Accelerating business growth during the coronavirus pandemic
- The coronavirus pandemic has proved to be a make or break moment for CEOs, shifting business transformation with the abrupt arrival of new trends.
- Businesses have been forced to make quick pivots in operations or risk being outdistanced by competitors.
- CEOs are prepared to invest in business transformation but must identify long term risks and recognise the future of the corporate landscape.
The coronavirus pandemic proved to be a make or break moment for thousands of businesses worldwide, with many forced to make quick pivots to align with the changing economic climate.
Pre-COVID, many businesses were apprehensive about implementing dramatic changes, with delayed responses to new imperatives. However, with coronavirus forcefully disrupting global economies, businesses have had no choice but to accommodate new trends and best practices to avoid being outdistanced by their competitors.
Multinational professional services network Ernst and Young (EY) recently conducted a CEO Imperative survey detailing how the coronavirus pandemic has accelerated the course of most corporate organisations. As a result, CEOs must take hold of these new opportunities to elevate their business and promote innovation in 2021 and beyond.
The EY survey categorises businesses into two groups; ‘thrivers’ and ‘survivors’. Thrivers are described as leaning into this fundamental transition, outperforming the survivors in business growth.
How businesses establish their place as a thriver amidst a period of economic turbulence is a valid question. The EY CEO Imperative Series aims to deliver crucial answers to help businesses restructure their organisation to align with the new corporate landscape.
The EY CEO Imperative Study surveyed 305 chief executives of Forbes Global 2000 companies and highlighted concepts to establish sustainable long-term business growth.
The survey outlines the emergence of a new framework for prosperous enterprises centred around human-oriented transformations with the ability to break down barriers, generating innovation and long-standing value.
CEO intention versus execution
Well-coordinated firms can be forgiven if their business strategy wasn’t at the top of their priority list pre-COVID. However, EY’s survey found that the companies that best navigated the short-term impacts of the coronavirus pandemic responded quickly and showed resilient leadership.
Additionally, EY’s research found a strong correlation between current company performance and their business progressions pre-COVID.
34% of the businesses surveyed were classified as being thrivers and showed strong performance before the coronavirus pandemic struck and very quickly leaned into the sudden changes caused by COVID. As a result, businesses that respond quickly in a time of crisis experience accelerated business transformation.
32% of companies surveyed were considered survivors, all of whom were experiencing declining profits before coronavirus and are expected to see continued falling revenues over the next three years due to lack of transformation.
The remaining 34% of businesses surveyed are categorised as maintainers who experienced flat growth pre-COVID and will likely continue to see balanced growth over the next three years.
Whilst this pattern may suggest that businesses are trapped within their trajectory, growth and innovation can be generated by affirmative action from CEOs.
EY’s survey found that 13% of CEOs are considered value visionaries who embrace change and are quick to reframe their organisations when necessary. These CEOs viewed COVID-19 as an opportunity for business change and ambition, with the potential to offer further value to stakeholders.
The remaining CEOs are considered pragmatists who appreciate the need for business transformation to align with the post-COVID landscape but are hesitant to commit to definitive actions.
These two types of CEOs highlight the importance of intention versus execution, with strong leadership and informed business decisions paving the way for innovation and value.
The difference between business thrivers and survivors
EY’s research highlights how the coronavirus pandemic emphasised the trajectory businesses were already on pre-COVID. The divergence in the business journeys between thrivers and survivors is set to widen further. 79% of business thrivers have forecast growth in the next three years, compared to just 7% for business survivors.
58% of business thrivers responded to COVID-19 by enhancing their company transformations that were already in place. As a result, they likely benefited from a clear strategy heading into the coronavirus pandemic, creating less negative impact.
Therefore, business thrivers are already on the path of steady business growth amid COVID due to firm pre-pandemic foundations.
However, 54% of business survivors decelerated their transformations that were already in place instead of focusing on cost reductions. As a result, thrivers are moving forward rapidly, whilst survivors are still in the process of reassessment.
In simple terms, thriving businesses are structured towards their future, while surviving companies only look to protect what they have.
CEOs are prepared for new business risks
Across all businesses surveyed, CEOs demonstrated a willingness to delve into new investments to generate further growth.
61% of companies said they planned to begin a significant new initiative to generate business transformation. Meanwhile, 68% said they planned to bolster their investments in data and advanced technology.
CEOs also stated they would increase their investment in business transformation over the next three years, primarily offset by cost reductions. Almost half of the respondents said these initiatives would be funded by investor support even if their financial performance contracted.
The current trends that are encouraging business transformation are not new initiatives but have undoubtedly become more imperative in the age of COVID. The economic disruption created by the coronavirus pandemic caused businesses to abruptly shift towards digital and virtual operations, highlighting the risk of ignoring new trends and not implementing a proactive strategy.
The priorities of business transformation
In the age of COVID, CEOs are prioritising the human components within their organisations, including talent, leadership and culture.
As a result, greater focus is being placed on reskilling, collaboration and agile working to strengthen the crucial human elements in kick-starting business transformation.
68% of CEOs confirmed there was at least one human-oriented priority within their transformation strategy, whilst 15% said there were two or more human-related priorities.
In addition, CEOs are also prioritising shifts in risk management, innovation, capital allocation, business models and supply chains, all of which are underpinned by human contribution.
The prominence of the say-do gap amongst businesses
Companies must assess long-term risks and take definitive action when accelerating business growth rather than mere considerations.
EY’s research highlights a distinct ‘say do’ gap amongst businesses, suggesting companies are aware of the need to make quick pivots but are unsure how they can achieve these objectives.
Just 26% of CEOs acknowledged climate change as an imperative trend and understood the impact this could have on their companies. The lack of climate change awareness amongst CEOs shows a distinct gap in broad-based risks.
Digital transformation has also become a priority on CEO agendas but remains challenging given that technology is continuously advancing. As a result, business technology focused transformations must be constantly reviewed.
Additionally, CEOs highlighted substantial gaps in their company’s ability to assess data and generate value from the results meaningfully. For example, just 34% of CEOs said customers trusted their business’ data handling abilities. This gap hinders many company priorities, from restructuring business models to supply chain visibility.
Diversity and inclusion
Cultural shortcomings are also a significant hindrance to business objectives, with just 44% of CEOs claiming to have an innovative approach within their organisation. Meanwhile, 32% of CEOs said their mid-level management shared their business purpose and visions. Just 28% of CEOs also said they implemented diverse and inclusive teams across their business.
These statistics suggest that CEOs generally prioritise competent decision-making rather than implementing diversity and inclusion into the workplace.
More businesses claim they will develop and implement ecosystems, though EY’s survey revealed only 47% of CEOs confirmed they were investing in this transformation.
Business ecosystems are a network of organisations, including suppliers, customers, and government agencies, to create a constantly evolving relationship. However, only 31% of CEOs said external ecosystems were currently part of their business strategy.
The structure of the future enterprise
The aim of many CEOs when hastening their business transformation for the future enterprise is to improve agility, innovation and provide long-term value to their customers.
To meet these objectives, companies must keep human-centred initiatives at the forefront of their business strategies with the intention to drive customer and stakeholder value.
The future enterprise will rely on internal and external ecosystems to drive collaboration and demonstrate essential leadership, which will be structured to become more agile.
Adjusting to the future enterprise
Becoming a thriving business in the future enterprise comes down to closing the gap between intention and execution, prioritising technology and innovation.
Businesses can elevate growth by adopting the thriver or survivor mindset, considering the future of their company and not just protecting existing assets. Thrivers are not afraid to ask uncomfortable business questions to challenge the status quo of their industry.
Developing a solid plan of action will help businesses address gaps within their organisation from operations, finance and company culture.