Beyond the health crisis – Positioned for success?
Blog: Capgemini CTO Blog
If you look beyond the health crisis today and focus on the renewal and renaissance required for the success of tomorrow, you’ll notice there are three very similar drivers. Albeit for different reasons, and with different means available, these drivers are: position, platform, and proficiencies.
In this, the second article of my multi-part narrative on the modern-day enterprise, I’ll be focusing on the importance of Position – because gaining an intimate understanding of the strategic context in which the enterprise is about to embark is paramount. However, let’s be clear that this is far different than simply defining with precision what the future holds. Rather, it is knowing, sensing, and understanding the strategic landscape and market dynamics in line with how the enterprise operates.
So, without further ado let’s take a look at the three key dimensions of positioning the enterprise: stakeholder relevancy, competitive landscape, and governance.
Assessing stakeholder relevancy
Who are the stakeholders of the enterprise in the future state, what are their expectations, and how do we establish and maintain relevancy with each? Post-crisis, be assured the attitudes, behaviors, and engagement preferences of all enterprise stakeholders – internally and externally – will all be in extreme transition.
Consider customers, suppliers, partners, employees, investors, and the communities in which we operate. What is the strategic intent and fundamental purpose that the enterprise serves in the future state for each stakeholder group? What value do they add to the enterprise and how do we ensure we can continue to be the desired provider of this value?
For example, at the highest level, is maximization of shareholder value the dominant raison d’etre? And is there a corporate social responsibility agenda that has served a “feel good” purpose, rather than a sincere commitment to true charitable and/or social causes? Consider the admirable work of Pehr Gyllenhammar, former chairman and CEO of Volvo, who delivered socially conscious change and opened the door to stakeholder capitalism – without sacrificing profit. In a recent article written by Gyllenhammar himself, he commented:
“A number of influential CEOs have pledged to shift their company’s purpose to stakeholder capitalism. But to prove they are really committed to change – and not just affixing their signature to a statement of lofty aspirations – they must embrace a system where they are held accountable for their stewardship. And they must get shareholders on board to keep them in check.”
Customer loyalty today is transient at best. And customers’ demands and expectations are not only increasing exponentially alongside advances in technology, but they’re continually evolving too. Add to this the fact that today’s employee base spans multiple demographics and will soon be dominated by millennials and Gen Zs, and it’s clear to see that enterprises need to keep sight of these rapidly moving targets.
With this in mind, does a global supply chain optimized primarily for cost and efficiency truly serve the agility and velocity demands of the enterprise?
What is the competitive landscape?
Here lies one of the most essential justifications for enterprise renewal and renaissance. If, so far, you’ve been focused on returning to “business as usual” and restoring a steady footing, then you need to consider the competitive landscape.
Perhaps not all, but certainly some of your competitors will be adopting a much more aggressive posture in re-imagining and renewing their enterprises. These are the competitors that “get” what this period is all about and will pursue it relentlessly. So, be sure to take note of the following aspects to prevent the competitive gap from widening:
- Strength in numbers
Consider the weakest organizations among your peer group. These will be targets for consolidation, whether to gain market share, talent, IP, or to eliminate the competition. How will you fare in this competitive context?
- New kids on the block
We’ve seen over the past decade and a half, numerous startups emerge on the edge of our market boundaries and consume our market share piece by piece. Some of these remain in the shadows until it’s too late to counter them. Others burst into the landscape, taking advantage of periods of economic decline – the likes of Alibaba, Uber, and Airbnb did just this. How will you react?
- Cross-industry collaboration
These times are conducive to accelerating the cross-industry or adjacent-industry plays that began pre-crisis. Think of Amazon, Apple, and Google. With strong balance sheets, notable cash positions and exceptional valuations, what will prevent them from continuing to pursue entirely new market segments as a means to sustain growth – and where will this put you?
- The Chinese competitive threat
The IMF has recently noted its expectations of a 3% contraction of the global economy in 2020. However, China is expected to grow 1.2% in 2020 and 9.2% in 2021, making it the top performer among major economies – continuing to reach a larger share of the global economy, while closing the gap with the West in terms of GDP per person. This accomplishment, combined with the head start China gains in terms of its rebound from the current crisis, creates an increasing competitive threat that needs to be addressed. Are you prepared?
Redefining and realigning governance
If we use boards and the C-suite as a proxy for governance, how well aligned are these entities to the strategic contexts of the enterprise today and tomorrow?
An overwhelming majority of boards are comprised of investor representatives and enterprise management. Independent directors tend to be nominally represented. And most board members today have very little experience in leading or operating global enterprises, especially with even a modicum of experience in dealing with the challenges faced today and in the foreseeable future.
Similarly, most C-suite executives rose in enterprises built for efficiency and strong cost management. Innovation, transformation, digital fluency, talent diversity, and VUCA (volatility, uncertainty, complexity, and ambiguity) environments are quite foreign to them. Therefore, boards and C-suite executives must truly be “invested” in governance because it requires more than just intent and ambition. It’s time for real leadership in the following areas and beyond:
- AI or EI?
Mindset, will and skill must be internalized and become representative of the strategic context and stakeholder composition referred to earlier. For example, while it’s easy to pay lip service to the buzzwords of the moment, such as AI and automation, how many enterprises are talking about EI (emotional intelligence)?
While there’s no doubt that AI is transforming our world and blurring the boundaries between tasks performed by machines and humans, EI offers some recourse for both employees and employers. In fact, 74% of employers and 58% of non-supervisory employees are convinced that EI will be a key requisite for success in the years to come, offering concrete benefits to all.
Why, then, do only 17% of organizations offer EI training for non-supervisory employees? We recently decided to find out and you can see the outcome in this research report published by Capgemini.
- Remote working
Although remote working is not a new phenomenon, this current crisis and the way we deal with it is bound to fundamentally recast the leader-employee relationship. So, how do enterprises ensure they lead effectively in a virtual environment? It requires a step-change in behaviors and mindset for both leaders and employees. It requires trust, accountability, empathy, authenticity, creativity, and care. It requires things that matter. If you’re interested, Capgemini has some valuable pragmatic tips for real leadership in virtual organizations here.
- Diversity and inclusion
In the past, diversity and inclusion have proven fleeting concepts at best. Diversity provides an opportunity for inclusion but does not guarantee it. And think about board diversity. In many countries and institutions, we largely require legislation, regulation, and compliance to achieve minimal levels. However, if it was truly embraced as a core belief and value, and as something that could positively impact performance, why do we need these external dictates?
As we consider the future, enterprises need to immediately leapfrog their current diversity posture. In the UK alone, 95% of students think diversity and inclusion is important in the workplace according to recent research. And more than three-quarters (79%) either agree with or don’t object to companies hosting recruitment events deliberately aimed at women, BAME or undergraduates from lower socio-economic backgrounds. Our governance-level positioning must reflect this.
What’s more, in addition to embracing gender, racial, and sexual orientation diversity, we must include experience and proficiency diversity too. We must be sure to gain the scarce, but mandatory, expertise of digital transformers and operators, innovators, technologists, business modelers, and ethicists to inform, challenge, guide, monitor, mitigate broad risk, and ensure trust as our enterprises renew.
While I leave you to consider these points, I’ll remind you to look out for the next article in this series, where I’ll be looking at the concept of enterprise as a platform – and whether it can help organizations step up to the agility, velocity, and transformational demands of the market today.
Read the complete blog series on ‘Beyond the health crisis’ by Lanny Cohen here.