The COVID-19 recovery will be digital: A plan for the first 90 days

McKinsey 14 May 2020 12:00


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By now, most C-suite executives have led their companies to digitize at least some part of their business to protect employees and serve customers facing mobility restrictions as a result of the COVID-19 crisis. As one CEO of a large tech company recently stated, “We are witnessing what will surely be remembered as a historic deployment of remote work and digital access to services across every domain.”

Indeed, recent data show that we have vaulted five years forward in consumer and business digital adoption in a matter of around eight weeks. Banks have transitioned to remote sales and service teams and launched digital outreach to customers to make flexible payment arrangements for loans and mortgages. Grocery stores have shifted to online ordering and delivery as their primary business. Schools in many locales have pivoted to 100 percent online learning and digital classrooms. Doctors have begun delivering telemedicine, aided by more flexible regulation. Manufacturers are actively developing plans for “lights out” factories and supply chains. The list goes on.

Second, as the economy lurches back, demand recovery will be unpredictable; uneven across geographies, sectors, product categories, and customer segments; and often slow to return to precrisis levels. While a few sectors will face unusually strong demand, leaders in many industries must deal with periods of structural overcapacity. Those companies face the painful need to rightsize the cost base and capital of their operations, supply chains, and organizations overall and to transition their fixed costs to variable costs aggressively wherever possible. Complicating matters for leaders as they grapple with ways to deal with an uneven recovery is that historical data and forecasting models will be of little use to predict where pockets of demand will emerge and where supply will be necessary. New data and completely rebuilt analytical models will be essential to steer operational decisions.

Refocus digital efforts toward changing customer expectations

In the next 90 days. CEOs should ask their business leaders to assess how the needs and behaviors of their most important customers have changed and benchmark their digital channels against those of their competition. This information should form the basis of a renewed digital agenda that should take no longer than 30 days to establish.

As companies construct these models, analytics teams will likely need to bring together new data sets and use enhanced modeling techniques to forecast demand and manage assets successfully. One automotive-parts supplier, for example, developed a forecasting model that incorporated previously unused third-party data. The model will help the supplier spot potential issues with its own suppliers’ ability to deliver needed items, offering a chance to reach out to its suppliers to work out logistics or find another source.

In the next 90 days. During the first sprint, identify the business areas where digital-execution velocity is needed and map out plans for digital factories to support them. In parallel, assess where remote work models could unleash productivity benefits. These two lenses should set the table for targeted changes to the operating model. In the second 30-day sprint, design the new models with consideration for staffing level, expertise mix, governance, and operating procedures. Finally, in the third month, implement and operationalize the new designs. We know from experience that three months is sufficient to implement and scale a digital factory. We have also seen banks, pharmaceutical companies, and insurance companies pivot entire field forces to a remote model in a few weeks.

Leaders who want to succeed in the digital-led recovery must quickly reset their digital agendas to meet new customer needs, shore up their decision-support systems, and tune their organizational models and tech stacks to operate at the highest effective speed. In other words, C-level executives must point their digital firepower at the right targets and quickly execute against them. It’s essential to set these targets at the outset and regularly measure progress against them. Achieving parity or better across digital channels to win the revenue race, rebuilding the most critical decision-support models, and doubling development velocity are goals that are all within reach. The 90-day plan will help organizations get there.

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