It's time to come up with new answers to old questions
BUSINESSES have all woken up to a new reality. The lockdowns, social distancing and loss of critical manpower due to illnesses or on public duty have meant that for long periods of time, the brick and mortar business has had to switch to online and virtual modes. Coping with these challenges is the defensive mindset.
Seeing this as an opportunity for better business outcomes is, however, a more positive strategy. The old competitive advantages have given way to a different set, some of which we always knew but may have ignored. The value equation and relative importance of various factors have changed too.
Let us analyse which of the advantages matter less and which ones matter more:
Physical advantage
We have always been awed by some of the finest facilities in several industries. Universities and schools were rated higher or lower based on the swank campuses they could showcase - size, layout, creative architecture, workspaces, ecological balance, auxiliary amenities, living features, access, proximity, smart classrooms and so on.
Online teaching (or home-based learning) has completely levelled this advantage with virtual educators. In fact, some of the virtual campus or office or factory designs are even more state-of-the-art and stunning, especially with the 360-degree and virtual reality views. Factory tours may not be part of a customer's evaluation of a supplier.
The field for intermediaries and e-commerce platforms has also been levelled with manufacturers. Customers value price advantages even more (especially for commodities), transactional ease online, quality of service (product quality is a given), delivery times, customer experience and so on, replacing concerns on infrastructural capability or pedigree.
The cost of setting up physical infrastructure and maintaining it could now be traded for better pricing and service. Many industries have surplus capacity and intermediaries will take advantage of that. Global crude steel production, for instance, was only at 76 per cent of capacity in 2019.
This trend could also see the re-emergence of intermediation in business-to-business (B2B) supply chains and demand chains. As a manufacturer, how can you mimic - or, ideally, improve upon - the interface and advantages provided by an intermediary?
Process simplicity
The working of an organisation is wired into its process. The methods, rules, workows, checks and balances and approval procedures form part of an elaborate process edifice. Traditional organisations in countries like Japan, Germany and some others viewed this as a virtue, especially as the rigour guaranteed standardisation, quality and easy measurement of work, inputs and outcomes. It was however, hard-wired into the daily working of the organisation without any flexibility. When you move to online processes, how does that work?
In many countries, legal documents have to be ink-signed even now, or require witnesses such as lawyers. The esignature model does not work there. A perfect process which involves several human interfacing steps is an impediment in the current times. Hotel check-in can now be done seamlessly without any human touch.
Processes that are decoupled from human actions (like the blockchain technologies) or are designed flexibly with bypass features are great advantages when working almost completely remotely. This would spur the rapid growth of blockchain and machine learning in all industries. Customers will see more value in less human intervention.
Flexible workforce
During the Covid-19 outbreak, many organisations lost the services of some people who either contracted the disease or had to be isolated if they were co-habiting with infected patients. How do you manage if you suddenly lose a few employees and more importantly, a key employee? Even the prime minister of a large nation was not spared.
Some organisations have a bench strength of people who work from time to time. Schools have relief teachers, also called supply teachers, who substitute for a regular teacher during his or her absence (typically for a few weeks). The relief teacher works with pre-prepared materials, documents and deliverables.
Organisations that truly practise a job rotation policy will benefit in the current scenario, as they will have people who can don different hats. Investments in back-up employee training will offer benefits compared to organisations that are driven by a few heroes or those that have an efficient but too-stable manpower policy - that is, those who see flexibility as instability.
Redundancy is another eective strategy to mitigate the loss of people. Airplane crews have fully licensed and trained redundancy count built into manning every flight (first officers, extra cabin crew) to cater to manpower emergencies in-flight. Broadway plays have understudies and alternates who step in to perform the roles of absentees or during planned breaks for a performer. They often live near the theatres, rehearse lines and music regularly, and may even cover the principal actor. As the famous stage dictum goes "the show must go on!"
Decision-making dynamics
One of the most complex systems in an organisation is the decision-making dynamics. It is often so fuzzy that even internal employees struggle to make or have decisions made. In many cases, exceptions are the rule. If all your employees need to work remotely, this fluidity will be a major disadvantage.
The decision-making culture and the role of one or a few people is another key issue. Having one iconic leader in whom all the power and wisdom is vested is thus a competitive disadvantage in these times. Key person departure or incapacitation can be mitigated.
Organisations with collective leadership or consensual processes, team principals at every level (no single person decides anything) or vetting committees will flourish now. Hero decision-makers who claim to singularly swing fortunes are not great competitive advantages (especially now, but perhaps always).
Digital state
Digital transformation has been happening for the past two decades, but with varying degrees of outcomes and participation levels. Companies like Google adopted home-based work as early as the beginning of this century. Others have moved swiftly to many common functions.
However, a lot more can be done. A large number of operations and services are not digitised, or are only minimally so. All high school students still take pen-and-paper tests at a central location in most educational boards. Many boards - International Baccalaureate Organisation, Cambridge Assessment International Education, for example - have cancelled examinations this year, with students' grades to be determined by their other work. This is not ideal for all.
Customer-facing organisations have not shown the necessary "digital courage". A digital strategy is good for all times, not just now. There should be no need for any retail customer to visit bank premises, for example - this is good for both the service provider and the customer.
Similarly, safety and security of offices and factories could be fully managed remotely via digital systems. This is still a nascent application. There are more than a hundred ways in which an organisation can become digital-ready, but most are scratching the surface. Before long, digital capabilities will become parity, not an advantage.
NEW ANSWERS
Competitive advantages are not cast in stone. They can disappear quickly, and some other dormant ones could be good leverages. Organisations should ask the following three fundamental questions:
- Do the advantages provide a seamless, consistent physical and online transactional experience for customers and employees?
- Do the advantages enable the employees to serve customers better?
- Do the advantages drive higher value perception from customers vis-à-vis peers?
These are not new questions, but they do need new answers.