5 Operating Model Changes For Our New Normal

^{A tsunami of COVID-related changes are inspiring new operating models for core business functions.}

Warren Buffett famously said, “Only when the tide goes out do you discover who’s been swimming naked.” 

In this case, the tide is COVID-19, and those swimming without their skivvies are organizations that never got around to embracing digital transformation. Now they’re racing to adapt, innovate, and remain relevant—finally recognizing that digital workflows and infrastructure are a necessity for a new and uncertain world.  

The tsunami of changes triggered by COVID may well be permanent. In any case, they have already led to organizations adopting new operating models for core business functions.   

Operating models vs. business models  

Why focus on operating models over business models? Very few companies have shifted the latter, with most focusing instead on how to maintain operations and deliver business services amidst COVID-19.  

U.K-based delivery service Deliveroo undertook this transition in the real world. The company revamped its business model by expanding from fast food delivery to all food and even fitness supplements and vitamins. This business model shift unleashed operating model shifts in return, especially for grocery stores. While these stores still sell produce directly to consumers, they can now use Deliveroo to bring that produce right to your door.  

This example of contactless and digital commerce is just one of five operating model shifts my clients have undertaken (supported by digital workflows on the Now Platform) in response to COVID-19.  

Shift #1: Work is no longer a place 

Despite less than ideal circumstances, remote work productivity remains high. “Workplace anywhere” has gone well enough that companies such as Siemens and Fujitsu have instituted permanent mobile working while others, including Google and Facebook, have extended it until July 2021. 

 But businesses continue to struggle with equipment, provisioning, cybersecurity, workflow visibility, and employee well-being. As workplace anywhere normalizes, employers must deploy technology to overcome these obstacles and ensure safe, seamless remote work.  

Shift #2: Agile organization structure 

When a ventilator shortage threatened New York, a consortium of tech incubators developed a low-cost ventilator in one month, accelerating a process that normally takes a year.  

This is agile organizational structure and ecosystem approach in action. During the crisis, organizations used an agile approach to bring teams together, focus on a common purpose, and make decisions at pace while bypassing hierarchies and organizing around value.  

Its success ensures agile approaches will persist as the pandemic slows. The challenge is to balance speed with sustainability and regulatory oversight. Getting this balance right offers a huge competitive advantage and allows a move towards continuous iteration and delivery.  

Shift #3: Agile and just-in-case supply chain 

COVID-19 exposed vulnerabilities within global supply chains and just-in-time (JIT) models. Recent data from Tradeshift, a supply chain management platform, reveals the magnitude of these vulnerabilities, with week-on-week trade dropping by half in China, Europe, and the U.S in the first months of the pandemic. 

In response, organizations are racing to onboard new vendors and stockpile “just in case”  inventory, especially for critical supply chains in healthcare and food. But all organizations need to develop better visibility into early demand signals to avoid over-stockpiling and tying up needed cash.  

Moving forward, resilience will depend on the digitization of outdated processes. This  will ease the sourcing of a diverse and regionalized vendor roster while increasing supply chain visibility.  

Shift #4: Contactless commerce, service, and hospitality  

MGM Resorts allows guests to pay, verify their identity, and obtain a room key all through a mobile app. Disney is experimenting with virtual queuing. And companies from Nike to Home Depot use VR and AR so customers can try and buy their products without ever entering a store.  

These offerings are increasingly important as retail, service, and hospitality seek to make in-person experiences safe and enjoyable during COVID-19. They also depend on “click and collect” operations in which consumers order, book, or receive a consultation online, thereby receiving their product or service in-store with little to no human interaction.  

This concept may eventually apply to everything from in-home maintenance, where customers are guided through the process by AR, to healthcare, where virtual triaging and queuing minimize emergency room wait times.  

All these use cases require a solid backend workflow with a simple UI that creates a seamless, omnichannel customer experience. 

Shift #5: Resilient workforce 

Lastly, businesses are rethinking offshoring as contact centers close and remote work becomes necessary. Resourcing strategies have emerged as a key challenge. Organizations need multi-skilled, multi-sourced, and multi-region workforces that can be scaled on demand.  

Two approaches show how this could work in practice. Unilever is making increased use of its internal talent marketplace, Flex, to match employees with capacity to projects that need their skills. At the same time, contact center-as-a-service” initiatives—offerings that allow virtual call centers to be quickly spun up for a dispersed global workforce—are growing rapidly in popularity across industries.  

For both, automation and self-service are important to ensure resourcing flexibility. Flex, for example, depends on AI to match the right people with the right opportunities.  

These five operating models all have one thing in common: digital technology deployed at every level of the organization.  

This realization is possibly the most striking business outcome to stem from COVID-19. Whether it’s Mr. Buffett’s swimming while naked analogy or the old chestnut that necessity is the mother of invention, it’s clear COVID-19 has unleashed an economy-wide digital transformation.