Meanwhile, 39% of executives say they will be taking steps to better manage their workforce. More than ever, they are pressured to accelerate digital transformation and adopt a more agile working model and flexible employment. Some companies may also consider reducing the size of their workforce to be able to better respond to accelerated market change — decisions that they found too hard to make in a positive-growth economy. Others may engage e-learning and other technologies to upskill their workforce and help them in the transition to a new normal, or develop new strategies and incentives to attract talent with the right skills for what comes next.
Next, focus on building resilience in the supply chain and expect a new kind of customer
One of the biggest shocks for companies was the level of supply chain disruption during the crisis. German companies will be taking steps to build resilience into their supply chains. For some, this may mean establishing or strengthening a local or regional supplier base. For others, it may mean moving from a linear to a networked supply chain ecosystem. For all, there will be a much greater emphasis on conducting thorough risk assessments and finding suppliers that are resilient enough to withstand the next crisis.
A reimagined supply chain will be imperative in creating and delivering engaging customer experiences. Companies will also need to increase their digital customer access and optimize data analytics across data sources in preparation for a new kind of customer with higher expectations, particularly of their e-commerce and online experiences. Incompatible legacy systems that don’t talk to each other will be costly weaknesses, which the resilient organization cannot afford. Analyzing customer behavior will provide opportunities for rethinking product and service portfolios.
Looking beyond, German companies are well-positioned to reshape results
During the crisis, the German government provided a robust stimulus program to re-engage the economy. As government support measures taper off, companies will need to monitor capital needs conservatively as the uncertain environment continues.
Despite these interventions, looking beyond we expect there will be winners and losers from this crisis. We believe that many German companies will be well-positioned to navigate out of this economic crisis. German companies were better prepared, are fairly well capitalized and have strong product offerings and robust operating models.
That said, the road for some companies in the beyond will be a long one, particularly for those in hard-hit sectors such as automotive, airlines and other travel- and hospitality-related industries. Moreover, all companies need to be prepared for the possibility of a second or third wave of the pandemic virus or similar events in the future.
The future may be unknown, but companies that have confidence in their ability to strengthen their agility and enterprise resiliency will be able to reshape results for long-term value creation and stimulate local and global economic growth.
3 practical conclusions German companies should consider when developing a recovery road map
- Operate in a business-as-unusual environment. Companies need to expect future crises or unpredictable events and plan accordingly. Scenario-planning that incorporates lessons learned from the COVID-19 crisis and previous crises will help German companies build business resilience.
- Know your portfolio’s weakest link. For many businesses, profit margins and revenue-generating capabilities were stressed before the pandemic crisis. To withstand shocks and create optionality, German executives need to examine their portfolios for liquidity vulnerabilities.
- Look beyond the immediate crisis to see the next steps. German executives need to be bold in their strategic decision-making to take advantage of new market dynamics. More frequent strategy and portfolio reviews are a mindset as much as an event.