E Kumar Sharma June 9, 2020
Andrew Poon, Hong Kong-based partner at global lea-dership advisory firm Egon Zehnder, while talking to the CEO of an insurance company from the Asia-Pacific (APAC) region, heard about his plans to change the structure of his organisation. Instead of the traditional architecture, led by a set of leaders, he was thinking ab-out organising the company on the basis of customer-focussed areas.
Poon, who advises companies on senior leadership issues, is not surprised. He is facing a unique set of questions from clients these days as businesses try to get back on track after a prolonged slump due to Covid-19. Most of the queries revolve around changes in organisation structure that companies want to undertake to become more agile and strong.
For instance, one big lesson from the Covid crisis is the need to plan ahead and think out of the box. Also, everyone, right from business leaders and academicians to sector experts, sees a rise in gig workers, led by more agile teams. Apart from this, as companies embrace new technologies, and virtualisation catches on, new roles around IT and analytics are likely to emerge.
The insurance company from the APAC region is planning to create agile teams sourced from three broad streams - first, the people stream focussing on human resources (HR) and employee engagement; the second, a business-enabler platform covering all the functions that enable a business such as operations, digital, research and supply chain; and finally, the customer stream covering anything and everything related to the end-user, be it managing customer assignments, types of products or marketing propositions. Crowd-sourced teams will work on project mode, focussing on customers and deliverables. The idea is to have shared resources instead of a rigid structure.
Though companies have been talking about this kind of flexible structure for some time now, the virus outbreak has increased the urgency and fast-tracked implementation.
According to Poon, though it is hard to generalise about this trend, on a scale of 1 to 10, where 10 is the totally transformed organisational structure and 1 is the status quo, we are currently at level three. Things will become clearer as more and more employees return to work and companies prepare themselves for the road ahead.
What is hard to miss in this journey towards a new business structure and changing executive roles and responsibilities is presence of more technology. For instance, a person in a marketing role is no longer expected to know just the 4Ps (product, price, promotion and place). He should also be tech-focussed and have the ability to use data and remain customer-centric.
Also, it is no longer just about work from home, but is getting to be more about how the team structure should be like. People in the IT sector, who did not want to be quoted, told Business Today about companies' plans to reduce use of real estate by at least 30 per cent and revisit learning, upskilling and training since many of these programmes can now be delivered online.
Learning on the Go
An IT leader with global operations told BT on condition of anonymity that one of the biggest disruptions will be around learning and development, forcing companies to rethink the huge learning infrastructure that they have created to accommodate 25,000 to 30,000 people. The organisational architecture, he says, will be fluid. The recruitment process is itself expected to undergo major changes with rise in gig work. What this will mean is that you can assemble a team from anywhere across the world to come together to work on a solution or a project and then dismantle it after the job is done. Some even argue that changing labour laws in some states, allowing a hire and fire policy, will increase this trend.
Real estate planning will be a new element in companies' overall design plans, more so for the Indian IT sector which, compared to non-Indian companies,owns large real estate. They could face new challenges with only one-third to one-fourth of their employees operating from campuses. In fact, IT giant Wipro's move to hand over one of its campuses in Pune (currently not in use, according to a company representative) to the Maharashtra government for use as a Covid-19 hospital for a year has got some within the IT sector wondering if Wipro will really be needing it back to run a fully campus-staffed operation there after a year. Especially as IT companies, led by TCS, are thinking of having more people operate from home.
If real estate and remote working are going to guide the emerging organisational architecture in knowledge industries, issues around efficient factory operations and intrapreneurial capabilities of team heads are engaging leaders in other industries. Ullas Kamath, Joint Managing Director, Jyothy Laboratories, the FMCG player known for brands like Ujala and Margo, says: "The factory manager today is face of the company and expected to be entrepreneurial enough to manage internal and external people engagement. All this to ensure safety of the workforce while driving efficiencies but being mindful of social distancing needs." Kamath expects changes in roles and responsibilities to some extent based on abilities that people have demonstrated during the Covid crisis. A number of new roles are also expected to emerge, especially those linked to technology. "Newer roles will emerge around data analytics and mapping of consumer behaviour in the post-Covid world to get a better grasp of how the consumer will behave with the brand, and use that to launch products and position brands accordingly," he adds.
But one of the most crucial skill set needed to quickly adapt to the emerging environment is centred around intrapreneurial attributes - the ability to work like an entrepreneur in a large organisation. India's pioneer in denim products, Sanjay S. Lalbhai, Chairman and Managing Director of Arvind, the $1.5-billion garment conglomerate, says: "The crisis is unprecedented. A lot of fundamental things will change. Everyone will have to look at different models to adapt to this new environment. There will be more automation, digitisation and robotics, but more than that people will need to become more entrepreneurial."
And entrepreneurial roles will be expected at crucial points - be it a store manager or a factory manager. Retail industry veteran B.S. Nagesh and Founder of public charitable trust TRRAIN (Trust for Retailers and Retail Associates of India), says: "We will see entrepreneurship as you will have to allow stores to take own decisions as store managers are more aware about local laws and zones and hotspots."
"Different zones will behave differently depending on the catchment area. So, retailers will have to allow their store managers to operate very differently than in the past. That is one big change. Online and multichannel will play a bigger role. There also, the role of a store manager in running an omnichannel business will expand," adds Nagesh. He says, "Technology will morph into engineering and digital. So far, the recourse has been only enterprise resource planning (ERP). Now, we will need multiple interfacing at the customer end and, therefore, many ERP and management layers are likely to come down, which in any case was happening since last year, a slowdown period. But it will get accentuated now."
The big question this will raise is around what will happen to the supply chain? "If apparel shops do not do well, what happens to tailoring, fabric, yarn and cotton growers, starved of working capital?"
New Business Alignments
If questions around back-end and supply chain realignment matter, so do business networks that are emerging on the front-end. Harbir Singh, Co-director of Mack Institute for Innovation Management, Wharton School, University of Pennsylvannia, US, whose areas of interest include corporate governance and corporate restructuring, says: "Virtualisation of the corporation is the way forward. The focus of most will be not to waste the crisis but use it to invest in building networks and relationships."
"In times of deglobalisation and rise of nationalism, talent with international perspective will be in demand. This will help companies identify where to direct resources and which partnerships to build to ensure greater global visibility and higher local competitive advantage for both homegrown and global brands," he adds.
According to him, management teams will use this opportunity to invest in innovation. He cites the example of Microsoft, which has announced plans to invest more in artificial intelligence and Cloud. The power of networks and drive to seize new opportunities in last-mile delivery will see organisations realign themselves. Uber, for example, despite having its own food delivery platform Uber Eats, is attempting to acquire Grubhub, apparently driven by the belief that the time to market in the last-mile delivery is a major opportunity, thereby building synergies and dominance in the food delivery business.
In this architecture where business alignments will be made, Singh of Wharton School feels professionals who can stay ahead in the game will be in demand, apart from Internet security and data privacy experts who can ensure safety to virtualised corporations.
Market Dynamics to Drive Changes
New opportunities notwithstanding, immediate concerns still centre around the extent to which current businesses will be affected. A. Vellayan, Member of the Murugappa Group and its former Chairman, says: "What is still unknown in this journey towards a new organisational architecture is the nature of consumer behaviour post-Covid. In that scenario, it boils down to what organisations can afford, and the picture will get clearer only after the lockdown is over and one can see how demand moves."
"Based on that, people may look at right-sizing the organisation," he adds. There is, however, "no clarity as yet as to what level of capacity utilisation industries will gain, though as things stand, some sectors such as agriculture will be less affected, while others like auto and finance will see a greater impact".
Sector and Job Roles
According to an IT industry leader and a leading consumer business honcho, sectors such as metals, minerals, mines and even utilities will find it difficult to change their organisational architecture since most of them are tied to specific locations.
But manufacturing could see new patterns, according to one of the leaders quoted above. "We could get to automisation of processes. Today, manufacturing happens only at one place. Tomorrow, with the help of 3-D printing, we can have multilocational manufacturing, guided more by the location of the available talent or raw material, and assemble parts at point of sale. Things need not be done only in a certain fashion, by a certain set of people, at a set location and distributed only in a certain manner. All of these will change."
A new element of fungibility is also likely to creep in. For instance, someone looking at international sales may not be loaded with work now and so can look at other things. Campus hiring and onboarding of new talent, especially freshers, may see some slowing down as they may not be immediately productive and will need buddies, induction, acclimatisation and handholding to be effective. Existing people within the organisation could also take up additional responsibilities, strengthening the business structure.