Companies need to reset growth strategies in the new world

By now, we all have read and witnessed many large-scale disruptions caused by the Covid-19 pandemic. The past few months have been tough for many sectors like aerospace, aero-engines, and transportation, to name a few. As the world dynamics continue to change, companies working in various sectors require a realignment of strategies to support the changing needs and expectations of customers.

The repercussion will obviously have long-lasting implications on core players in several industries and their engineering services partners. It has already started to highlight the shortcomings seen in R&D’s traditional focus and ways of working while putting incredible pressure on R&D activities. It is anticipated that companies that don’t reinvent will find themselves unable to adapt to dramatic shifts in consumer preferences and demand for both existing and new products as well as services.

A crisis is an opportunity to take action, rise, and thrive. Many successful companies existing today were established, and many established companies made transformational changes during the great recession of 2009. The new, innovative, and clean sheet approach, transformational concepts and solutions worked wonders for these companies’ enduring success. They effectively navigated through any crisis and flourished in the post-crisis world.

They believed in transformation, which is the key for any business to thrive. Companies which realise the importance of a crisis are the ones that understand that many fundamental assumptions and drivers have changed. These are the ones who are willing to act and quickly transform in order to align with the new priorities. Here are some of the key growth drivers that companies may need to adapt, if not yet considered, in their transformational journey.

Revisiting digital

A digital transformation has always proven effective when businesses need to add capabilities fit for the future. Technology brings opportunities to rebuild a business around the customer and create a truly connected and highly profitable enterprise. Analysts believe that 80 per cent of revenue growth over the next three years hinges on digital offerings and operations.

Quite obviously, companies that continue to invest in their digital strategy while balancing short-term efforts with long-term measures will emerge more competitive. Digital transformation will drive the desired positive outcomes. Whether it is streamlining processes, harnessing data, or shaping entirely new ways of doing business, this is about uniting every part of the enterprise for a common purpose.

The Covid-19 pandemic has exposed a clear digital divide. Those companies which had already invested in digital operating models/enablement have fared much better in the unprecedented situation than those that had not. In fact, for many businesses, the continuity of operations today critically depends on their digital capabilities.

It is to be noted that most enterprises while adopting digital transformation, achieve only partial success and that’s because digital business transformation is far more than a technology upgrade. The focus needs to be holistic, transforming customer experiences, operational processes, and business models while leveraging technologies like data analytics, pervasive technologies, and software.

What value will be delivered to the customers will ultimately depend on integrating digital technology into identified areas of business, resulting in fundamental changes in how the business operates. It will produce business outcomes aligned with customer demands in the cyber-physical world when done right.

Across sectors, there is an increased urgency for digital and digitalisation. There is a higher adoption of digital by laggard industry verticals like aero, energy and healthcare, which will create all kinds of opportunities.

Redefining Innovation

As we move into the new era of products and services, companies want to focus their energies on what is critical to their product innovation and success in the marketplace. This kind of innovative thinking permits several new solutions from Engineering Services Players (ESPs) that result in engineering cost reduction and freeing up engineering budget to deploy in innovation. It provides greater agility and higher speed to market for customers.

For example, today, several companies in the business’ industrial side are still in flux; they are yet to fully understand the future business landscape and determine the way forward. Being their ESPs gives us the advantage of having vivid knowledge of their products and processes. This helps us understand their challenges quickly, and we explore the opportunity to cross-leverage ideas and solutions from another industry to theirs. We may already have a solution in place for a different industry/customer that may fit equally well for another customer. All it takes is to analyse the challenge with an innovative and open mind-set.

Resilient business models

In this disruptive business environment, the need of the hour is to develop a highly resilient business model that delivers cost-effective and comprehensive engineering services. This transformative model should enable flexible monetisation systems, which allow organisations to market quickly with creative new offerings and new packaging of existing services, ahead of the competition.

The result is reduced time of product development cycles, which are essential to take advantage of the vast benefits of being first to market and can also help responding more quickly to market conditions. The maiden step towards transforming your business model is to allow the business to move from a fixed cost to a variable cost structure. This approach will enable saving capex and ensure sustained savings for years to come.

One may also consider capital conscious models like:

Moving to variable cost: In the changing market conditions, organisations need to make significant budget reductions and squeeze fixed costs. This could involve headcount cuts and blanket hiring freezes while also ensuring not to lose key engineering resources. This is where transformational realignment partnerships come into the picture.

In many cases, the best way to implement a meaningful clean-sheet approach is for companies to realign various existing engineering activities and resources to their engineering services partner. This permits the customer to concentrate on critical innovations and realise significant savings while the engineering services partner provides higher value solutions for realigned activities.

Being a Trusted Thinking Partner to our valued customers, we have successfully carried out many such partnerships with a proven realignment playbook where customers transition their highly skilled engineers to us.

As a service model: With the convergence of IT & OT, what exists is a digital knowledge void. The fact that digital is a journey ultimately implies business transformation that begins with re-imagining the existing business processes and user experiences. Service providers can help identify and implement the digital solution in multiple ways like ”as-a-service” model, accelerating digital journey using a unique suite of solutions, etc.

An outcome-based model: By co-investing in programmes with shared risks, this model clearly defines the outcomes and ideas that reduce product costs or Proof of Concepts (PoCs). The model identifies target programs for investment, more Return on Investment (RoI) and shared risk. This model also allows freeing up the bandwidth of key customer employees for their core work.

When market conditions become volatile, enterprises must become more agile and resilient to master disruption and maintain momentum. Businesses must overcome growth challenges and build resilience to face future disruptions. Such unique Business Models and Transformative Solutions can empower any organisation to succeed despite challenges and uncertainties.

Embracing the future workforce

We are living through a fundamental transformation in the way we work. Adopting automation and Artificial Intelligence (AI) will mark acceleration as embracing digital labour like bots is set to become the new norm. The requisite is to leverage digital platforms, which can continue to remain uninterrupted while also reducing human intervention dependence. Businesses can further scale the deployment of digital labour.

However, the Covid pandemic has also prompted people to appreciate the fact that humans and technology are more powerful together than either can be on their own. New combinations of talent and technology deliver decisive advances in customer experience, operational efficiency, and competitive edge.

Several organisations try to address their talent challenges through a traditional workforce planning approach — based on the number of people or positions they have historically needed. Instead, workforce shaping is a discipline for organisations to articulate an intelligent and strategic understanding of the workforce they require in the next five to ten years.

These could be strong levers in an organisation’s response to the current crisis and strategies for the next normal. Of course, it is a more complicated landscape to navigate, but it’s something that we all need to face together. The result will be a stronger sense of what makes business more resilient to shocks, while being more productive and better delivered.

The writer is Chairman and CEO, QuEST Global