The Need to Reinvent Your Operating Models in a Post COVID World

How to re-imagine your operating models

The degree with which you need to re-think your models depends on how much COVID-19 will materially affect your particular market segment. One way to think about this is to segment business operations by degree of exposure, from both a customer as well as an employee perspective.

In the chart shown we have overlaid selling and delivery models on a matrix that highlights COVID-19 considerations. On the vertical axis, “Work Force Exposure” reflects the operating model of the business; on the horizontal axis, “Customer Exposure” reflects the delivery model of the business.

 

Logically, the higher the customer and workforce exposure, the greater the need to innovate the business model.

In considering your own business, where would you place it on the chart? This is more complicated for some businesses as they don’t fit neatly into one segment as they themselves can be segmented into different types of business segments. In any case, depending on which quadrant you would place your business or part of your business, we have listed below a number of considerations for how you might need to approach the post COVID world:

Low workforce and Low customer exposure: Safety

If your business is in the safety quadrant, your business model is not materially affected by the COVID-19 crisis. These businesses could be e-commerce platforms that offer a high degree of resiliency. Despite the lack of business model exposure, these businesses will still need to practice good governance of cash flows and the cash-to-cash cycle. While the business model may be largely unaffected, the likelihood of a recessionary climate remains a threat.

High workforce, Low customer exposure: Innovate employee experience

These businesses typically have low customer exposure but require an active and engaged workforce. This environment will most likely apply to most manufacturing and business services industries. Some of the changes these businesses are doing to improve the employee experience and mitigate exposure are as follows:

Zoning – many organizations are moving to zoning models which allows for a select set of the workforce to be responsible for a specific asset or function. This involves redefining roles and responsibilities to be more specific to an area. The intent is to mitigate the risk of employee cross-contamination.

Testing and Management – businesses are planning to be more restrictive on employee movements and heighten employee protections. Some businesses are considering asking employees to check their temperature prior to arriving at work. Additionally, depending on the needs of the business, some will be asking employees to wear protective masks.

Shift Segmentation – businesses that require more than one shift have the potential to manage employee safety and operating surety through staggering shift start and stop times. This could involve 30-minute intervals between shifts to mitigate the chance of cross-shift contamination as well as provide time for the sanitization of “shared” hotspots such as door handles and meeting rooms.

Meeting management – many organizations plan on limiting the number of in person meetings. When an in-person meeting does occur, no more than five people can attend. Usually these meetings will take place in larger conference rooms so that proper social distancing practices can be followed.

Digitization of tools – the elimination of paper reporting and whiteboard in combination with dedicated reporting interfaces mitigate exposure. Some businesses are leveraging PowerBI and other platforms to create digital reporting metrics that allow for real time tracking that is accessible through employees’ smartphones. This creation of dedicated interfaces allows for employees to monitor performance in real time while eliminating the risk of multi-surface transmission.

Integration of safety – the role of health and safety has changed within businesses around the world. It is important to incorporate COVID-19 contamination practices into both onboarding and refresher safety training. Education of the workforce will be critical to manage employee safety.

Low workforce, High customer exposure: Innovate sales experience

These businesses have a high degree of customer exposure but typically have sales forces that are regionally fragmented. The approach can be segmented between Business to Business (B2B) and Business to Customer (B2C). These approaches, regardless of the segment, focus on changing the customer experience through changing the methodology in which the business interacts with the customer.

Business to Business (Sales Funnel Management) – for most businesses, key changes will occur as it relates to funnel management. At the top of the sales funnel, more and more potential customers will avoid physical interaction. As such, businesses are rethinking how they leverage digital technologies to engage prospects. As you move down (or through) the sales funnel, the likelihood of physical interaction may increase. This move to virtual is not only a strategic imperative, but also generates resource allocation decisions. For instance, if the sales force does not need to travel as much to meet face-to-face, does that mean inherently there is less travel time and more sales force capacity? Similarly, the resources (i.e. capital, cash, costs, etc) that went into the first impression (i.e. the quality of the store, the travel to a customer, etc) are now resources that can be reallocated to be more productive. Where can these resources be reallocated to maximize sales funnel effectiveness?

Business to Customer (In-Store Experience) – limitations within the stores are likely to be the new norm for the time being. Capacity restrictions will likely remain in place, and store visits by customers may get fewer. Retailers must reinvent the store experience to make it memorable and to develop a consumer connection to the brand. Some retailers have hired “Entertainers” to engage would-be customers while they wait in line. Other retailers are combating social isolation through curb side pickup.

Business to Customer (Omni-Channel Experience) – while this term primarily applies to Retailers, we think it takes a new meaning in a post-COVID world. Omni-channel is defined as a multi-channel sales experience. Due to the hesitation of physical interaction, and continued social distancing guidelines, organizations will need to rethink how their sales channels reinforce one another. There may be re-occurrences of COVID-19, creating a greater degree of optionality for consumers. This goes beyond having a strong e-commerce platform and is routed in the customer journey. We work with one client who is trying to increase conversation rates of existing customers. After each sales, a Sales Associate calls the customer as a “check in” to ensure that the delivery has gone as expected. Included with this check in call is a discussion regarding complimentary products. This omni-channel reinforcement has led to a 12% increase in sales.

High workforce, High customer exposure: Reinvent the business model 

 These businesses are often vertically integrated and exist across a platform of services within the supply chain. Unfortunately, these businesses need to think about both the operating and delivery model considerations listed above. These businesses may need to significantly innovate both the selling and delivery model.

COVID-19 will change how many businesses engage with customers and their workforce. Re-envisioning both selling, and delivery models will be critical for many. If you would like to discuss operating model considerations, we are more than happy to share our findings, experience and expertise.