Here is an overview of the changes the new normality is bringing at the top corporate levels of business. Take a look!
In the aftermath of the COVID-19 crisis, it has become clear that while many companies have failed, others have survived. What is the difference? For answers, we can look at how corporate directors are viewing the “new normal” in four key areas: governance priorities, business continuity, customer expectations, and funding.
More than six months after the first COVID-19 case was reported, businesses that aim to survive the crisis are having to come face-to-face with a new normality. The pandemic has not only brought suffering as millions face health challenges but it has also exposed the weaknesses in the economic system that has prevailed until now. It was founded on the notion that business had only one social responsibility they must think about: to make a profit for the owners and shareholders.
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That belief, captured and crystallized by Nobel economist Milton Friedman, is being tested as many America’s CEOs and corporate boards rethink their purpose during the aftermath of the global outbreak of COVID-19. In all four key areas mentioned above, the crisis has made an impact. It is the corporate boards that recognize the new normality and transform themselves accordingly, who will be the ones who survive. Here is a closer look at the changes the new normality is bringing at the top corporate levels of business.
Governance priorities are changing
The pandemic is unprecedented in our lifetimes, in terms of economic impact, complexity, and scale. Supply chains are broken, the stock market is volatile, and uncertainty is everywhere. Even before the pandemic struck, trust in businesses was eroding — all against a backdrop of increasing economic inequality. To build trust and address income inequality, some corporate leaders had already redefined their mission, incorporating basic components of corporate social responsibility.
That has continued for about a decade, until now, only a handful of Fortune 500 CEOs still focus mainly on profits without any regard to social goals. Clearly, the tide was already turning toward a friendlier, more human-centered corporate mindset. But now, with COVID-19 changing the landscape for the foreseeable future, that drive has been accelerated. How corporate boards and business leaders respond to the crisis will define them for many years to come. As a result, governance priorities are changing.
Corporate governing boards must prioritize preparedness for “black swans” like the pandemic because COVID-19 will not be the last of them: leaders are also facing a possible recession, for example, or increased frequency and severity of cyber attacks.
Directors must learn to be more creative in their thinking, to imagine the unknown, and help their companies become resilient so they are ready for whatever the future brings. This can take many forms, such as revising processes, increasing cash reserves, revising security standards and practices, and introducing new norms for corporate governance.
Business continuity gains attention
The approach and methods of business continuity will shift, also. Even small and medium-sized organizations will see the value in establishing business continuity plans, which in the past were reserved mainly for enterprises.
More priority will be placed on beefing up cash flow and cash reserves as a hedge for future crises. Business risk will take front and center at executive meetings, as companies will look for ways to reduce risk by updating systems and hiring more risk managers.
Another component of business continuity is decentralization — of IT and other resources, especially, as cloud-enabled products and services become more widespread and more business critical. Operations Technology (OT) will come online, which calls for new security systems and networking protocols. DevOps will rise to prominence, too, as organizations restructure for agility and efficiency.
Customer expectations are key
Now more than ever, paying attention to customer expectations will be a key to survival in the post-pandemic, human-centered world. Expectations have shifted dramatically since lockdown, with hiring managers more open to new working arrangements, including replacing onsite resources with advisory and consulting arrangements. They will also be more open to nearshoring.
To minimize risk, remote implementations will take precedence over those that require travel, especially in IT. Managers will lean toward a willingness to partner with service providers rather than hire in-house teams for a variety of business functions like cyber security, marketing, development, and more.
Business funding has a new paradigm
There is so much in the news about the economic impact of COVID-19 — jobs lost, businesses closed, bankruptcies — but what is hardly ever mentioned is how business funding has changed, too. Until there are signs that an economic recovery is well underway, Series A funding may be scarce. But there may be opportunities found elsewhere, such as in mergers and acquisitions, which can open up new channels and capabilities for existing companies that need to expand or diversify.
Startup funding will be more plentiful for lockdown-related categories like delivery services, home entertainment, fintech, and cybersecurity to serve, entertain, and secure the home networks of the legions of remote workers now working from home. Assessing possible recipients of venture capital funding will take on a new meaning with new, post-crisis criteria for businesses who want to qualify.
The new normal for businesses: a recap
The global pandemic has brought economic pain in addition to physical and mental suffering due to sickness and loss of life. Businesses who aim to emerge stronger than before are learning that, in the post-pandemic climate, recovery is closely tied to change: change of business models from a “shareholder primacy” model to one that is more forgiving, which considers the welfare of the people who are part of the business landscape, the state of the environment, and other important conditions and stakeholders that have largely been left behind for several decades.
For businesses, surviving the pandemic may mean creating an atmosphere of accountability that recognizes new priorities: in governance, business continuity, customer expectations, and funding. This will help businesses become more resilient, as they accelerate digital transformation and become more flexible for the new normal and for whatever crises they may encounter in the future.
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