Business Productivity Ahead of The Covid-19 Pandemic
Last week our partners at the Institute of Directors IOD, published a Directors’ Priorities List which shows the support available to UK businesses under Lockdown. Whilst being quite helpful, it somewhat misses the point. If it is aimed at the CEO, the list really should start and end with leadership; fast, tough leadership decisions to survive, with what the operational model is going to look like post-COVID-19 and how do you turbocharge business productivity?
With numerous dire warnings about UK GDP, we suggest the number one priority is leading with business productivity central to your crisis management plan. According to the management consultants McKinsey & Company, UK business productivity is 40% behind that of the United States, and 20% behind that of Germany with the root cause of this gap being low labour productivity, driven by a lack of exposure to global best practice, combined with a lack of competitive pressure and poor skills. This could seem extremely demoralising, but here maybe lies our opportunity; can we feed-off the COVID-19 crisis to shake up our businesses, close the gap and turbocharge?
Operating Model Changes and Its Impact on Business Productivity
None of us can predict the economy, or how our supply chains will be directly affected, so we should now make plans assuming either a small, medium, or significant dip in business activity, and each scenario should be realistically modelled. Central to these models should be the operational changes needed that will increase business productivity, and which are largely similar to those before the COVID-19 era:
- Remove complexity by reducing product/service range.
- Reduce the management ‘layer-cake’ and build faster decision-making protocols.
- Invest in technology as the hub to your business, not just a spoke.
- Create a more flexible supply chain model.
- Create new approaches to supplier management and selection.
- Disperse your workforce supported by technology as an enabler.
- Increase the use of staff collaboration tools to create a community spirit.
- Invest in central enterprise resource processes, planning and systems.
- Standardise the ways of working, backed by better tracking and skills training.
Through this, the survivors will be those agile businesses with strong leaders who keep the long game in play and business productivity central to their survival. As one of those leaders, you should strive to see beyond short-term operational efficiencies and must clearly understand how to retain competitive advantage through business productivity. Through all of this, simple common-sense leadership questions still apply despite the pandemic.
- Who are your future customers and what new products will they need?
- What is your core intellectual property that will create competitive advantage?
- How can you use technology to positively disrupt and drive efficiencies?
- How can you create a better brand and a customer pull marketing effect?
At the end of the day, your business productivity during and after the Covid-19 pandemic will be determined through a variety of different variables. However, if you take a moment to sit back and breathe, to assess and diagnose any potential problems – present or future – and ask yourself and your business the aforementioned question’s we have put forth in this article, then you will be at the very least in a far better, more prepared position than you were before.
Avondale are EME business advisors. Through our management consultancy, we support growth and scaling up. Through our M&A and corporate work, we secure investment and finance for EME businesses, help people buy and sell companies and enhance shareholder value. We recognise ambitious owners who require ambitious, specialist advisors.