Where Do We Go From Here? Get Ahead of the “New Normal”
As businesses start to emerge from the COVID-19 crisis, leaders need to look ahead to the recovery and determine how to help their organization accelerate the turn to the “new normal.” Companies will need to rethink their strategy and respond with a new go-forward plan. To successfully navigate the “new normal” you must understand which trends matter, which ones will continue to force change, and how these trends will impact your business. For B2B suppliers, especially those 2 or 3 steps removed from end markets and who sell through complex customer chains, defining the “new normal” can be challenging. To do so effectively, leaders need to do the following:
- Identify the most relevant trends: The world has changed significantly, but some trends will be more important and longer lasting. Focus on trends that are most likely to have the greatest impact on your business. While a food & beverage ingredient supplier will be significantly impacted by an increase in time spent at home, a metal working equipment provider will not. Furthermore, while macro trends are obvious, second, third order, and beyond effects may not be evident. It is important to understand these effects and be able to translate them into implications for your market. For example, increased time spent at home means less commuting, less commuting translates to fewer miles on vehicles, and fewer miles on vehicles reduces the need for automotive maintenance and repair.
- Start at the end and look across the entire customer chain: “New normal” market changes will have a direct and indirect impact on players operating across your entire customer chain including end users, service providers, channel partners, OEMs, suppliers, etc. Start by examining changes with end users as these changes will flow backward and drive changes further up the customer chain. Recognize that this is not a one-size-fits-all situation — different market changes will be relevant to different customer chain players.
- Understand impact across three key dimensions: To paint a clear picture of the “new normal” you must have a well-informed perspective on 1) shifts in demand, 2) changes in customer needs, and 3) changes in buying behaviors, journeys, and preferences.
Using a furniture material provider as an example, you can see these principles in action. Three macro trends: increased time at home, eCommerce acceleration, and supply chain resilience have implications across the customer chain and define the “new normal” for their office business segment.
In this example, a new trend that impacts the end user also flows across the customer chain. Increased time at home implies more work from home, leading to a demand shift from the commercial segment to the home office segment. With this comes a second order and a third order effect – customers now need more home office-friendly furniture that is space efficient and lighter weight. Channel activity shifts towards those with greater exposure to the home office market and first-time home office buyers. Furniture OEMs will look for lighter materials to address the shift in customer needs.
With the “new normal” defined, the furniture material provider can identify where it is advantaged and disadvantaged and formulate key elements of its go-forward plan to drive success. This could include accelerating introduction of new light-weight materials already in development, expanding its OEM customer base, or promoting its global manufacturing footprint.
Defining the “new normal” is a challenging but critical exercise to put together your go-forward plan. You should quickly form a strike team to own the task, engaging your best strategic thinkers and leaders with the greatest market experience. They will be essential to identify the most relevant trends, understand second and third order effects, and translate them into implications for the business. Gathering perspectives from your direct customers and across the customer chain will better inform your outlook and provide greater confidence in making key strategic decisions. Lastly, using an outside advisor can accelerate and provide structure to the process. They can also be invaluable in providing a broader perspective and challenging long-held internal beliefs that no longer apply in the “new normal.”
The quicker a company can define how the “new normal” will impact its business, the quicker it will be able to develop its go-forward plan, gaining a competitive advantage now and during the recovery.
This article is a continuation of our thoughts on the impact of the COVID-19 pandemic and the key strategic decisions B2B companies should be focusing on. You can find our other articles here: