Carl Williams, managing partner of Grant Thornton, North West, on how the coronavirus pandemic has normalised radical change in business
He may have been head of the Prussian army but Helmuth von Moltke probably did not expect his pronouncements to be passed down through the ages.
His most famous observation – that no plan survives first contact with the enemy – is nonetheless as telling today as we fight to recover from the Covid pandemic as when he offered it up prior to the First World War.
You don’t need to be a military commander to appreciate that the majority of Government policies and business strategies have been radically impacted by the pandemic and that 2020 is already a marathon of pivoting and adapting.
Our own research has shown how profoundly UK mid-market businesses have been affected by the pandemic.Some 88% have made fundamental changes to their business model during the crisis, according to research compiled for Grant Thornton’s International Business Report.
The research also found that 50% are planning to continue with the new model going forward, as the pandemic has highlighted areas for improvement. Digital transformation was ranked top, with 48% of UK companies anticipating they will need to make more use of technology.
This was followed by changes to improve their organisational flexibility (41%), improve their crisis management process (36%) and build more resilience in their supply chains (33%).
One of the most striking aspects of the pandemic has been the way it has made radical change seem normal. Many a seasoned chief executive might once have reflected that when struggling to introduce new ideas the culprit was not usually the strategy itself.
Resistance to change was the first and biggest obstacle. In a change process, a classic comment coming back would always be, “But we’ve always done it this way” or outbreaks of ‘Not Invented Here Syndrome’.
Now sweeping changes, introduced overnight, are almost normal. In 2020 we have seen long standing assumptions about ways of working swept away and massive policy U-turns, not least around exam results.
The advocates of the once-trendy managerial acronym VUCA are back in vogue. VUCA, short for volatility, uncertainty, complexity, and ambiguity, was first introduced by the US military in 1987 to help define the post-Cold War global security environment. It has since has been applied to strategic thinking and risk management across a wide range of industries.
It’s an interesting intellectual framework but one that doesn’t change the fundamental truth that markets don’t like volatility. Economic uncertainty is the biggest constraint to growth for the UK mid-market (70%) in our survey results.
A shortage of orders (51%) and a shortage of finance (45%) were also highly ranked, both increasing in significance since the second half of 2019 (+12 and +11 percentage points respectively).
What’s clear about the next 12 months is the need for us all to dig deep. Less than a third (31%) of UK companies on the Grant Thornton survey feel optimistic about the outlook of the country’s economy.
This fall in optimism is also impacting revenue expectations with less than a third of UK companies (32%) expecting to see an increase over the next year – the lowest level recorded since our survey was launched in 2011.