Building back better
From the start of the COVID-19 pandemic, the word that best characterises the experiences of many businesses is “disruption”. The hangover from the pandemic is still with us as business struggles with supply chain issues. As we say goodbye (good riddance) to 2021, we asked KPMG’s Dan Reinhold to take stock.
Dan Reinhold, Associate Partner, Private Equity Portfolio Services & Value Creation, KPMG
dan.reinhold@KPMG.co.uk
In a time when so many businesses and individuals were faced with so much uncertainty, KPMG spent a lot of time talking to our clients, tracking their views, and monitoring their confidence, approach and responses to the pandemic. It gave us some powerful insights.
At a headline level since the pandemic, we learnt nine in 10 privately owned businesses across the UK have changed strategy; one-in-five fundamentally. These were according to polls at a series of KPMG Private Enterprise and Business Insider ‘Future Proofing’ events earlier this year.
During this time, we convened hundreds of business leaders in the UK to join online discussions, about how their businesses have changed in the last 18 months and their areas of focus for building back better.
The results found that the actions they had taken in response to events since 2020 had permanently changed the way businesses operate with Agility, Technology, and People at the heart of their new strategies.
Agility
The pandemic caused some businesses to accelerate strategic decisions and investments, and we’ve seen success stories emerge.
For many, the global health crisis resulted in them making bold decisions that were probably long overdue.
We heard from one business that “plans that might have stagnated in the boardroom or been put in the ‘too hard to do box’ have suddenly been activated,”. Another said: “Things we might have introduced in time, once perfect, have been brought forward when they were good enough.”
“We haven’t really changed our strategic plan, we’ve just moved it forward five years”, was one client’s conclusion.
Indeed, we heard the assertion every business had moved away from a very set way of working to genuine agility and flexibility.
We also saw a tension between those businesses who were seeking to recover lost time and income to re-establish a more robust platform for recovery, to those who had a strong growth mindset and took the opportunity to pivot towards new operating models. We saw the same in our own business.
Technology
This point hardly needs to be laboured! As the pandemic hit, organisations across the globe quickly sought out technology solutions to enable their businesses to move faster, to respond on the ‘fly’, and build resilience.
For some it’s meant cheaper, easier and faster access to colleagues and clients across the globe; for others it’s a new platform to market products or services.
The challenge however was to successfully integrate this technology and invest with a clear ROI in mind. Many businesses spent a significant amount of time wrestling with the question, “…is the juice worth the squeeze?”.
“It’s been 18 months no one wants to repeat, but it seems many businesses will be better positioned for growth now than before…being alive to new opportunities, and flexible enough to seize them. It’s a defining feature of many businesses that have emerged from the pandemic and are looking to the future with confidence.”
We heard about deploying technology to achieve many different aims, from giving investors access to more opportunities, to more efficiently supporting high volume, low value tasks, allowing people to focus on delivering the greatest value.
The scale of technology adoption has transformed engagement with both workforces and customers, and some of our panellists were clear this has boosted productivity. As customer behaviour has changed so much over the last 18 months, investment on customer-centric technologies is a key area of investment for a lot of public and privately-owned businesses going forward.
The rapid changes in customer behaviour also meant that the data we've been accumulating for the past five to 10 years is less useful in predicting what will happen in more disruptive times. Investment in the right data and analytics tools to collect real-time information will help organisations understand and manage changes as they unfold.
Organisations may not build all of this capability in-house. Instead, M&A appetite over the next three years will be driven by acquiring digital technology to transform their customer experience or value proposition.
A noticeable shift in recent times, for both organisations and customers, has been a growing recognition that Environmental, Social and Governance (ESG) is here to stay. Many businesses will be looking to lock in the sustainability and social gains their companies have made during the pandemic and will want to build on these for the future.
An important step in maintaining this momentum will be gathering insight on what customers and employees think about ESG issues and how they are responding to both the concerns and the opportunities.
With the right technology, customer sentiment can be gathered from the online social discussions that are happening hour-to-hour, day-to-day. Using AI, it is also possible to mix this unstructured data with structured data to create practical insights that are useful for decision making.
People
Our events saw tributes being paid to workforces for pivoting to working from home as well as to new recruits for adding value without ever meeting their new colleagues – and teams working hard to meet new demands.
A rise in the importance of staff wellbeing was cited by many panellists who were alive to drops in morale and had implemented what one called ‘welfare initiatives’ from socials, to yoga and mental health support. Management teams are seeking to adjust behaviours in the face of virtual working, encouraging colleagues to strike a balance between meetings and headspace.
In terms of the future of work, the conversations strongly suggest mass closure of workplaces is not round the corner, rather that business leaders and their colleagues can’t wait to be collaborating in person again.
Quite simply it’s understood people miss one another, despite massive communication efforts. That said, there is a recognition from some they will look again at their real estate strategies to ensure they are fit-for-purpose. Most indicated working practices won’t return to pre COVID-19, but on-site time is valuable and new skills are absolutely essential.
One speaker predicted: “It’ll take 12-18 months for things to settle and we need to listen to what our people want and to take the opportunity to engage them.”
The shift towards location-neutrality will make identifying and addressing skills shortages through recruitment easier, suggested one business. Perhaps this is all most starkly illustrated by a recent KPMG and REC UK Report on Jobs survey showing demand for workers increased has increased as 2021 has moved on, whilst availability for skilled candidates is also falling – creating tension and competition for those with the right qualifications and mindset.
It’s been 18 months no one wants to repeat, but it seems many businesses will be better positioned for growth now than before…being alive to new opportunities, and flexible enough to seize them. It’s a defining feature of many businesses that have emerged from the pandemic and are looking to the future with confidence.
I’ll leave the final word with a speaker who told us: “Nothing’s off the table in terms of our future direction – we’re looking at new markets, new tech, and new staff.”
KPMG’s latest CEO Outlook survey brings some of these issues to life further : KPMG 2021 UK CEO Outlook - KPMG United Kingdom