The three pillars of shock-proof operations

As Coronavirus impacts the world economy, business leaders have realized one thing: the way their organizations deliver work – and specifically knowledge work – must evolve to confidently withstand such major shocks.

This issue is most visible in large companies with complex processes and operations. Tens of millions of people around the globe are dedicated to making the world work: from monitoring and processing financial transactions and optimizing supply chains to analyzing maintenance schedules for industrial assets and moderating online content. Their ability to continue delivering this work is a fundamental element of a functioning economy.

A robust operating model that allows organizations, their processes, and their employees to add value keeps businesses moving during times of both growth and stress. Until now, operating models dealt with disruption by handing work off to people in different locations, but what happens when disruption impacts everyone at the same time?

For operations to run smoothly, large organizations have relied on three pillars, the 3Ss: scale, scope, and skills. Today, they're being tested. And many companies are finding that they did not build their foundations as solidly as they had thought – or indeed had struggled to establish them at all. Businesses with robust pillars in place will reap the benefits:

• Economies of scale – Investments in technology and specialization allow operations across the front, middle, and back office to grow with the business. Thousands of people already follow standard processes thanks to methods like lean six sigma and, more recently, digital transformation. They've had enormous impact, reducing costs for businesses, making products and services more affordable for customers, minimizing risks, and increasing transparency.
• Economies of scope – Sharing and adopting the ideas and lessons learned from outside your company, industry, discipline, or function unlock opportunities and business resilience. For example, techniques pioneered by retailers for customer segmentation and hyper-personalization have been picked up by financial services firms. And analytical methods from manufacturers, such as lean six sigma and data science, are now embedded in consumer-goods firms.Large organizations must also work collectively as an industry with regulators and local governments to update business processes so that they comply with legislation and can adapt to fast-developing conditions.
• Skills – As scale and scope have evolved for businesses, the skill sets they need to compete have advanced too. Today, organizations must reskill large numbers of people quickly and ignite innovation at all levels.

These pillars support a company's future success, enabling it to generate value from its people, processes, and technology. And in today's circumstances, the 3Ss allow us to respond and adapt.

As organizations faced lockdowns, the first and fastest response has been to empower people with the ability to work from home. This has been a natural extension for companies already accustomed to working with a global footprint of operations, employees, clients, and partners. Those experienced in using collaboration technologies have been at an advantage, but soon everyone will be proficient in how to facilitate sophisticated meetings from their dining-room tables using virtual whiteboards, online annotation techniques, and recording tools.

But technology is only one part of the solution. The companies that will thrive are also helping their employees adapt how they work in this new environment. Changing office-based procedures to virtual ones is a challenge for global operations and finding effective ways to motivate distributed teams requires new approaches. In addition, companies need to enable close alignment across functions – including information-security, operations, risk, and work-transition teams – to make sure new practices work across functions.

In the first phases of the response to Coronavirus, organizations with a resilient operating model will have designed solutions, implemented them, and handed them over for wider adoption at speed.

Just as the three pillars support businesses today, I believe they will also carry organizations through this period of uncertainty to become stronger for the long term.

There are a number of potential scenarios for companies as they emerge from today's situation.

One scenario is that assuming the steps organizations and governments are taking now are effective, we'll see markets start to heal. And after managing the whiplash of transactions from a backlog of loan applications, invoices, and insurance claims, for example, business could go back to normal.

More likely is another scenario in which companies go through a protracted period of struggle that requires significant attention before their levels of economic value return to where they were.

A third and more dire possibility is that organizations and governments have a knee-jerk reaction to the challenges they face and reverse the value globalization has delivered without acknowledging the economic cost of that reversal. Though this may be an emotionally comforting approach, it would undo decades of progress.

We believe that today's instability offers a fourth scenario that can take us to a higher plane if we harness the momentum we have unlocked within our organizations. Having adopted and learned new ways of working with our people, processes, and technology, and built on a robust, globally diversified operating model, our world of work can change forever and for the better.

How companies navigate their organizations through uncertainty will separate the successful from the rest. Those with strong operational foundations will have the scale, scope, and skill to pivot toward new ways of working and resist the urge to fall back on outdated operational designs. The shape of tomorrow's recovery depends on the choices we make today as leaders.