Beyond the terrible human toll, the COVID-19 crisis has precipitated the worst global recession since the Great Depression.
This survey of over 2,600 businesses across 14 countries, markets and territories was conducted between 28 April and 12 May 2020. These markets had varying degrees of business activity – from mainland China where domestic business largely resumed, to Europe under stringent lockdown.
This report considers actions taken by businesses to weather the crisis; and how they are shaping the new normal to seize emerging opportunities.
businesses across 14 countries, markets and territories
Almost every business has been impacted by COVID-19 and short-term challenges dominate the thinking of 3 in 5 business leaders.
Even as restrictions necessitate physical distance, the data show that more than 4 in 5 businesses have grown closer to employees, suppliers and customers; acting on a clear preference for collaboration over self-sufficiency.
This crisis is also catalysing long-term change. Business leaders increasingly focus on culture. This enables firms to become more agile and responsive to change – learning a lesson from this crisis where agile companies have proven resilient. There is a broad focus on employees – both to build resilience and shape the transformation they are seeking.
This cultural change can enable emerging opportunities to be realised. Technology and sustainability are only becoming more ingrained in how businesses operate. And technology is not only about automation, but also its ability to shape culture and enable agility.
So while the results show that challenges are real, they also reveal self-awareness about the need to change and adapt. Accelerating technological change and sustainability are deep structural trends with potential to drive growth but also disruption. Companies are making rapid and quite fundamental changes in response. Supply chains are being reshaped, but not reshored, with a continuing trend towards near-shoring evident.
Broadly consistent findings across surveyed markets evidence the shared nature of the COVID-19 challenge, and the universality of the deep trends companies have identified. Resilience must be built into businesses’ DNA to prepare for crises.
Around 3 in 4 felt either strong or very strong impacts, reflecting the severity of the crisis. Yet 9 in 20 businesses felt as well prepared as they could be. And only 8% felt completely unprepared.
Firms in the automotive, wholesale and retail sectors are most acutely impacted.
5% of companies surveyed had fully ceased operations as a result of COVID-19. These businesses are therefore excluded from the results within this report.
This becomes more important as the sources of potential disruption multiply: whether infectious diseases; environmental change; financial shocks; or political instability.
The findings show that there is no blueprint for navigating crises, but reveal that resilience is multifaceted.
The importance of a strong financial foundation to weather storms is clear. But resilience runs deeper.
The data suggest firms are adopting new ways of working to better serve customers. Many are prioritising a change in culture to become more agile.
Factors such as adaptation and management decision-making were identified as key characteristics of resilient businesses by 3 in 4 companies surveyed.
Treating employees well
Adapting fast to external events
A strong balance sheet and steady cash flow
A healthy organisation can set a business apart. Culture can create sustainable advantage given it is unique to a business. Respondents are taking steps to improve employee wellbeing, through an emphasis on both innovation and inclusivity.
They are doing this because agility strengthens resilience and enables companies to grasp the long-term opportunities created by innovation, technology and sustainability.
New ways of working appear set to enable this cultural change. The data suggest an inflection point: with workplaces reimagined through flexible and remote working becoming commonplace.
The Navigator Made for the Future report, published in 2019, highlighted a trend of increasing investment as companies adopt new technology to improve productivity.
This year’s survey shows technology investment is geared towards enabling collaboration and close working, rather than automation alone. This suggests that cultural change is an increasing focus and that technology has a role to play.
Adoption of technology is seen to improve agility, productivity and help prepare employees for the future.
of businesses expect remote working to become the norm in the next two years
A crisis can bring clarity to decision makers’ thinking.
Nowhere is that clearer than on sustainability. Far from being a ‘nice to have’ in the good times, it is increasingly integral to how businesses operate.
Environmental sustainability is one aspect of building resilience and a deep trend creating long-term growth opportunities.
Those businesses which prioritised sustainability felt better prepared for this crisis. This also matters for the future when, as the World Economic Forum’s Global Risks Report highlights, environmental risks are intensifying.
More sustainable companies may benefit as both consumers and investors favour companies with superior Environmental, Social and Governance performance.
of businesses surveyed see environmental sustainability as a priority
1. Extreme weather
2. Climate action failure
3. Natural disasters
4. Biodiversity loss
Supply chains are undergoing change.
But the view that COVID-19 will only accelerate retrenchment and deglobalisation appears premature. The survey points to supply chains being reshaped, rather than reshored.
The importance of connectivity is evident. Businesses feel closer to their suppliers and have taken active steps to support partners. This collaboration facilitates the control and transparency businesses are seeking to become more resilient.
This appears particularly timely, given the elevated level of threat felt by components manufacturers and also service companies.
As 2 in 3 businesses seek greater control of their supply chain (67%), they place greater emphasis on supplier resilience. More broadly, they are reconsidering the shape of their entire supply chain – variously pursuing diversification, digitisation and vertical integration – approaches which are considered in the Supply Chain section.
Beyond control, companies are seeking transparency (44%). This enables sustainability and also resilience. Companies that identify as sufficiently agile have greater transparency and digitisation across their supply chain.
Businesses have also supported the companies they work with:
As well as helping each other, 32% of businesses have changed their products or services to support COVID-19 relief efforts.
feel closer to strategic and supply chain partners
have supported the businesses they work with
Following a 2012 fire in a German factory producing half the world’s cyclododecatriene (a chemical used in the production of plastic parts), the Automotive Industry Action Group convened competing car manufacturers and suppliers to manage the limited supply.*
*The Power of Resilience, Yossi Sheffi, MIT Press 2015