As the COVID-19 pandemic continues to weigh on the economy, companies are reimagining their future. For some, that means completely revamping their business model and transforming from the inside out. And what is transformation today without technology? According to Guy Cartwright, virtually nothing—and the reason he’s joined West Monroe from a successful 25-year career in turnaround and transformation. Here’s what he thinks about the decision many companies are facing—and how they can come out of this crisis on the other side.
Companies may need to transform for a number of reasons, although it almost always comes down to significant strategic, operational, or financial challenges. Also, needing to implement a new way of working over the coming months or years to serve customers differently. Obviously, the pandemic brought these challenges to the doorstep for an unprecedented number of companies, almost overnight—which is why we’re seeing bankruptcies and restructurings surge today. It’s a very extraordinary time.
The biggest sign is that you’ve gotten to a point where you’re approaching being unable to pay your bills. Or you’re facing top-line and bottom-line financial erosion. You get to the root cause of what’s driving that—and at that point in time, you still have time to engage in a proactive process. But it’s more a reset than grow, and it needs to be done quickly. Those are the ones we see most often.
Simply put, you can’t transform your business today without technology playing a significant role. The right combination of people change and technology change has a real chance to solve the operational and financial challenges that companies are facing.
The role of technology is behind every activity within an operation and behind every touchpoint for the consumer today. Being able to understand that—and chart a path from “current state” to what you need to invest in for the future—is a really complex problem to solve. The ultimate challenge in today’s market, and will be for years, is whether companies have the right technology leadership to accomplish that properly.
One issue is due to the sheer volume of restructuring efforts happening today, there just aren’t enough advisors or experienced executives in the marketplace who have experienced this before. There are also constraints on a company’s ability to restructure with labor: In a healthy market, it’s easier to cut labor than we can in this current environment. It’s also difficult to predict how much bounce-back will occur in any sector. You have to be cognizant of taking a humane approach to how you engage and plan for what a company would look like coming out of the restructuring.
Every company has an established way of working that has been set and maintained by employees over a long period. The biggest hurdle to successfully transform is changing the way you work. Momentum at the beginning is critical, and to get that you need an objective external review of your operations and defining an outcome needed quickly. In my experience, an analysis of shortcomings could include the way decisions are made, the way your technology platform works, or the way you manage data. Simply put, the way you’re working isn’t working and it needs to change.
It’s often best to have a new leader because they’re not tied to the norms in many cases, are the reasons why progress isn’t being made. Can companies transform on their own? Sure. But it’s risky. You have to be honest in assessing the following: Do you have skill set to do this? Are you willing to pull somebody out of their current role and make this their full-time job? And is that someone who has done it before? Remember, the done-it-before qualification is someone who has been involved in situations where they’re trying to objectively work a company toward an outcome. It’s more than simply enacting change within a company, which is why we recommend a fresh perspective. It works.
The best companies actually proactively transform when they’re doing well. Because they’re paranoid about becoming irrelevant. The question becomes: Are you a company that can handle double or even quadruple the volume of transactions? And can you do that the same or better service levels? Two, a company can get disrupted from five different sides, and being at the forefront in your particular industry from a technology standpoint matters most.
This doesn’t mean that all companies need to be in a constant state of transformation. But it should be top of mind whenever there’s substantial change—positive or negative. The firms that continue to innovate and serve customers well and proactively will almost always have an advantage over their competition.