Companies will move to reassess, reimagine and reinvent their business.
Looking to the post-crisis future, executives will prioritize both changes in capital allocation and measuring returns and capital efficiency more effectively. How effectively capital is allocated either accelerates or hinders business performance and determines whether companies can readjust to a new environment and free up further capital to reinvest in future growth opportunities.
Companies across sectors will continue to face disruptive factors such as industry convergence, geopolitical uncertainty, evolving regulatory regimes and technology-fueled fundamental changes to customer behavior. These factors are forcing businesses to evolve rapidly. Executives are using better data to more holistically understand all these interconnected drivers for change across their own and adjacent markets. This is enabling them to better model future changes and more quickly anticipate the moves they need to make.
Executives are also looking to recycle capital through divestitures and acquisitions based on the results of their strategic and portfolio reviews. The current market is more challenging than it was only two months ago, but it is not yet clear if markets are closed to raising financing for acquisitions. However, given the changing environment, it is better for companies to be constantly assessing their portfolio and divesting to raise capital.
Once some normality has returned, companies will also prioritize new organic growth opportunities and new investments in digital and technology. Companies have been reimagining their ecosystems for some time — looking at more innovative business models and collaborations to access new markets and customers. They will also be reshaping portfolios and reinventing their future as the world becomes increasingly dependent on virtual transactions. They are transforming to operate in a digitally enabled, hyper-speed world. COVID-19 may have significantly disrupted the journey, but the end destination remains the same.