Vijay Govindarajan, Coxe Distinguished Professor at Tuck School of Business at Dartmouth, said he has received several calls from CEOs in the past 12 months asking this very question. Covid will transform industries but one doesn’t yet know how. According to Govindarajan, what companies find useful to prepare for an uncertain world is the ‘Three Box Solution’ (see graphic).
This is a framework for managing actions in three time horizons at once. Box 1 (in the above graphic) is executing the present core business, the performance engine, at peak efficiency. Box 2 is taking steps to avoid the inhibiting traps of past success, and Box 3 is inventing a future built on breakthrough ideas.
“Leaders must set aside time to understand what is possible in the future, conduct one low-cost experiment and, based on the learnings from the experiment, build the future brick by brick. The process involves imagining the future but proceeding from the present,” said Govindarajan.
He has been advising companies to set up two task forces — one to respond to the short-term challenges (Box 1) and the other devoted to preparing for the long-term future (Boxes 2/3). For instance, automobile companies can simultaneously excel in the traditional gasoline-powered, internal combustion-driven car (Box 1) as they prepare for a future defined by electrification, ride-sharing and autonomous vehicles (Boxes 2/3).
Management gurus believe learnings from the financial crisis of 2008 should be applied here as well. Rohit Deshpande, who is the Sebastian S Kresge Professor of Marketing at Harvard Business School, said a majority of companies reduced their investments in marketing during the financial crisis.
“We found that those companies that did not do that came out ahead of competition and gained market share. The moral of the story is if you understand your customers and stay with them, particularly in bad times, customers will reward you even more after the crisis is over,” said Deshpande.
“During the pandemic, all that companies focused on was supply chain and manufacturing. What I am telling executives of companies is that they need to get back to thinking about what customers are doing. While companies have been thinking all this time about cutting back, I ask them why don’t you instead think about investing for the future?” said Deshpande.
The fundamental issue now, said Deshpande, is a lot of companies have lost touch with customers and they need to go back to the paradigm that serving customers comes first and profit is a reward for serving the customer.
“They also need to think about who the new customers are and how they can reach them. For this I have coined a term called customer centricity. Companies are focusing so much about the functionality of products, that they have forgotten about emotionality. A brand is a trust mark and customers need to feel reassured. What this requires is spending money now,” said Deshpande.
Citing Amazon’s example, Deshpande said, “We have seen how they are investing in customers through data management and also expanding their footprint.”
Lynda Gratton, professor of management practice, Organisational Behaviour Department, London Business School, said every company she has been advising or hearing from is anxious to best understand what to do now. Gratton had launched the ‘Future of Work Consortium’ over a decade ago, which has TCS as an early joiner.
The biggest question Gratton is getting from companies is about hybrid work. “Multiple surveys have shown that employees don’t want to go back to their prior way of working — many are enjoying having more flexibility about time and place — but these are difficult to manage. One of the companies I advise, Fujitsu, moved 80,000 people in their Japanese office into home working within a week — very difficult for the Japanese culture of being in the office,” said Gratton.
Gratton believes the best theories that have been useful in the current situation is the network theory (a problem is represented in the form of a graph to provide better clarity and problem solving) as also theories about autonomy.