Reinventing Businesses

How the pandemic has changed CEO's agenda for the future

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A few weeks ago, the market capitalisation of listed global companies crossed $100 trillion for the first time. This comes in a year overshadowed by the worst global crisis in memory. All major economies, barring China, are projected to be in recession this fiscal. Yet, stock markets grew 15 per cent over the year. The markets reflect our faith in future potential for growth and are on track for a recovery in 2021. However, aggregate numbers show that big digital technology stocks in the US and China are driving the market. The world's wealth is distributed more asymmetrically now than ever before.

Digital technology has become an instrument of wealth creation as we spend more time online, be it in transactions, entertainment, education or healthcare services. The pandemic has only accelerated this behaviour.

This crisis helped us realise the importance of environmental protection. A September 2020 report from Data-Driven EnviroLab and NewClimate Institute noted significant increase in Net-Zero commitments by corporations and local governments. Commitments by companies have risen three-fold, with 1,541 organisations committing to net-zero emissions this year as against 500 last year. In 2020, 823 cities agreed on net-zero commitments in 2019.

Digital disruption and climate change are the two powerful forces that compel business leaders across industries to rethink strategies and reinvent businesses. Let's look at three different business segments and how the pandemic has transformed the CEO agenda.

  • In sectors dependent on physical supply chains, there has been a significant disruption in supply and demand. Business leaders in these sectors are prioritising "repairing" their businesses - managing short term-liquidity, transforming the cost structure to variabilise fixed costs and allocating capital to positive segments. The longer-term imperative is to reconfigure businesses and operating models for a low-carbon economy. India's largest coal-based thermal power company is looking to grow its renewables portfolio 30 times by 2032.
  • Healthcare, education, hospitality, finance and IT services have traditionally relied on human interactions. There is potential to reinvent business and operating models:
  1. Contactless consumer interaction: Multiplexes are reinventing viewer experience by contactless digital ticketing, payments and pre-ordering of refreshments using SMS/apps.
  2. Virtualising delivery of services: Schools, colleges and universities are adopting virtual learning for short term and need to prepare for a future where virtual classrooms are a significant part of a hybrid learning experience.
  3. Reinventing work for the new workplace: Organisations have adopted remote/virtual working models and look to a future where WFH and work from office coexist. India's largest IT Services company announced plans to make 75 per cent of its workforce work from home. Another organisation announced plans for a hybrid model allowing employees to work from both home and office. Leaders need to choose business operating models and redefine technology, human resources and cybersecurity strategies accordingly.
  • The pandemic has given a huge opportunity to the digital economy and has been beneficial for platforms like online retailers, social media agencies, over-the-top content streaming platforms and cloud infrastructure companies. This sector has been the fountainhead of innovation over the last few years. In 2020, fintech, edutech and e-commerce were positively impacted despite the pandemic. Many of the nine new Indian unicorns in 2020 are from these sectors. Platform leaders have the opportunity and the onus to reimagine future business models for sustainable growth and responsible use of emerging technologies.

From repairing and reconfiguring to reinventing and reimagining business models, leaders are exercising multiple strategies in the post-pandemic world. It provides CEOs a unique opportunity and responsibility to navigate businesses and the economy towards future growth.

(The writer is Partner and Leader Management Consulting, PwC India)