For large incumbent companies, 2020 began much like any other year. In pursuit of growth, executive teams focused on reducing the complexity and bureaucracy that had crept into their companies over time and slowed them down. They hoped to take their companies’ performance to the next level, but in unfiltered moments, some wondered if they had the organization they would need to get there.
Since Covid-19 hit, however, many of these leaders have been amazed by the response of their organizations and people. Employees are demonstrating agility, innovation and resilience. Leaders are effectively managing the urgency of the crisis while also preparing for the longer-term recovery. Companies have redoubled their focus on customers, employees and their local communities.
In short, incumbents have behaved in this crisis as what we call “scale insurgents.” They are leveraging the benefits of size while at the same time displaying the scrappiness more commonly associated with start-ups. In the US consumer products sector, for example, established companies have taken advantage of their supply chain infrastructure, retailer relationships and consumer brand confidence to capture a larger-than-normal slice of category growth this year. Prior to Covid-19, insurgents garnered 35% of sector growth while representing only 3.3% of the market. Since the pandemic, however, their share of sector growth has dropped to just 5% as incumbents have leaned in.
While employees have had to adjust to drastic changes in the ways they work, they nevertheless report feeling energized by the fact that their companies are acting like start-ups. They are putting purpose at the forefront, focusing on progress over perfection and innovating with the consumer in mind. Overall, employee satisfaction as measured by the Net Promoter SystemSM has increased.
Of course, many of us are exhausted, and sometimes it feels like chaos—but the good overall results are motivating executives to take a close look at how their organizations have responded to the pandemic and think proactively (see Figure 1).
Workers see companies changing for the better since Covid-19
In the past few months, executives and managers have drastically changed how they work. They have focused on what’s critical and eliminated what’s of little value. This has empowered their teams to become more agile and effective. Many have organically adopted agile methods like holding daily stand-ups, working in fast cycles and creating minimum viable products with customer feedback. All of these challenge slower, traditional waterfall approaches.
Remote work has also tested how managers engage with employees, access talent and create corporate culture. And in their response to communities in crisis, many organizations have discovered a deeper purpose.
Four steps to accelerate progress
Executives hope to capture and nurture the agility, speed and focus their organizations have displayed during the crisis, using it to accelerate progress and emerge from the pandemic stronger. To do this, forward-thinking CEOs are focusing on four Covid-19 lessons to recharge their organizations for the future.
Make purpose the imperative. To keep employees inspired and motivated, managers are working to reveal, champion and scale behavior and decisions that prioritize the company’s deeper purpose.
Prior to the crisis, only three in ten employees could identify their company‘s purpose. It was often too generic, lacking depth and meaning, and not clearly tied to corporate expertise. All too often, it simply was not “lived” in key moments.
For many, Covid-19 has changed that. Employees have noticed companies expanding their sphere of purpose, and a majority report feeling proud of their company’s support of the community through the crisis. Responding to our recent survey, 64% of employees said they were proud of the actions their company has taken to support the broader community, and 75% were proud of how their company supported its employees.
After the onset of the pandemic, and facing a big drop in industry sales, Ford Motor Company halted its automobile production and asked the question “How can we help?” Ford rapidly restructured its assembly lines to manufacture tens of thousands of ventilators for Covid-19 patients, which it is selling to the government at cost―a way to do good while riding out a sharp downturn. In many other categories, manufacturers and retailers have come together with the singular purpose of getting product to customers in need.
Tap the advantages of a distributed workforce. Companies can increase their capabilities by broadening their talent pool, accessing talent wherever it is, and leveraging remote collaboration, ecosystem partnerships and the gig economy.
This was already true before Covid-19, as digital technology and new business models supported the emergence of more fluid talent models. These new approaches to talent loosen the historical connection between work and location and better match the aspirations of people in their 20s and 30s. They are flexible and provide continuous access to the newest skills, often incubated outside the company’s walls. As jobs decouple from location, talent pools open up. Companies will increasingly find the skills they need in the ecosystem of partnerships they have formed in recent years.
The pandemic has drastically accelerated distributed working, revealing it to be a credible alternative even in situations in which it would have been inconceivable only a few months ago. According to Bain & Company research, since Covid-19, 72% of white-collar employees have been required to work remotely, an experiment in distributed work unparalleled in modern times. The sudden mandated migration of so many has forced companies to manage talent in new ways, and they are―perhaps to their own surprise―succeeding at it. The challenge will be to find ways to continue to do it well, sustainably.
Employees are open to the idea. Before the pandemic, only 14% of white-collar employees preferred to work remotely three or more days per week. Now that they have lived the experience, 41% say they are likely to accept a remote position in the future.
Make the most of frontline managers. Frontline managers are best equipped to help frontline workers, who in turn can best meet the needs of customers. This is not a new insight, but the large number of companies acting on it is. Some 62% of respondents to our survey report that decision making has improved in their organization since the crisis hit and that more of it has moved to the front line. Rather than simply provide direction based on experience and expertise, executives are clarifying objectives and priorities, and then helping employees execute them and realize their own potential. That includes removing roadblocks so frontline managers can make better decisions faster.
After the pandemic forced Chinese cosmetics retailer Lin Qingxuan to close 40% of its stores, the company redeployed over 100 beauty advisers from retail stores to become online influencers. They quickly expanded the brand’s digital presence, hosting livestreamed sessions to recommend products for sale on e-commerce channels. On Valentine’s Day, during a livestreamed shopping event, one adviser’s sales in just two hours equaled that of four retail stores. The company’s February sales climbed 120% over the prior year’s.
Embrace agile at scale. Nearly three-quarters of employees surveyed report that their teams are working with greater agility. Teams are prioritizing better, embracing the concept of creating a minimum viable product and then improving on it, and doing more cross-functional teaming. Agile ways of working nurture faster decision making and a focus on the customer that will foster innovation.
During the crisis, use of agile tactics has been ad hoc (or sporadic), but to really capture the full value over time, it needs to be systematic. By formally embedding agile rituals and routines, and implementing agile principles in a more structured fashion, companies can minimize some of the chaos of combining old and new ways of working, further increasing the metabolic rate of the organization.
Although some companies were hesitant to use agile in the past, their experience during the pandemic has given them faith that they can successfully adopt pretty significant shifts in their ways of working. As a result, experimenting with persistent and project-based agile teams has risen to the top of many executives’ agendas.
Moving forward stronger
Companies are at an inflection point. When the urgency of Covid-19 subsides, some will migrate back to familiar, and often bureaucratic, patterns and behaviors. Others will take their pandemic lessons to heart and use those insights to recharge their business.
The companies that will thrive have learned from the natural experiments of the crisis and come to understand that enduring positive change is within reach. Executives can fight against backsliding by focusing on the four areas outlined above, using them to permanently embed in their organizational DNA the extraordinary behavior and action sparked by the crisis.