Top 5 priorities today:
1. Aligning resource requirements with future business objectives
Aligning resources to objectives has moved up the priority list and has evolved to reflect new operating conditions. Private companies fall broadly into one of two groups: those hit hard by the crisis — for whom aligning resource requirements means some combination of restructuring, reorganizing or even downsizing — and those who are adapting to new business models, which in turn is reshaping their needs around resources, skill sets and competencies. For both, expanding digital competencies has become even more important than it was prior to the pandemic.
2. Embed people plan within corporate strategy
If the pandemic has underscored one lesson above all for entrepreneurial businesses, it is that resilience is key to sustainable growth. And while digital transformation, ‘stickier’ value propositions and improved customer loyalty and risk management efforts all contribute to organizational resilience, it has become clear that a company’s people are the greatest factor. It is no surprise, then, that creating a ‘people’ plan that puts employees at the heart of the business and its strategy has rocketed upward among leaders’ priorities. This is driving a renewed emphasis on building a purpose-driven organization, retaining and developing talent, implementing new work models and workforce planning, enhancing agility and embedding a culture of continuous feedback. Our analysis also reveals that strategic initiatives to (i) ensure leadership visibly rewards innovation and (ii) develop a clear management succession plan are rising fast among the key strategic initiatives around people.
3. Rapid product/service innovation
The pandemic has reshaped customer expectations, reflected in a dramatic increase in online buying, the impact of working from home and more, all of which is unfolding amid an increasing emphasis on sustainability. While product/service innovation has always been a focus of entrepreneurial companies, leaders are working to better understand the implications of these evolving customer needs, and to adjust their product and service portfolio accordingly.
The pandemic revealed how adept some businesses are at pivoting to meet rapidly changing needs. For example, some cosmetic companies switched to creating hand sanitizer products; fashion companies moved into face mask production; and manufacturing companies converted their operations to produce ventilators. While some of these pivots are temporary or focus on optimizing short-term opportunities, others may represent a more fundamental shift in market demand. The challenge for leaders is to determine which product/service innovations are necessary for success in a post-pandemic world.
4. Data analytics
While data analytics is another priority that has carried over from the pre-pandemic environment, the sense of urgency and perceived impact of improved data analytics capabilities has increased sharply in recent months.
Having witnessed the pandemic’s explosive impact on customer expectations, private companies are prioritizing predictive and even real-time data analytics that can identify changes in customer buying patterns, behavior and satisfaction levels early and accurately.
As a result, developing greater capabilities in internal and external data analysis has moved higher on the C-suite agenda.
5. Seek alliances that deliver scale and/or improved revenue and profitability
New to the list of top priorities is building strategic partnerships and alliances. Highly successful entrepreneurs understand that a powerful network of strategic partners can help enable growth, by complementing a value proposition, widening market reach or unlocking access to new expertise. Amid changing customer needs, the necessity of product innovation and evolving operating and business models, even more leaders are recognizing the potential advantages of these relationships. And the pandemic has provided ample and varied evidence. For example, when the pandemic closed nearly half of its 300 stores and precipitated a 90% drop in sales, Chinese cosmetics company Lin Qingxuan rapidly partnered with Ali Baba to adopt livestreaming technology as its primary sales and marketing channel. The livestreams become highly effective venues for showcasing products, while the company’s beauty advisors - redeployed as online influencers – addressed customer queries in real time, more effectively than an online store experience. Meanwhile, board game distributor Winning Moves Australia adapted quickly to the pandemic reality of home meal delivery, partnering with Deliveroo to offer 30-minute delivery of entertainment to enhance customers’ food orders.
As the impact of the COVID-19 pandemic continues to unfold in markets around the world, private company executives are grappling to identify the strategies and business models that will take their businesses forward in a sustainable way. Amid vivid lessons in resilience, agility, risk management and entrepreneurship, they are asking, what does it take to future proof my business?
At EY, we’ve learned through our research and work with the world’s leading private enterprises – in all kinds of market conditions - that the companies most successful at futureproofing their businesses are those that look at a broad set of capabilities, and balance their investments in time, money and energy across them as they adapt, transform and grow. We call them the 7 Drivers of Growth, and together they provide a proven framework for ambitious companies seeking to build resilience, drive sustainable growth and reframe their future, even and indeed especially in a post-pandemic world.