In the 1950s, the average age of a Fortune 500 company was 60 years. In early 2020, as we approached the end of the first quarter of the 21st century, it was less than 20 years. In 2021, trends have hyper-accelerated or pandemic pole-vaulted into existence.
Amazon’s profits rose 220% (source: NY Times). JC Penney, J Crew, Belk and Chuck E. Cheese filed for bankruptcy. Higher education took another punch on the chin: enrollment dropped 2.9% from spring 2020 to spring 2021 (source: National Student Clearinghouse). Lumber prices are up 323% (source: Fortune). Online and in-person retail were already trending in opposite directions. Higher ed was already struggling due to decades of costs rising higher than inflation, demographic changes, and emerging alternate models.
Change is no longer episodic or situational. Change is omnipresent and omnipotent. Agility is not enough, there has to be deep adroitness of innovation, ideation, executing and sustaining.
The strength of an organization is only as good as its weakest attribute. All of the circles in the Venn diagram have to be optimized.
1. People. Find and compensate the people that your customers deserve. Two organizations, two different approaches, two results: One starved compensation during the pandemic – employees became apathetic and disengaged, business results continued trending down. One invested heavily in training and listened to what employees said they needed, including providing $500 per employee to appropriately decorate their workspace for video meetings.
2. Technology. IT is no longer a cost center, it is a business center. Any CXO or executive who wants to “save money in IT,” or questions the need to increase critical success factors like a robust training budget does not understand the importance of technology throughout customer and product lifecycles. The CIO should be THE leader for all technology and report to the CEO.
3. Data & Process: Bad processes and unhealthy, hidden data are hidden debts on the balance sheet. Both must be visible (warts and all) and iteratively, continuously improved. Finding the “grit in the gears” is half the battle. The other half is figuring out which ones are causing the most pain, plus having the leadership fortitude to jettison the “as is” and streamline processes.
4. Governance & Finance. Another tale of two organizations. One had all budgets and contracts tightly managed within the finance unit – line executives did not have control or visibility into their financial health. This created tension between finance and units and finger-pointing when financial results were poor. The other made financial management a capability and capacity within the units, aided and supported by finance. Everyone felt accountable and responsible for financial results.
The pandemic will slowly cease to dominate strategy and operations. The impact it had on accelerating existing trends and creating others – not so much. Leaders must focus on the How, What and Venn …..