24 minute read 29 Jun 2020
Reframe your future office

Will ‘normal’ be business as usual or better?

Authors

Cheryl Grise

EY Americas Solutions Leader and EY Entrepreneurial Winning Women Program Executive Sponsor

Energetic and forward-thinking leader. Passionate about helping clients. Strong believer in the power of purpose. Water sport enthusiast.

Glenn Engler

EY-Parthenon Global Digital Leader, EY Americas Strategy and Transactions Digital Strategy Leader

Helping organizations shape their business strategy in a digital world. Relentlessly curious. Passionate board member. Husband. Father.

Betti Packman

Vice President, Consumer/Retail Strategy and Transactions, EY-Parthenon (Americas)

Customer advocate. Empowering leader. Focused on the future. Reshaping clients to understand and respond to consumers’ wants and needs. Loves binge-watching TV. Dessert fanatic.

Justin Badlam

EY Americas Senior Analyst

Horizon scanner, storyteller. Focused on the emerging trends in the Americas. Strives to help EY use knowledge, data as a catalyst for change. Husband, father. Cyclist passionate about cities.

24 minute read 29 Jun 2020
Related topics COVID-19 Megatrends

Viewing your strategy through the lens of five critical dimensions will enable your organization to reframe its future in a post-COVID-19 world.

Three questions to ask:

  • What strategies do you have to respond to the increased focus on health, hygiene and the environment?
  • How will you prioritize digital investments to do more, faster?
  • How can you develop innovative models of collaboration to accelerate your business growth?

The COVID-19 pandemic has presented business leaders with a mountain of challenges and a sea of often conflicting predictions. Seeing through the complex layers of possibilities, how do you isolate a clear image of the future from the visual noise of the present?

COVID-19 has brought the longest uninterrupted growth charge in recent history to an abrupt halt. EY analysis of major recessive cycles of the last 50 years has shown that each recession presents a tipping point for a new type of business cycle. Companies that successfully navigated these business cycles moved early to position themselves while those that adopted a wait-and-see strategy paid the price.

The pandemic is changing our culture – our values, behaviors and beliefs. Some of these changes were already at play before the crisis, but they’ve now gone into hyperdrive. For example, the EY-Parthenon Life After COVID survey found significant shifts in attitudes toward hygiene and cleanliness; behavioral changes in travel, leisure and shopping; and the expectation of improved customer experience and engagement on digital platforms. These shifts ultimately reflect how companies need to pivot to better serve all of their stakeholders. A recent survey by JUST Capital, for example, finds that just 25% of Americans think capitalism as it stands is good for society.1 By contrast, a large majority thinks that the pandemic has exposed underlying structural problems and that big companies should reset their priorities.

  • About the EY-Parthenon Life After COVID survey

    In March 2020, EY launched an online, general population survey of ~1,500 respondents to provide a snapshot of consumer expectations of their changes in behavior across a range of sectors as a result of the COVID-19 crisis. The survey’s responses provide insights into how consumers will emerge post-outbreak and the long-term impact of the pandemic.

“Leaders are faced with difficult decisions,” says Sam Johnson, EY Americas Vice Chair, Accounts. “But, by paying attention to the durable changes we can already see in the market, with an eye to the longer-term megatrends you can focus on how to pivot to the next business cycle.” To aid in this process, we have identified five critical dimensions to recast business strategy and priorities after COVID-19.

There is no crystal ball that can show us the future — but there is a need for a practical blueprint. The Lens for Better, with five dimensions that can be used individually or together, helps organizations determine which aspects of their operations can or should return to business as usual, and which aspects have the opportunity to be improved in order to do something better.

The Lens for Better is a tool that also helps companies prioritize future investments and explore durable change emerging from the COVID-19 crisis to give us all an opportunity to ensure what lies beyond the pandemic will be better than what went before — better for business; better for the environment; and better for more members of society.

The Lens for Better

.

In the video below, Glenn Engler talks to CNBC about the Lens for Better and how it can be used.

Created in collaboration with CNBC Brand Studio. © 2020 EYGM Limited. All Rights Reserved.

The Lens for Better is centered around five key trends: health, connectivity, relationships, ingenuity and accountability:

  1. Better health captures the heightened response to public health, safety, wellness, sustainability and environmental solutions arising out of the COVID-19 pandemic. Organizations will need to rethink their strategies to account for workplace distancing, redesigned packaging, greater supply chain transparency and more investments in renewables.
  2. Better connectivity represents digital transformation and the power of connection across every industry, accelerated by the pandemic. Companies need to better understand how they can build better solutions by harnessing improved bandwidth, mobile, video, data cues/sensors and analytics.
  3. Better relationships looks at the reimagined community building that we have seen flourish at a global and hyper-local level. Organizations will ask questions about segmentation and personalization of different customer groups and of employees, both at the local community level and also at a global level, in an effort to understand them better and build stronger relationships with them.
  4. Better ingenuity captures innovation toward more sustainable, flexible and profitable business solutions as a result of COVID-19. Organizations will need to think about how to leverage disruptive technology. For instance, using 3D printing to drive flexibility in their supply chain or developing innovative partnerships to drive new business models.
  5. Better accountability describes the increased responsibility organizations have to demonstrate to balance operational, fiscal and organizational decision-making. Companies will re-examine and ask questions about how they should address regulatory affairs and handle risk.

These five dimensions act like an image stabilization system on the confusing blur of possibilities facing business leaders. Explore each dimension in more detail below.

1. Better health

Better health describes a heightened focus on public health, personal safety, sustainability and environmental solutions.

Even in a future in which a vaccine may significantly reduce the threat of COVID-19, there is strong evidence that people will be more focused on health than they were before the pandemic. The pandemic has reset our relationship with the physical world. Consumers may think twice before handling high-touch surfaces, accelerating the adoption of touchless systems (e.g., voice-activated elevators and automatic doors) in public places. Companies can respond by placing increased emphasis on employee health and on hygiene in the physical workplace. EY research reveals that 80% of consumers state a long-term impact of the pandemic will be the heightened importance of cleanliness.2

Social distancing has prompted a re-examination of our relationship to physical space. And the expectation of enhanced health and safety standards will result in a reconfiguration of physical spaces across environments, from retail to restaurants and schools. And these changes have historical precedents. In the aftermath of the 9/11 terrorist attacks, for example, air passenger security was strengthened across the globe, placing new burdens — and significant delays — on passengers boarding aircraft. Within a few weeks, travelers felt that these measures were routine, and they were universally accepted.

Our data points to a rapid increase in comfort levels doing things like shopping in stores and going to restaurants as states and cities reopen. This could be attributed to the fact that these activities look much different than they used to, much safer than they used to, and consumers are ready to establish a new routine in this world. “In this environment, trust is becoming a core determinant of where consumers shop and choose to spend their time.” Says Kathy Gramling, EY Americas Consumer Industry Markets Leader. “Can the consumer trust retailers, restaurants and other venues to provide a safe environment to shop, live or play? Build trust by bridging transparency with a seamless digital experience that speaks to consumers looking for newer but safer ways to engage.”3

Restaurants looking to reopen their doors can launch digital menus, contactless payments and transparent food sourcing, harnessing technology to augment the physical. The flight from cash has also been accelerated by the pandemic, as contactless payment systems gained momentum amid fears that the virus was spread on notes and coins. On March 3, 2020, the day the World Health Organization recommended touchless payments, there was an 8% increase in consumers who said they need touchless payments as compared to before the outbreak.4 In our recent survey, over half of respondents (53%) said they cared about whether stores offered touchless payment systems.5 In some countries (the United Kingdom and the Nordic countries, for example), contactless payments for small purchases account for the majority of transactions. By 2019, 80% of all retail transactions were conducted electronically in Sweden, and the country is on course to be entirely cashless by 2023.6 And we may see more apps such as Whim and Citymapper allowing people to utilize multiple transit options in a city using a single payment source.

Increasing use of telehealth is here to stay (including everything from remote sensors that monitor blood pressure and oxygen saturation, to videoconference consultations with medical practitioners). Telemedicine claim lines increased 4,347% year-on-year in March 2020, underscoring our research finding that 42% of respondents plan to increase the use of telehealth as a result of COVID-19.7 Telemedicine is unlikely to replace personal consultations with patients for more serious conditions or for acute emergency visits; however, there is an opportunity to blend the digital with the physical as we reframe health services.

The renewed focus on personal health means that people are increasingly comfortable trading private data for enhanced health protection. For example, in the April 2020 EY Future Consumer Index, over half of respondents (53%) were willing to share their personal data to help track potential infection outbreaks.8 Better health is a dimension reaching beyond humans to the whole environment.

Climate change is one of the defining challenges of our era — for Gen Z, it is by far the dominant priorityand the next business cycle will, to a very large extent, be shaped by how we tackle it. More than one third (38%) of respondents in the EY Future Consumer Index said that they will pay more attention to environmental issues due to the pandemic.9 This has important ramifications for business, as employees, customers and investors raise their expectations of companies’ climate stance.

Key action:

  • Start with the better health dimension. It’s the single most profound change coming out of the COVID-19 pandemic. Which parts of the business model can fuel positive changes surrounding employee, customer and partner health?

2. Better connectivity

While the COVID-19 outbreak has reduced our comfort with physical interactions, it has propelled us into a digital world of virtual connectedness.

If we were climbing the digital stairs before the pandemic, an elevator has now shot us to the top of the building. Better connectivity and digital transformation are on an accelerated and unstoppable trajectory following COVID-19.

Take teleconferencing. A few weeks into lockdown, 74% of companies had increased their use of teleconference and video meetings due to COVID-19.10 The videoconferencing app Zoom saw its daily active user count increase by 340% with monthly users growing by 160% within the first three months of 2020.11 By the end of May 2020, the company was worth more than the world’s seven biggest airlines combined.

Future Consumer Index

340%

increase in daily active users, within the first three months of 2020 on the videoconferencing app Zoom

Even as workplaces open their doors, more of us who can will make remote work a permanent feature of our lives. According to the EY Future Consumer Index, 17% of employees plan to work remotely after COVID-19.12 This impacts more than knowledge workers pecking at their laptops. It may impact commercial real estate and businesses that rely on office foot traffic, for the default structure of the working day and week, and for how we view work and non-work. According to a recent EY report on the future of the business district, office locations need to be seen as major hubs of social life that focus on community around the office building.13 The blurring of these boundaries focuses interactions less on which hat we happen to be wearing and more on the human being within.

Just as COVID-19 has changed the division between work and home, so it has also altered our shopping behavior. With roughly 95% of the US population in lockdown at the peak of the pandemic crisis, it’s not surprising that COVID-19 delivered a crash course in e-commerce.14 Reports show that there was 129% year-on-year growth in US and Canadian e-commerce orders as of April 21, 2020, and 146% growth in all online retail orders.15 Rising online sales have an impact on the packaging sector, which not only must enable products to arrive safely to consumers, but also must facilitate easy restocking if returned. Consumer demand for more sustainable solutions to packaging is rising, replacing single-use plastic with circular packaging.

In China, property sales closed by the country’s top 30 developers unsurprisingly slumped by 30% during February 2020. Yet, China property developer, Evergrande, managed to double year-on-year sales that month, thanks to aggressive social media marketing and the use of virtual reality technology.16 Similarly, Nike, building on its positive digital retail experience in China during the pandemic, posted a 30% global increase in online sales in the first four months of 2020, even though most of its stores were closed during that period.17

In many developed economies, online shopping was already growing in popularity before the pandemic. COVID-19 has accelerated e-commerce, filling gaps and boosting familiarity with online shopping experiences among late adopters. Starbucks, for example, has been ahead of the consumer shift to remote ordering, with 80% of transactions ‘on-the-go’ prior to the COVID-19 outbreak. And the crisis has only sped up the rollout of a new store format—Starbucks Pickup—to meet and elevate consumer demand as a compliment to its traditional café stores.18

However, the digital infrastructure that makes this and much else possible is unevenly distributed. Just as developed economies roll out 5G technology, with its promised enhancements to processing speed and power, a 2019 Pew analysis showed that 44% of American adults earning less than US$30k a year do not have access to broadband internet.19 Digital exclusion bars those without strong connectivity from the digital economy of the future: it’s about a lot more than the time it takes to download a movie.

The enhanced mobile connectivity of 5G is no mere upgrade; it’s a game changer. It will allow 100 times the number of devices to be connected (enabling the Internet of Things (IoT)) at 100 times the data speed of 4G, using just one tenth of the energy. It will act as a catapult for new business models, as it enables exponential bytes of data from connected devices that advanced analytics can use to develop better insights. Manufacturing can employ remote diagnostics on connected equipment to drive predictive maintenance cycles and increased sales of service and parts. And commercial real estate automation will increase, creating more rich data on, for example, space and energy usage patterns that can lead to efficiencies and savings.

Higher education has been universally affected by the pandemic lockdowns and subsequent social-distancing regulation. The question facing many institutions is how much of their perceived value to students is inextricably linked to the physical, and how much could be effectively delivered leveraging technology. Off-campus courses can attract a wider net of students, increasing access both by offering more flexible class times and by being geographically neutral. Although a large majority (78%) of higher education students felt that the online learning experience was unengaging during COVID-19 crisis, this doesn’t have to be the case.20

Organizations will need to explore an effective blend of the physical and virtual. Parents of children whose schools remain closed, for example, have been underwhelmed by their digital experience with remote education: nearly half (49%) are concerned about the negative impact of the COVID-19 crisis on their children’s learning.21 The balance of in-person and remote ways of delivering services may be different in, say retail and restaurants, than in personal care or early childhood education.

Key action:

  • Focus on three to five critical digital priorities. Digital transformation is a common thread through every dimension of the Lens for Better. What investments can be made to better transform your business model through digital?

3. Better relationships

COVID-19 has encouraged new and better models of relationship-building to develop.

The pandemic has caused fractures in some relationships (e.g., global, linear supply chains; international travel) and closer bonds in others (e.g., governments and their citizens, companies and customers, and even companies that are direct competitors). This rewriting of how we relate and with whom has profound and durable impacts on the future.

Enabled by big data and forensic analytics, companies can increasingly personalize their interactions with customers, building stronger and more intimate relationships while harnessing predictive behavioral sciences to nudge demand. Just as 3D printing brings affordable, customized product design to market, personalized relationships bring a company closer to all stakeholders in its ecosystem.

Big data and advanced analytics are driving ever-increasing intimacy between companies and customers, partners and employees. Marketers have long segmented the customer base using geographic and demographic data, but that is now augmented with complex and heavily nuanced cultural, behavioral and psychographic profiles. Tracking trends through, for example, first party data, pattern recognition and multichannel listening tools, for example, is enabling ever more sophisticated approaches to marketing, sales and operations. “We can already see how segmentation will continue to evolve in its sophistication, from more advanced analytics in defining segments to better use of personalization to drive strong human connections.  From marketing, to supplier ecosystems, to talent, everything benefits from understanding the patterns that sit beneath the top-line dynamics,” says Janet Balis, EY Global Media and Entertainment Advisory Services Leader. Companies (and individuals) have access to record amounts of knowledge and expertise across the world with one click. Better relationships harness the macro with the micro.

Some 75% of US businesses saw supply chain disruption during the pandemic, and while some supply chains held up remarkably well, the empty supermarket shelves and the scramble to acquire personal protective equipment in the early days of lockdown, only emphasized vulnerabilities in global supply chains.22 Some degree of near-shoring, a move to increase local manufacturing and new thinking about just-in-time inventory management will all be durable changes. A majority (55%) of consumers believe COVID-19 will heighten the importance of domestically produced goods.23

However, onshoring isn’t always a viable option. With more than 80% of all active pharmaceutical ingredients produced in China and India, for example, global supply chains are likely to survive COVID-19 and beyond.24 Some of the protectionism that the pandemic has amplified should be relaxed so that open trade and competition can fuel growth.

Key action

  • Look at the better relationships dimension to segment your customer base. How can you harness data to offer a more personalized service?

4. Better ingenuity

Businesses showed agility to pivot quickly in extraordinary moments of the pandemic, which will be a lasting change of the crisis.

Seven years ago, Harvard Business Review called time on the word “innovation,” arguing persistent overuse had rendered it meaningless.24 And yet the need for discovery, experimentation and new ways of thinking about old problems has never been greater. As with many crises, the pandemic served as wake-up call around the globe.

We’ve seen fragrance manufacturers and brewers make sanitizer; apparel companies sew protective gowns for health care workers; and industries worst hit by lockdowns (hospitality and airlines, for example) share their workforces with those experiencing sudden spikes in demand (delivery systems and food retailers).

The pandemic has brought together companies in new relationship ecosystems with long-lasting potential. Singapore-based Grab, the ride-hailing company, is one example. Having acquired a ride-sharing competitor’s Southeast Asia operations in 2018, Grab went on to offer its 130 million users financial and other services on top of food delivery and travel booking. Later this year, it will add health care services from Ping An, a China-based digital platform. Three years ago, Walgreens and LabCorp collaborated to bring patient services to 600 Walgreens stores.25 With the advent of COVID-19, the two companies were able to expand on the relationship to add drive-through testing across 49 US states and Puerto Rico. Ingenuity is about building partnerships that leverage different skill sets to rapidly deliver new services to customers.

EY-Parthenon Life after COVID Survey

77%

respondents agree that new creative innovations will emerge from companies adjusting to the new world following the COVID-19 pandemic

The urgent threat of the pandemic catapulted companies into action. They ditched slow and obstructive processes, clearing a path to quick decision-making and enabling fast experimentation, iteration and adoption. For example, the Mercedes-Benz powertrain engineering team was able to design, prototype, obtain approval for and launch a new continuous positive airway pressure medical device in just one week.26 The team had previously never produced a medical device. Better ingenuity means harnessing that energetic drive to better solutions, bulldozing through obstructions and delays.

Having seen companies rise to the challenges of the pandemic, 77% of respondents in our survey agree that new creative innovations will emerge from companies adjusting to the new world following the COVID-19 pandemic.27 Consumers expect more of companies now; they expect clever and unexpected solutions. Digitalization has already transformed many business operations. Robotics and 3D printing are reimagining the factory floor, bringing efficiency and personalization to manufacturing in ways that business is just beginning to harness.

Better ingenuity is about leveraging new technologies to develop new business models, as much as new products. More and more companies have developed products-as-a-service (PaaS) platforms in which customers pay for an experience or use rather than a product. This model is now migrating to a wide range of “everything-as-a-service” business models (often termed XaaS). Signify, for example, doesn’t supply lighting to Schiphol Airport in Amsterdam; it supplies light. The company’s luminaires are designed to be easily repaired or replaced, and the maintenance is handled by Signify.

IoT technologies are accelerating PaaS models. For the client, this de-risks the capital purchase and puts the onus of reliability onto the manufacturer. HP is rolling out “3D as a service,” which allows customers to pay only for what they print rather than purchasing a pricey 3D printing kit and supplies. HP’s early customers include Wallbox, which makes electric-vehicle chargers, and HIPP Medical, which makes tools for orthopedists and dentists.

As Peter Drucker famously wrote, “Ideas are cheap and abundant; what is of value is the effective placement of those ideas into situations that develop into action.”29 The extraordinary and urgent challenges of the pandemic triggered ingenious solutions that were action-focused. As companies reframe their operations, products and business models for better, ingenuity can accelerate progress, eliminate obstacles and deliver better value to all stakeholders.

Key action

  • Use the better ingenuity dimension to expand your offering. With whom could you collaborate for mutual value?

5. Better accountability

Leaders will be more conscientious of the responsibility organizations have to demonstrate to balance operational, fiscal and organizational decision-making.

Leaders looking at investing in the priorities surfaced by better health, better connectivity, better relationships and better ingenuity, have the weight of accountability to balance against these decisions. Few of these shifts are without costs that impact the balance sheet and the employee base. As leaders consider how to crack the code on the next business cycle, they have to apply a counterbalance of fiscal, operational and organizational accountability. Their employees, customers, partners and shareholders will expect them to act responsibly, to balance big decisions for the long term.

  • Shaping a better future through long-term value

    Today, societies demand greater responsibility from the organizations where they work, buy and invest. The COVID-19 pandemic and its aftermath shine a spotlight on how organizations behave, which is now more critical than ever. This is also a unique opportunity to reimagine a future where every company acts with a deep sense of purpose. Organizations can shape a better future by applying a long-term view to nurture relationships across their entire ecosystem: customers, suppliers, employees, partners, financiers and communities. Using purpose to create long-term value and build a better world, organizations are better positioned to benefit from, demonstrate and measure the value they create.

Better accountability depends on freeing data from the captivity of functional silos and creating a new category of integrated modeling. Making decisions at speed relies upon advanced data modeling and scenario-building. Organizations are tasked with making decisions that have profound and immediate impacts on a complex structure of interdependencies — customer data needs to be balanced with supply chain models, and financial data must feed into market trend data. Data sets that live behind operational walls are unfit for future needs; better accountability will flow from a new category of service that unifies disparate data sets.

The Wisdom of Peter Drucker from A to Z

86%

respondents expect data security to be a higher priority after the COVID-19 crisis ends

Better accountability is about managing risk. As more and more of our interactions are digital, cybersecurity will need renewed focus. In a recent survey of chief information officers, 86% of respondents expect data security to be a higher priority after the COVID-19 crisis ends.30 It is also about balancing other threats, such as climate change, and implementing strong mitigation and adaptation strategies.

The pandemic has delivered a lesson in unpreparedness for a plausible threat and its consequences. Better accountability means a focus on resilience and immunity rather than efficiency and short-term profits. It encourages companies to think in terms of building sustainable, long-term value for all their stakeholders, while balancing the trade-offs between competing considerations. The decisions they make now will have long-term consequences, but by focusing on long-term value for all of our stakeholders, we can enable the next business cycle to be better in more ways for more of us.

Key action

  • Employ the better accountability dimension as the critical counterbalance. Is your financial and risk “scorecard” appropriately geared toward better outcomes for your customers, employees and shareholders?

The bottom line

The Lens for Better helps companies see beyond the fractal camouflage of our post-pandemic world to the underlying shifts that are reframing our future. The culture has changed in just four short months and propelled us into a brave new world. As companies explore which areas of their business will continue with business as usual and which need to change, they have an opportunity to reframe their business model, their investment focus and their operations for the better.

The pandemic has delivered an object lesson in danger, but we cannot let that paralyze us. To win in the next recovery cycle, we need to act now to grasp the opportunities that arise out of every crisis — the new ways to create value. There is no reverse gear to take us back to the pre-pandemic era. We must have the courage to view the future through the Lens for Better to make an informed leap into the future. 

“We are in a pivotal moment for business. It’s more clear than ever before that success is about more than our bottom line today; it’s about being better, and helping those around us thrive in the long term. Our clients, people and stakeholders demand it,” Says Carmine Di Sibio, EY Global Chairman and CEO. He continues by noting that “CEOs don’t have a choice anymore between doing what’s good for business and good for their stakeholders. They must choose to do both.”

The pandemic has taught us that we can make the future a place that we would like it to be: it just needs collective effort and focus on what should be business as usual and what we can reframe for the better.

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Summary

As we plan for business recovery, we challenge organizations to explore what will go back to business as usual – and what should change for the better. To win in the next recovery cycle, we need to act now to grasp the opportunities that arise out of every crisis — the new ways to create value. Our Lens for Better is a way to do this, centered around five key trends: health, connectivity, relationships, ingenuity and accountability.

About this article

Authors

Cheryl Grise

EY Americas Solutions Leader and EY Entrepreneurial Winning Women Program Executive Sponsor

Energetic and forward-thinking leader. Passionate about helping clients. Strong believer in the power of purpose. Water sport enthusiast.

Glenn Engler

EY-Parthenon Global Digital Leader, EY Americas Strategy and Transactions Digital Strategy Leader

Helping organizations shape their business strategy in a digital world. Relentlessly curious. Passionate board member. Husband. Father.

Betti Packman

Vice President, Consumer/Retail Strategy and Transactions, EY-Parthenon (Americas)

Customer advocate. Empowering leader. Focused on the future. Reshaping clients to understand and respond to consumers’ wants and needs. Loves binge-watching TV. Dessert fanatic.

Justin Badlam

EY Americas Senior Analyst

Horizon scanner, storyteller. Focused on the emerging trends in the Americas. Strives to help EY use knowledge, data as a catalyst for change. Husband, father. Cyclist passionate about cities.

Related topics COVID-19 Megatrends