Beyond coronavirus: The path to next normal’ A brief on the article by K Sneader and S Singhal

The first one is from an article ‘Beyond coronavirus: The path to next normal’ by Kevin Sneader and Shubham Singhal

What will it take to navigate this crisis, now that our traditional metrics and assumptions have been rendered irrelevant?

According to McKinsey companies need to act across five horizons from crisis to the next normal i.e. Resolve, Resilience, Return, Reimagination, and Reform

Resolve

Address the immediate challenges that COVID-19 presents to organisations workforce, technology, customers and business partners

A toxic combination of inaction and paralysis remains, stymying choices that must be made: lockdown or not; isolation or quarantine; shut down the factory now or wait for an order from above.

Determine the scale, pace, and depth of action required at the state and business levels.

Resilience

Address near term cash management issues and broader resilience challenges during shutdowns and economic knock-on effects. A health crisis is turning into a financial crisis as uncertainty about the size, duration, and shape of the decline in GDP and employment undermines what remains of business confidence.

Organisations need to tackle near-term issues of cash management for liquidity and solvency and broader resilience plans as the shock begins to upturn established industry structures, resetting competitive positions forever, they will need to make difficult “through cycle” decisions that balance economic and social sustainability

Return

Create a detailed plan to return the business to scale quickly as knock-on effects become clearer.

Most industries will need to reactivate their entire supply chain,

The weakest point in the chain will determine the success or otherwise of a return to rehiring, training, and attaining previous levels of workforce productivity.

Leaders must, therefore, reassess their entire business system and plan for contingent actions in order to return their business to effective production at pace and at scale.

Reimagination

Imagine what the next normal can look like; what a discontinuous shift looks like and implications for how organisations should reinvent

Institutions that reinvent themselves to make the most of better insight and foresight, as preferences evolve, will disproportionally succeed. The crisis will reveal not just vulnerabilities but opportunities to improve the performance of businesses.

Leaders will need to reconsider which costs are truly fixed versus variable

Opportunities for technology adoption will be accelerated by rapid learning about what it takes to drive productivity when labour is unavailable.

Reform

Be clear about how regulatory and competitive environment may shift.

Business leaders need to anticipate popularly supported changes to policies and regulations as society seeks to avoid, mitigate, and preempt a future health crisis of the kind we are experiencing today.

Policies on critical healthcare infrastructure, strategic reserves of key supplies, and contingency production facilities for critical medical equipment will all need to be addressed.

Managers of the financial systems must now contend with strengthening the system to withstand acute and global exogenous shocks, such as this pandemic’s impact. Educational institutions will need to consider modernizing to integrate classroom and distance learning.

There will be a lot of social innovations and experiments, ranging from working from home to large-scale surveillance. With this will come an understanding of which innovations, if adopted permanently, might provide substantial uplift to economic and social welfare—and which would ultimately inhibit the broader betterment of society, even if helpful in halting or limiting the spread of the virus.

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