Part 3: Checkmark or full V recovery?
Imperatives for phase 2
As we started to realize the depth of the pandemic, it was easy to find articles pondering or prognosticating when and how business would “return to normal.” The thing every one of these predictions shared was that they were wrong — at least in the sense of how the question is framed. Whether you’re a teacher, physician, restauranteur or senior executive in an asset finance company, the world in which you live and work will be changed by the pandemic. Things will never “go back” to the old normal.
This change might not be a completely bad thing — at least from a business perspective.
Research firm McKinsey conducted a study this summer and asked senior leaders across a wide range of vertical markets how they thought the deep and permanent changes wrought by Covid-19 would impact their markets and their individual enterprises. Not surprisingly more than 85% of leaders in tech companies said the pandemic will result in strong new growth opportunities, even before the end of 2020. After all, a large number of those companies were busy providing the world with solutions that enable online conference calls, digital supply chains and work-from-home infrastructures. Leaders of financial services companies were nearly as optimistic: more than 73% of them identified the coronavirus-induced crisis to create a flood of new growth opportunities, especially as the calendar turns to 2021.
To bring those insights closer to home, Solifi surveyed asset finance leaders with the help of Monitor two times during summer 2020. In July, we asked 75 asset finance leaders, “How would you describe your view of your business and the market for the next 12-18 months?” The three most popular answers pointed to new opportunities:
In August, we asked the same group which markets they thought would provide the best source of growth from mid-2020 through 2021. Not surprisingly, the responses reinforced what McKinsey heard from the broader market in its survey.
In the July survey, we also asked the group, “What do you think will be the key to emerging from the pandemic and finding ways to grow?” The answers we received again pointed to business leaders focused more on opportunity, growth and finding ways to lead in and define the “new normal.”
Looking at the responses to the last question, it’s clear that the idea of finding new ways to grow during and after the pandemic is already on the radar for the leaders of most asset finance organizations. While the paths forward were varied, just 13% believed staying the course and sticking with what has always worked is the best course of action. It’s encouraging to see so many senior leaders thinking about growth rather than contraction.
The views of most leaders are likely shaped by nearly six months of living amid the pandemic. Most seemed to have settled in, after making quick decisions and taking extraordinary early actions to keep things moving.
The first steps, which nearly every enterprise — in asset finance and every other vertical market — has taken center on resilience and business continuity. Most companies had dabbled in remote work. Some had even started down a path of digital transformation, making digital connections with customers and partners who provide services, such as digital signing, account tracking, insurance and tax calculations. But when the pandemic hit the global business environment, the dabbling turned into an all-out sprint to spin up remote workers and establish digital connections with customers and partners. There was no choice. Businesses moved quickly to go “digital enough” to ensure business continuity.
Those core digital changes occurred for most businesses in late March and early April. Since then, meeting online and working from spare bedrooms or kitchen tables has become the norm. And businesses have experienced varying success. In our July survey of asset finance executives, as you’d expect, most leaders acknowledged that the pandemic had impacted business in the near-term.
These responses indicate that most asset finance companies — at least those surveyed by Solifi (formerly IDS) and Monitor — found ways to mitigate the financial impact of the pandemic. Clearly, employee productivity was interrupted for most companies during the first weeks of the move to remote work. Most of their customers also took a hard pause on new leasing activity through April, at a minimum. But most seem to have found solid footing as the pandemic continues its slow progression towards an eventual resolution.
Now, it appears the challenge is to continue controlling costs without impacting service levels — and selectively investing in processes or technologies that will provide the ability to capitalize on the new opportunities most leaders see emerging as the pandemic eases. So, how do you do this? What steps can you take to ensure continuity and profitability now, while preparing to move fast when the time comes?
One way to approach this question is to employ a four-step innovation model: Learn, Transform, Target and Enable:
To say the least, market conditions and customer beliefs and behaviors during a pandemic are fluid. It’s important to dedicate time and talent needed to discover precisely how markets and customers are changing — and learn what is important to them now, after they’ve undergone change of their own. Collecting and synthesizing market insights should become everyone’s job — at least everyone who is at least partly customer-facing in their roles. Every customer touchpoint presents an opportunity to learn. Organizing your collective learnings so that they can quickly be turned into to new products, services and experiences is vital.
After learnings are compiled and a sense of what types of new products and services can be created, attention needs to turn to evolving the enterprise to deliver those new offerings. This requires careful thought regarding which aspects of the current business model will align with the “new normal” and which parts need to evolve. Experimenting with alternative models and thinking through options — such as new hires and acquisitions — is an effective way to explore new models and answer “what if” questions.
All of the transformation ideas you explore won’t be viable business models or product/service offerings. Deciding which models to deploy or which solutions to offer requires a careful vetting process that often involves customer or prospect input. Engaging customers to share how they see their business and needs change, then overlaying your new idea on those changes is a good way to validate new thinking.
Retailers, banks and other consumer marketers have learned quickly that digital channels hold the key to future growth. Even consumers who had previously resisted apps, ecommerce and other digital tools have been forced to adopt technology during the pandemic, creating a new reality for consumer marketers. The same holds true in the asset finance space. The organizations you serve have discovered new ways of working and they’re almost certainly not going back to the old ways. There’s a strong likelihood that your customers and your business partners will expect you to deliver digital expertise or cloud capability as you pursue new opportunities. Enabling your new business models or delivering your new offerings will likely require the use of SaaS platforms, like IDScloud.
Engaging in a process that at least roughly follows this Learn-Transform-Choose-Enable model will help accelerate growth when the time comes. Currently, we are tracking a check mark recovery, but it will take continued investment both in people and technology to drive the economy back to pre-covid levels and achieve a full V.
- Part 1: A proposed path forward — A three-phase proposal
- Part 2: What we’ve learned & done so far — Emerging from phase 1
- Part 3: Checkmark or full V recovery? — Imperatives for phase 2
- Part 4: Leading in the next normal — Innovation fuels phase 3
- Part 5: Keys to recovery — Solid strategies in uncertain times