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Striking the balance between agility and operational stability

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Andrew Duncan, Partner and UK Head at Infosys Consulting shares his insight on what businesses can do to achieve both stability and agility during this time…

Prior to the pandemic, most businesses were optimising for cost efficiency. COVID-19 revealed that this model made our value chains too lean, our budget cycles too rigid, and our departments too siloed to weather the storm of unprecedented shocks or disruption. We’ve had to work faster and better than ever before to match the dramatic shifts in customer expectations, and these new standards for agility will overturn old paradigms.

But speed shouldn’t come at the cost of long-term stability. You need to embed both within your operating model to gain a competitive advantage in the new economic climate.

Stability vs. agility

COVID-19 has broken apart business systems, requiring us to build small, nimble teams that make important decisions quickly and effectively. The past few weeks have seen employees from all levels jumping on video conferences to solve problems with a higher level of autonomy.

The lessons from this shift cannot be unlearned, and it has become clear that a flatter organisation with dynamic teams is often the most effective and scalable way to build resiliency into business operations.

Most organisations already had elements of agility prior to the pandemic, and it is the companies that embed this concept of decentralisation within their core that will succeed in a world where fast beats slow.

However, it is equally important that the organisation doesn’t lose sight of the long-term outlook when establishing a more agile operating model. Even the most agile companies tend to keep the backbone of their organisational structure constant, laying out clear governance and processes from the very beginning.

Strong leadership remains at the heart of a decentralised and agile organisation, and regardless of how disruptive the external environment is, employees need clear strategic guidance on expected outcomes and priorities.

Tactical cost management for long-term gains

We can also see this balancing act between speed and long-term stability when considering cost management. In the immediate aftermath of COVID-19, we will see tactical actions to optimise cash flows and working capital, including temporary freezes on new hires, complex and difficult renegotiation of new and existing contracts, and adjusting of inventory and working capital levels. In this case, speed matters.

Companies that survived the last recession were shown to have cut costs earlier, faster and deeper than their competitors. However, it is the companies that not only focus on cost management, but also use the recession for more strategic action, that will position themselves for the long-term.

While it may well be necessary to make tactical cuts quickly, businesses must consider how they can explore different cost levers to build resiliency for the future.

Those that are strong enough for transformational moves like reorganisations and portfolio optimisation have a unique opportunity to fundamentally rethink their revenue profile and get ahead of the competition.

The power of leadership

Leaders with the appropriate strategic vision may already be monitoring for signals of an economic rebound, and could potentially make an immediate shift to M&A to acquire assets that others are forced to discard. Now is also the time to consider rapidly scaling out digitisation efforts and investments to build a more resilient infrastructure.

Given the unknown environment ahead, it is clear that a robust business is formed through a careful balancing act. Post COVID-19, leaders need to not just define where they sit on the spectrum between stability and dynamic agility, but consider how they embrace both, to ultimately gain a competitive advantage and build an operating model that doesn’t fight between effectiveness and efficiency.

This pandemic has highlighted that resiliency isn’t a destination, it is a journey – a journey that depends on making a series of trade-offs as we navigate the evolving and volatile climate over the coming years.

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