With various businesses operating in a volatile economic environment, technology giants such as Google and Facebook, all the way to smaller local enterprises and multi-generational family businesses are future-proofing themselves in this time of unprecedented turbulence.
Prevailing market pressures have forced legacy companies to relook and evolve their internal business operating systems – the assumptions and protocols underlying how management motivates and applies their human resources – as they seek to build resilience.
With COVID-19 causing tremendous economic loss — JPMorgan estimates lost output at US$5.5 trillion — the cost to developed economies will be similar to past recessions of 2008-2009 and 1974-1975. But there are ways for businesses to survive and even thrive in the aftermath of the current recession; Amazon survived the 2000 dotcom bust and 2008/2009 financial collapse.
Companies that survived these recessions prepared contingencies and reacted defensively. Through navigating reforms in debt, decision making, workforce management, and digital transformation, as well as a healthy cash pile, companies that were sufficiently flexible endured.
How will businesses adapt
To survive this, businesses across sectors are pivoting and innovating, forcing companies to adopt new solutions in the face of market shifts. Young technology enterprises are pivoting and operating with agility, but legacy firms face different challenges.
Legacy companies need to invest in and implement new technologies, given how the younger generation will take over. With industries evolving and the emergence of bionic companies — organisations that meld the capabilities of humans and machines to drive efficiencies and improvements — it comes down to how legacy firms adapt to technological shifts.
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With companies able to access data that grants unique insights into how their customers interact, granting them the tools to build competitive advantages.
The question is, how do these companies future proof themselves? Key factors include identifying and managing risks; developing and reinforcing brand identity through unique identifiers to be distinct in a large market; adopting new technologies to stay relevant and current; as well as identifying key customer needs.
Fundamentally, legacy companies must adapt to keep up with consumers’ changing behaviour. Agility is an essential trait, not a choice.
Companies that decline to adapt have no insurance they will survive, especially if they refuse to be open to external perspectives nor invest in the new tools required for their business context. Gradually, these firms will be overtaken by more adaptable enterprises.
Venture intelligence platform CB Insights reports that in the manufacturing space, consumer technology brands heavily reliant on Chinese manufacturing, players such as Apple, HP and Microsoft, are anticipating production delays and revenue declines.
For instance, on February 17, Apple warned investors that it did not expect to meet quarterly revenue guidance, partially rooted in reduced Chinese manufacturing output.
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Meanwhile, many luxury brands have experienced reduced first-quarter sales, as Chinese shoppers account for a major percentage of worldwide luxury sales; they account for an estimated 40 per cent of global spending on luxury items, according to Jefferies and the Financial Times.
To adapt, these luxury brands need to explore how to augment and automate their online shopping and delivery experience. These will permit them to remain accessible to their customers.
Organisational responses
Companies are redesigning their products and services, as well as creating new items. This is in response to new market demands as various jurisdictions undergo quarantine periods meant to break infection cycles.
For instance, in the shipment visibility domain, France-based Shippeo provides real-time global shipment visibility to retailers and consumer goods brands. This helps businesses to enhance their accuracy in efficiently managing their inventory amid unexpected delays.
Meanwhile, in the autonomous delivery space, Chinese e-commerce major JD.com has employed autonomous delivery vehicles and drones to distribute goods and supplies while minimising human-to-human contact.
And in the manufacturing sector, the current pandemic is driving automation in warehousing and manufacturing technology. Goods production will be less dependent on physical labour, with technological improvements enhancing robotic dexterity, computer vision.
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The potential for human interaction has also strengthened the robotics business case. Collaborative robots (cobots), which interact with humans in workspaces are seeing increased adoption. Large industrial robot makers like ABB and Kawasaki Industries have released cobots for industrial use, with greater robotification of the production process.
The solutions needed now should not involve removing people from the business equation – human capital is critical to business continuity – but means enterprises must build better systems for people to work remotely, on a part-time basis, or when quarantined. Such systems should be intuitive and simple for workers to use.
Organisations also should not have to spend more capital to invent new systems, as they are already out there.
Those organisations which have not made progress decoupling from legacy systems and rely on them for data and information are also unlikely to survive. Elements of the Singapore governments’ response offers a model for legacy enterprises – it has engaged in testing, travel restrictions and the use of mobile technology to track potential infectees – and managing to minimise it relative to worldwide figures and population density.
Moreover, Singapore’s public sector has established mechanisms for doctors to share information; logistics updates for the private sector and public relations; and tried to restrict social media misinformation.
COVID-19 endgame
Adaptation is a necessity for organisations in this uncertainty. Companies will continue to innovate in a post-COVID world; the economic shock and its losses will force companies to cope with new and complex global realities. COVID-19 is arguably the largest digital disruptor for legacy enterprises.
Those businesses which have centralised business functions or require in-situ staff will face challenges surviving. Mature companies cope through maintaining their large market share and leveraging their bigger investment capabilities, though this entails greater risk. Legacy enterprises often aim to be leaders in adapting to changes, but advances in practices and technology may not propagate management or the businesses’ continuum.
Work from home (WFH) arrangements require a different management style versus co-located groups, with workplace flexibility and trust in employees vital to new work models. A lack of this means companies will not be successful.
In a period where many staff must WFH – a move that may become integral to businesses in the future – technologies that permit digitalisation and automation of procurement will serve to minimise time-consuming activities in supply chains. Online e-commerce is one automation procurement solution that highlights this.
According to McKinsey, the broad implications for businesses are shifts in the future of work and consumption. New technologies such as e-commerce and remote-working are gaining traction, with new working and shopping practices likely to become a ‘new normal’.
At RS Components, we have been preparing and innovating for a long time, as the majority of the companies that we work with have been online globally for more than 10 years. The solutions we provide to businesses operate in a way that does not compromise their compliance but complements their requirements, meaning we have been improving our platforms regularly to encourage and propel such behaviours.
With the pandemic exposing how dependence on vulnerable nodes in global supply chains is a vulnerability, massive restructuring in production and sourcing will see shifts to be closer to end-users, as well as greater localisations or regionalisation of supply chains.
But for RS Components with its corporate history, which has developed resilience and future-proofed its practices, it’s simply another challenge in a different age.
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