aspect you will have to rethink: the design of the new premises. For starters, you could consider what Blaine Brownell, Director of the School of Architecture at the University of North Carolina, writes in Architect magazine.
In an article headlined Rethinking Office Design Trends in a Post-COVID World, Blaine (an architect himself) suggests that a portion of employees could come to office on a given day, while the rest work remotely.
Noting that US companies are questioning their traditional investment in expensive real estate, Blaine asks two questions: (a) Is the workplace as we know it now a relic of the past? (b) Is commercial office space no longer relevant?
He answers the questions himself, saying we will eventually return to a collective workplace, but one that has changed beyond what we could have previously imagined.
So what would this future office look like? McKinsey, which discussed the same issue in its Reimagining the office report, says organisations could now create workspaces “specifically designed to support the kinds of interactions that cannot happen remotely.”
In other words, it echoes Blaine’s view that the offices of future must be designed to house fewer employees – whose presence in office cannot be avoided. In its view, staffers who work in cubicles and rarely have to attend group meetings should work from home.
What cost-cutting measures you can adopt as an entrepreneur?
If you are an entrepreneur, you should take note of this: a smaller office space means less rent and maintenance costs, which in turn means lower fixed costs. Why is this important? Well, as McKinsey points out in yet another report, Indian businesses across sectors are burdened with huge fixed costs; for instance, it can be as high as 60%–70% for the service industry.
This report, titled Five priorities for corporate India in the next normal, talks of how the post-pandemic phase could provide companies the right fillip to take a relook at their balance sheets. For instance, debt servicing, already an issue with Indian companies, will become harder on account of the pandemic. This is also something you could look at.
According to McKinsey, the problem of fixed costs is already forcing many businesses in India to look at reducing cost bases by downsizing and go for variable costs through outsourcing and digitising; in fact, staff reduction could be as high as 30%–40% at some companies.
In this same report, McKinsey says the pandemic has come as a wake-up call to embrace advanced technologies, lower costs, and create value. This could be done at three levels:
- Digitise sales, which over time will cut down physical locations and lower cost on sales;
- Digitise supply chains to ensure better collaboration with supply-chain partners;
- Create digital platforms to address more customer needs.
As the world transitions to the new normal, the business community across sectors will see fundamental changes, and few industries are expected to be untouched by some degree of change. As a business owner, the faster you identify the areas in your business that you can bring about a change to fit the new normal and adapt accordingly, the faster you will be able to navigate your way out of the slump that we are all passing through. Look at these 8 Ways to manage your wealth and recover from the COVID-19 crisis.