How COVID-19 is redefining the next-normal operating model

Here is an excerpt from an article written by  Gregor JostDeepak MahadevanDavid Pralong, and Marcus Sieberer for Harvard Business Review and the HBR Blog Network (December 2020). I went back and re-read it in light of what has — and hasn’t — happened in the last eight months.To read the complete article, check out the wealth of free resources, obtain subscription information, and receive HBR email alerts, please click here.

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In our experience, a set of common beliefs often helped reassure some leaders that they didn’t really need to dive into these new ways of doing business: the company already operates at great efficiency; large companies can’t possibly move as fast as a start-up; their employees can’t be mobilized and energized quickly; you can’t put customers first all the time. Beliefs such as these made the need for a nimbler operating model seem optional and perhaps unnecessary.Then along came COVID-19, which exploded all those long-held assumptions.
As our colleagues have noted elsewhere, businesses reacting to the COVID-19 pandemic have produced previously unimagined gains in speed and productivity, even as the very nature of their workplace was transformed. Business leaders tell us that the metabolic rate of their organizations has soared. Their companies have accelerated by adopting new ways to work. Boundaries and silos have been removed; new technology has been adopted quickly, delivering digital products that customers suddenly needed; decision making has accelerated and been pushed further down in the organization. Leaders have spent more time in direct connection with teams, while teams of cross-functional, high-caliber talent have assembled and then reformed to address the company’s—and its customers’—most critical needs. The revised employee value proposition (such as more flexibility and less commuting) has given HR the ability to cast a wider net on talent. The spread of empowerment throughout the company, born of necessity, has created a new set of potential leaders.CEOs are actively taking advantage of this particularly malleable moment, where new ideas are becoming the foundation of new ways of doing business, to reinvent their companies in ways that simply make more sense for today’s—and tomorrow’s—economy.The result: COVID-19 is shaping a new kind of operating model. Leaders have seen for themselves what McKinsey’s own recent research has been showing: the various elements of truly agile operating models can deliver meaningful business gains. Many companies have tested aspects of such models before and during the crisis with convincing results: total clarity on priorities and goals, nimble resource allocation, and reduced handovers can boost productivity by 20 to 40 percent. A genuine customer orientation with fast, iterative feedback cycles can raise customer-satisfaction scores by 30 points. And people working with a clearer purpose and greater autonomy to make decisions will drive up employee-engagement scores (see sidebar, “How operating-model reinventions drive better results”).

In this article, we highlight four key pandemic accelerations that are now being incorporated into the emerging operating models of leading companies. We also look at the process by which companies can evaluate the changes they made during the pandemic, decide which shifts they want to make permanent, and embark on a broader transformation to make this speed and efficiency the standard going forward. The exigencies of the pandemic have given many companies a tangible experience of operating at unprecedented speed (exhibit). Companies that don’t lean into this emergent shift run the risk of being leapfrogged by those that do understand why a swift, nimble, and versatile operating model is best and necessary for uncertain times like these.

COVID-19 is shaping a new kind of operating model. Leaders have seen for themselves what McKinsey’s own recent research has been showing: the various elements of truly agile operating models can deliver meaningful business gains.

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Here is a direct link to the complete article.

Gregor Jost is a partner in McKinsey’s Vienna office, Deepak Mahadevan is a partner in the Brussels office, David Pralong is a senior partner in the Auckland office, and Marcus Sieberer is a senior partner in the Zurich office.

The authors wish to thank Jonathan Green, Alberto Montagner, Charlotte Relyea, Guilherme Riederer, Daniel Rona, Lars Schor, and Patrick Simon for their contributions to this article.

This article was edited by Rick Tetzeli, the editorial director of the McKinsey Quarterly.

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