Unprecedented Times

Introduction

As companies redefine the workplace and move employees to remote sites and virtual offices, the future of the work environment is rapidly evolving, greatly impacting companies and challenging long established business practices that have governed work culture. This rapid adaptation to remote work compels strategists to leverage new growth opportunities and adapt to maximize market share. Competitors, who are slow to change, continue to struggle using traditional business models.

This article focuses on assisting companies to pivot in the short-term to accommodate changes that have happened in the business landscape as a result of COVID-19. The authors’ framework and discussions assume that companies already have a long-term vision statement and strategy in place. In this new norm, the overall strategy should focus on developing a competitive advantage by challenging many of the fundamental assumptions that once governed business success. In particular, companies should leverage new cost savings, optimize critical assets, and be purposeful with building or sustaining their company culture in a digitally distributed environment, while taking into consideration the human factor more than ever before.

According to Forrester research, 41 percent of working adults in the U.S. are uncomfortable with going back to work in person.[1] This will lead to a new norm of more permanent remote (fully or a hybrid of part-time) work situations. What is news here is that companies will need to adapt to both scenarios in order to remain competitive. According to another Forrester report, “employee power” will be prevalent moving forward.[2] It will become the standard, and likely even expected, for firms to offer the option to work from home. This idea of employee power means that employees will have demands (like working virtually), and if companies do not adapt, many will lose their competitive edge, as more companies begin to offer additional benefits and flexibilities. There are, though, many potential advantages that companies can leverage in this situation. Three of these will be specifically discussed in this article.

Cost Savings for an Unpredictable Future

When it comes to financials, companies want to (if they are not forced to) reduce costs, especially with an unpredictable future due to the pandemic and socio-political events unfolding. There are opportunities to save, and companies can begin with analyzing their real-estate holdings, equipment, physical inventory, and headcount.

It is an ideal time to explore providing employees with a full- or part-time virtual work environment. If a firm’s core business focuses on providing technology products and/or services, they need to determine if the output and productivity levels have been worse, the same, or better during quarantine. If deemed better, firms could potentially continue to offer a portion, if not all, of their workforce to remain remote and still maintain productivity. Subsequently, the company may have an opportunity to reduce office space, since it would not be needed if business were to continue remotely. With remote employees, the budget normally spent on travel, perks, and entertainment could also be decreased if people are not meeting in person. Furthermore, if there is no longer a need to provide physical space for employees, the equipment and furnishings normally included can be discounted, as well.

When considering the human factor and setting up virtual work environments, it is important to consider the employees’ bandwidth and home-setup to avoid issues like burnout and work-life imbalance. Many people are feeling burnt out from having to balance their home life and work with this unexpected “work from home” situation.[3] Organizations will need to provide employees with the flexibility they need, and encourage them to take time off as needed for mental breaks (no lunch-hour meetings, head-down time to work) or to handle personal matters (children are back in school remotely, and parents will need to adjust to this). In terms of home office furniture, the good news is that employees working remotely will cost much less than real estate, facilities, and office furniture.

Before fully committing to changing an organization’s approach to remote work, companies should anticipate and prepare for the potential additional challenges that may arise as a result of changing the way staffing a virtual workforce is approached. Communication, collaboration, and building connections and trust among employees can be difficult. With people scattered across the globe, time zones as well as languages and cultural differences can bring forth added challenges.[4] The organization still needs to understand and recognize cultural differences, establish rules of engagement and provide employees with resources to address the challenges of a virtual work environment.[5]  Furthermore, there could be unintended consequences about hiring virtual employees, such as the need to file additional taxes and paperwork for employees in multiple and new locations (i.e., states or nations).

There are also changes to technology to consider if corporations are no longer physically working in the same building. If, for example, firms have physical space to store servers, they should consider migrating to a cloud-based platform for additional savings. Not only would they be saving on the physical space, but as a bonus, they could potentially have a more stable environment for their systems, since physical servers require maintenance and oftentimes fail. Migrating to the cloud offers virtual storage space, easy access to organized data, and security.

Pivoting Your Workforce Strategy and Protecting Critical Assets

Leaders typically think “critical assets” means intellectual property (IP). However, employees possess the tribal knowledge of organizations and systems, making them critical assets as well. There is no reason to have business systems (processes, data, tools) if there is no one to work the data, tools, and processes. Leaders need to identify their firm’s IP and determine what skill sets are necessary to maintain it. After this exercise, determine which employees possess these skill sets; they are the company’s critical assets. Having and retaining knowledge in-house is key to protecting IP. In sum, if firms are able to move forward with permanent remote work, they should revisit both their workforce and IP simultaneously.

Workforce Strategy

Revisiting workforce strategy should be done on a regular cadence. During this time, it can be beneficial to leverage opportunities. With the pandemic, many people lost their jobs. If they did not lose their job, they likely shifted to remote work. The talent pool has now broadened due to (1) the amount of people who are now seeking work, and (2) because being bound to a physical office is now unnecessary with remote work. This current situation is a good time to recognize potential cost savings and opportunities to reduce cost.  It is also an opportunity to optimize on the current skill sets of their employees as well as identify areas of additional training needed by employees. To analyze your workforce, there are three attributes for each individual to consider: skill set, location, and whether hired as a contractor or associate.

With the talent pool expanding due to remote work, business leaders should hone in on the skill sets needed to maintain current or future systems/work and determine where there are skill gaps in their workforce. In addition, research hiring in different locations. Not only does this open up options for firms to acquire more skills and expertise, but there can be potential cost savings when it comes to hiring abroad or even in different states in the U.S. For example, when searching for a specific skill, California and Ohio may offer the same talent with a significant difference in salary ranges. For the third attribute of whether you hire a contractor or associate, there are several factors to consider. There can be major cost differences and perks to both. If having both makes sense for your firm, determine what the ideal, efficient ratio of associates to contractors is.

Corporate executives should consider the impacts, ramifications, and benefits of outsourcing work (legal, security, cost, timing of delivery). Again, there are likely to be factors that could benefit the company’s strategy and operations; and there could be opportunities to further complicate the business operations.  For example, there might be an increase in administrative tasks and costs pertaining to taxes, documentation, and varying state laws, rules, and regulations. As mentioned previously, there can also be time zone, language, and cultural differences that can pose new challenges. Business leaders will need to understand the benefits of this pivot, but also keep these factors in mind.

Protecting your Intellectual Property

Strategy formulation examines interrelated parts of your organization. An important piece that should be included in your analysis is the topic of intellectual property. When strategizing the plan to protect your IP, two things should come to mind—protecting and retaining critical employees and understanding the information security programs in the firm. Retaining in-house talent with niche or system-specific expertise that understands your firm’s technology portfolio and infrastructure is crucial. These people hold key roles. How do firms ensure that their employees are happy, motivated, and feel like they are invested in as employees? The more that is invested in these key resources, the longer employees will stay.

Business leaders will also need to revisit and potentially establish a more robust, comprehensive IT portfolio and security measures. The business community has just begun to see the digital transformations that are possible, given the type of environment that COVID-19 has put them in. With additional opportunities comes new and additional risks. Therefore, having a thorough cybersecurity program will be a worthwhile investment. Calculate the amount of risk that comes with being virtual; even one vulnerability can cost more than having a cybersecurity program in place. In developing a program, be sure to do a cost-benefit analysis and set aside a realistic budget. Consider costs associated with hardware, software, security training, and external vendor services. The cost of a breach is in the millions on average (global average of $3.86M and U.S. average of $8.64M for the first three-quarters of 2020), and the cost of a cybersecurity program can be much less, depending on the amount of data a company interacts with.[6]

Building and Sustaining Company Culture with Remote Work 

Firms should constantly develop and maintain their company culture and ensure that employees are satisfied and feel supported. There are different ways of evaluating a company’s culture—whether it is done formally or informally—it needs to be consistently addressed, monitored, and improved. What is important is for firms to get a better sense of what they are doing right, what needs to be improved, and incorporate suggestions obtained directly from employees to make working at the company enjoyable. This matters because countless studies show that employee satisfaction leads to higher productivity. Employee loyalty and retention are critical for maintaining the skills and roles that are key for business success.

Despite a company’s current work environment, establishing and nurturing the company culture is imperative. With the new norm and potentially remaining remote, it is important to check in to see if employees are genuinely happy and fulfilled. Interactions through digital platforms are not the same as interactions in person. With employees having to balance their personal and professional lives, team building activities can potentially become less frequent. Instead of attending that quick happy hour after work, people are already home and have other responsibilities to attend to.

Onboarding new hires may pose additional challenges, and doing it properly will be critical to the successes of new employees. Making them feel welcomed and included when being introduced to their teammates with a cake on the first day in the office is easy, but will firms be able to reproduce this feeling for everyone onboarded remotely?

Building company culture will have to be an intentional and thoughtful exercise that starts at the top level. To begin, companies must evaluate their current culture either informally through one-on-one conversations or more formally by distributing an anonymous survey to better understand the pulse of the organization. It is important to make employees feel like they are being heard, cared for, and have contributed to establishing a good work environment and culture. Then as a leadership team, determine what company culture should look like with the new remote work situation. Compare the differences of where the company is currently at and create a plan to get to where it should be. Include success metrics and benchmarks. Once this plan is solidified, communicate it out to the workforce. Ensure they understand the current and goal states and how the company plans to achieve and maintain the goal state.

Strategy Formulation

Examples were provided for each area of focus, but even firms in the same industry will find themselves in their own unique situation, depending on where they started when the economic disruption began. Therefore, based on these unique circumstances, executives must prioritize and determine which area needs to be addressed first, while considering the trade-offs.

To assist with this type of decision-making, we discuss a five-step strategy formulation model (Appendix 1: Strategy Formulation Model) to guide executives in evaluating and making the right decisions as it relates to understanding and pivoting during this dislocation to remote work. We build on existing models but add questions and elements driven by the remote work dispersion. There are many process models that address strategy formulation, and our model is an adaptation of the many models available in the industry to focus on the current situation and how we should evaluate and adapt to the new norm.[7] [8] [9] [10] The value of our proposed model is perspective and a framework to assist companies in a short-term pivot to complement or to enhance a firm’s long-term strategic plan.  This is important to recognize that our framework will assist companies in better understanding how these short-term pivots can tie into the overall, long-term corporate strategy. Most models recommend assessing priorities first in terms of vision, mission, and strategy. When having to unexpectedly adapt to unforeseen situations like this pandemic, companies should address major pain points and leverage opportunities quickly to be able to adapt to achieve some stability.

In each step, we provide the goals or targets that should be focused on and accomplished, as well as questions that you should be asking your team to guide the development of a roadmap. Keep in mind that your strategy should be revisited on a regular cadence, with adjustments made periodically.

Conclusion

With the COVID-19 pandemic, a new norm is arising with remote work and the coupling of two environments (personal and professional), which creates competing priorities for everyone. With this new idea of “employee power” in addition to the flexibility of remote work becoming more standardized, it is crucial for business leaders to revisit their firms’ strategies with the five-step model and leverage opportunities pertaining to cost savings, protecting critical assets, and building or sustaining a strong company culture with the human factor in mind.

Additional References

Business Insights. (2020). “A Manager’s Guide to Successful Strategy Implementation: HBS Online.” Business Insights Blog, February 25, 2020. https://online.hbs.edu/blog/post/strategy-implementation-for-managers.

Craumer, M. (2020). “How to Think Strategically About Outsourcing.” HBS Working Knowledge, July 22, 2002. https://hbswk.hbs.edu/archive/how-to-think-strategically-about-outsourcing.

Deloitte. (2020). “Workforce Strategies for Post COVID-19 Recovery: Deloitte Global.” Deloitte, May 19, 2020. https://www2.deloitte.com/global/en/pages/about-deloitte/articles/covid-19/covid-19-workforce-strategies-for-post-covid-recovery.html

Harper, J. (2020). “Coronavirus: Flexible Working Will Be a New Normal after Virus.” BBC News. BBC, May 22, 2020. https://www.bbc.com/news/business-52765165

PricewaterhouseCoopers. (2020). “COVID-19: Workforce Considerations.” PwC. https://www.pwc.com/us/en/library/covid-19/workforce-considerations.html.

Appendix 1: Strategy Formulation Model

(In this model it is assumed that the vision and mission statements had been previously established.)

Step 1: Define Your Challenges and Opportunities

In this first step, the purpose is to define the challenges. The goal is to better understand and determine the problems that your firm is trying to solve.  Some of the focus for this initial step is to identify challenges and opportunities that might have changed due to the new environment. The key here is to better understand existing and new challenges that the firm should navigate. Firms that are unable to overcome these challenges will be the ones to lose competitive advantage. However, for firms who can directly address these challenges, new business opportunities and a stronger competitive positioning may surface.

• What are our pain points?
• Where do we envision ourselves in the next year? Two years? Three years?
• What skills will we need in our workforce to align ourselves with our goals?
• Are there platforms (technical platforms) we will be retiring?
• If so, what skills will we need to maintain the new platforms?
• What kind of data are we collecting, and what kind of data do we see ourselves collecting?
• How will we prepare to store and protect our data with remote work?
• How will we evaluate risk?
• What technologies are available that we are not using?
• What will work look like in the next few years? Remote? More virtual?
• What will our products and/or services look like in the next few years? What will we need to adapt?
• What obstacles do we currently face and what challenges do we foresee having to overcome?

The firm’s leadership team should identify the problems they have observed and in addition, can seek input from employees of the challenges that they face at the operational level. Themes will typically emerge. Keep in mind that firms should think primarily about strategy and not just focus on tactics and challenge resolutions. While technology certainly adds a layer of complexity for execution and decision-making, the essentials remain the same.

Step 2: Assess Your Priorities

In this second step, the purpose is to assess the organization’s priorities. As a leadership team, executives should prioritize the challenges and opportunities in terms of highest impact and determine what is most important to the organization and what needs to be addressed more immediately. In this step, it would be a great opportunity for firms to determine what is truly important to them and to prioritize their resources, values, and business processes to get them to where they want to be, leveraging a digitally distributed environment. This step is also an opportunity for firms to get rid of offerings that may no longer be relevant or serving as a competitive advantage.

• What is important to our organization?
• How can we extend and amplify this in a digital environment?
• Do our priorities align with our mission and how are they impacted by the new digital operations?
• Do our priorities align with our vision and how can they be amplified or accelerated?
• Which challenges will impact us the most if not addressed immediately? In a year? Two years?
• What type of work (or technologies) does our workforce prefer to work on? What do they want to learn or develop?
• What type of work do we have the skills for?
• What challenges are low-hanging fruit we can address easily and quickly?
• Which challenges should we address to maintain our competitive state?
• Which challenges, if addressed, would put us ahead of our direct competitor? Ahead in our industry?
• How long will each challenge take to address?

Step 3: Develop Your Action Plan

In this third step, the purpose is to develop the firm’s action plan to adjust or pivot to the new normal. It would be effective in this phase to devise a plan that tackles the firm’s top challenges and opportunities. Document the firm’s vision and work backwards to develop high-level steps to achieve the desired end state. Firms should ensure that everyone within the organization is aligned and bought into the new objectives that have been established. As a team, corporate executives and employees should also discuss, establish, and buy into success metrics. Internal and external collaboration and accountability are essential elements in this step.

• In alignment with our vision, what steps must we take to reach our desired state?
• What does success look like?
• How will we measure success—on a scale of one through five with five being “outstanding,” three being “met the minimum,” and one being failed? Describe what each score would entail.
• With our challenges prioritized, can we set a timeline?
• What are our MVPs (minimum viable product) and milestones?
• Who are our stakeholders? How will we socialize our plan?
• How will we ensure our stakeholders (dependencies) complete their part?
• How will we communicate our plan to our employees?
• What approvals will we need, and how will we approach obtaining these approvals?

Step 4: Implement Your Action Plan

After socializing and communicating the plan, implement it with regular check-ins to determine if implementation is on track. Track success metrics to determine and ensure favorable outcomes of the initiatives. Remember to communicate and practice change management throughout this entire process. According to Forrester research, communication should be double what it was pre-COVID.[11] Ensure the strategy is cascaded down so that all levels, from senior management to individual contributors, understand the objectives and desired state. Also in this step, it is helpful to conduct check-ins with internal and external partners to ensure that everyone is on the right track. It is also important to celebrate small wins as the team makes progress on the plan. Celebrating and recognizing small wins also helps to encourage company morale in a time of change.

Step 5: Evaluate Your Success

Firms should integrate their strategy and success metrics into their annual (or whatever their cadence may be) objective planning. If firms need to pivot or re-prioritize, do so, but cautiously. Changes should be calculated and purposeful. Establishing metrics and benchmarks to determine various functional area measures of success can oftentimes be useful, as it provides an opportunity for executives to better determine which changes have positively (and negatively) influenced the organization. Sustain the strategy and remember that the plan requires firms to revisit and reevaluate success on a regular basis. Quick adjustments to the firm’s strategy should be done systematically in order to ensure that the company is on target with the changes happening in the industry and market.

Capitalizing on The New Normal Opportunities

This pandemic has brought upon numerous opportunities that companies can capitalize on. By utilizing the five-step strategy formulation model, leaders can evaluate current and future scenarios to re-draft their strategies for the new norm. To help guide leaders in addressing opportunities and challenges in this new normal, we provide a few questions to help guide your efforts:

Cost Savings

• Do we need office space?
• How should we re-purpose our travel and entertainment budgets?
• What are the anticipated cost savings from migrating to a cloud service provider?

Access to Global Talent Pools

• What is the best approach to identify talent?
• What are the salary differences between different countries, states, and towns?
• How do benefits differ domestically versus internationally? Should benefits be provided internationally?
• What are the potential costs from additional payroll taxes and other expenses?

Protecting Critical Assets

• Should we migrate our data resources from servers to a cloud service provider? If so, are we prepared to do so? What are the anticipated risks associated with the migration of data?
• If we continue to operate remotely (fully or hybrid), is our information security program built to ensure cybersecurity with remote work?
• Do our employees have the expertise in skills we need for our systems and infrastructure with remote work? If so, how do we retain them? If not, how will we source them?
• What is the best approach for onboarding remote employees?
• Should we hire contractors in addition to our associates? If so, what is a good ratio or mix of associates to contractors?

Company Culture

• If our new norm is remote, what should we do as management to effectively lead from a distance?
• How can we build a culture through digital platform interactions?
• How do we measure and ensure employee satisfaction?
• What types of conversations should we be having and what questions should we be asking employees?