Next-generation operating models for the next normal

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Physical distancing, working remotely, travel barriers, and the psychological impact of isolation have changed the behaviors of stakeholders in every organization, creating unexpected challenges. While it is too early to predict the long-term outcomes and trends prompted by the COVID-19 pandemic, the most likely scenarios suggest organizations will be operating in a next normal environment for the foreseeable future.

 

Changes in internal and external stakeholder behaviors mean that companies may wish to reconsider how they operate and act now in order to emerge stronger after the pandemic. This may include starting to think about and plot their transition to a next-generation operating model best suited to the next normal.

 

Impact on the three key stakeholder groups

 

These next normal changes will affect the behaviors of three key stakeholder groups—customers, employees, and vendors and partners—in different ways.

 

Customers could shift their purchasing preferences to avoid physical channels, adopt more digital services, and demand more from delivery services. Customers might also adapt their consumption patterns by consuming less, focusing on essentials, and delaying the upgrade of devices and services—not including those that now help consumers to maintain ties with the outside world, like computers and smart phones, as well as remote communication and entertainment packages. COVID-19 may also impact customer psychology in the form of growing anxiety and boredom. For example, customers could feel an increasing need to own items rather than renting for sanitary reasons.

 

We have also seen people making new and renewed commitments to values and goals (for example, balancing time spent at work and with family), and preparing to make meaningful trade-offs that will shape their life choices long after the current crisis passes. At the same time, people are weighing the values and risks in everyday decisions about who they spend time with, where they go, what they do, and what they buy. In an uncertain environment, people are asserting control in their lives wherever they can (for example, diet, spending, and environment) to feel safer, more comfortable, and to safeguard their futures.

 

The way employees work is changing, as they become more accustomed to remote working and virtual interactions. McKinsey research shows that employees with a stable, secure work experience working remotely report an increase in positive work effectiveness and well-being. However, employee experiences are varied, and families working from home and those without remote work options have additional considerations. Moreover, job cuts could make the labor market more competitive, which has wider implications for employers.

 

Vendors and partners might be considering scaling down activities and operations, focusing on the short term, delaying nonessential investments, and attempting to cut costs. They may pay greater attention to social responsibility, putting the containment of the human consequences of the pandemic before profit optimization. At the same time, vendors and partners could shift to digital channels, reducing the need to visit customers on-site.

 

In recent interactions with executives, we found the majority thought most customer demand for business origination, servicing, and renewal would be fulfilled online via digital, mobile, video, and chat, while only a minority expected future operations to be conducted virtually. Companies also face additional challenges regarding productivity: more than half of those we engaged with believed that their organizations will face pressure to boost productivity by more than 10 percent year-on-year to compensate for the loss.

 

Customer, employee, vendor and partner shifts have implications across the value chain, impacting product, sales and channels, and services and support. They also affect workforce models, office operations, and vendors and partnerships.

 

This article uses examples from around the world to look at some of these behavioral shifts in more detail.

McKinsey & Company'

 

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