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The DNA of the Future post-Covid-19 Organisation

Posted | Updated by Insights team:
Dr. Evangelo Damigos; PhD | Head of Digital Futures Research Desk
  • Competitive Differentiation
  • Post-Covid-19


Publication | Update: Sep 2020

How has the DNA of our organisations been altered in recent months?

And how will it evolve to support a super-resilient business model that can thrive in times of uncertainty?

Savannah Group hosted an event with a panel of experts to get their thoughts and insight into the DNA of the future organisation. Here is a summary of the ideas discussed.

“We were already seeing a build up of uncertainty and unpredictability. I certainly didn’t see the tsunami being biological in nature. I presumed it would be a collection of macroeconomic forces of which digital technology would be the primary driver.” 

– Ade McCormack

Organisational DNA has been altered by the crisis

The world of work, workers and leadership is changing radically. Culture and the nature of risk have experienced massive shifts in recent months. The crisis has been a catalyst for change that has manifested itself in different ways including:

  1. Keeping employees safe by moving immediately to remote working where possible. In doing so, quickly adapting new technology to support agile working and remote management. In environments where people needed to be at work, organisations had to act quickly to put safety measures in place.
  2. An unprecedented focus and pace. During the crisis, less important work was naturally deprioritised, and people felt empowered to make decisions where needed. A sense of urgency that has never been experienced before was felt across businesses, with partners and even with regulators. For GSK, whose teams are working on the COVID-19 vaccine, this urgency was felt acutely.
  3. A willingness for collaboration not just within organisations but across industries and including competitors. For example, GSK is working with 40 different companies to bring the COVID-19 vaccine to market. This required unparalleled collaboration with companies that were previously competitors.

There was a feeling amongst the panel that these attributes will shape how we will work in the future as they’ve already become embedded in the way we’re working today.

“There was an absolute unprecedented willingness for collaboration not just internally to GSK but across the industry. Collaboration where companies were previously competitors. I think we are currently working with more than 40 companies to bring the vaccine to market.”

-Maureen Wedderburn

The DNA of leaders is changing radically

Work and leadership have become more people orientated. Hierarchies have all but disappeared and employees have become more appreciative of one another and more empathetic towards individual situations as we juggle the realities of work and life. The change in working environment, such as the lack of a commute, has released new cognitive capacity for many and the panel noted more new ideas, increased innovation and a desire to do more interesting things. The way we manage has been forced to change too. Remote work has meant an end to presenteeism and managers are basing performance on outcomes, not activities.

Leaders have needed to become more collaborative, more situationally aware and more flexible in their approach to leadership. So what traits should leaders demonstrate to get the best out of their teams?

  • A blend of IQ, EQ and DQ. DQ is the dignity quotient which has been less evident in the past. Leaders need to take responsibility for both the good and the bad.
  • Flexibility and empathy. To nurture organisational culture and find ways of working smartly thorough changing and unpredictable circumstances.
  • Communication. Giving employees time, tools and opportunity to communicate extensively.
  • Erudite. Able to understand people from an emotional perspective, to communicate crisply and to encourage learning from each other.

Distilling a unique organisational culture

How are organisations maintaining their culture as a blend of remote and workplace-based working becomes the norm?

Can we still be creative, collaborative and innovative when teams are distributed?

As organisational hierarchies have broken down during COVID-19 how will people navigate around the organisation?

Technology is critical in enabling internal and external collaboration and in those companies that rapidly adopted new technology, it has already enabled groups to get together, to be nurtured as a team and supported them to solve problems at pace.

“Digital transformation is a beautiful word. People think it’s a project and a programme but it’s a new modus operandi, it’s a new culture, it’s a new balance between working life and office life, it’s a new balance between business and society. It will be talent and technology led.”

-Markus Ruetimann

Another challenge to culture is the onboarding of new employees.

How do we get them up to speed and help them make the right connections?

Those who were already established in the company before the crisis know who to connect with and how to get things done. This is challenging for people who are new especially since hierarchies have become flatter. The discussion about onboarding also raised questions about promotion cycles and criteria.

. Leaders need to inspire and empower people to translate ideas into actions. Teams are no longer restricted by traditional boundaries and in one organisation remote teams have gone viral with new members volunteering to join. Teams are growing and morphing and businesses can capitalise upon this through technology and the right leadership skills.

 

Industries have been talking about digital transformation for many years, but the crisis has forced us into it in a way that has been welcome, said one panellist.

“We are great at unlocking loads of ideas, but we don’t often do the hard work of thinking about how we unblock the old ways of thinking and behaviours that don’t work. For example, we can’t apply old thinking about meetings and productivity to new technology.”

-Scott Morrison 

Baking diversity into organisational DNA

The panel agreed that diversity needs to extend beyond characteristics such as gender and ethnicity to incorporate diversity of thought. As one panel member said, “You can have a Board that looks diverse but if they all went to the same schools and universities then there is limited diversity there.”

Diversity of thought will enable businesses to adapt very quickly, to see different perspectives, to join dots in new and interesting ways. Different experiences and perspectives generate outputs that are fundamentally different. As examples, one panel member shared that he’d appointed a speedboat engineer as a Head of Change to bring an entirely different way of thinking to the table. He’d also appointed a Head of Operations from Formula 1 into a financial services organisation to bring a different perspective and approach.

Another panel member highlighted that businesses that already had collaboration, diversity of thought, global scope and empowered people are those that are thriving now. One of the challenges for businesses in recruitment is to move from recruiting based on skills to recruiting on based on traits such as agility and learnability which should also be an opportunity for more diverse hiring.

Virtual event: 26th August 2020

Panel:

  • Ade McCormack – Former FT opinion columnist, keynote speaker, digital strategist and near-futurist
  • Maureen Wedderburn – SVP GMS IT at GlaxoSmithKline
  • Markus Ruetimann – Former COO of Schroders, Commissioner of the Jersey Financial Services Commission and Chair of Aprexo and Global Prime Partners
  • Scott Morrison – Former Marketing & Commercial Director at Diesel, keynote speaker and founder of the Boom! Operating System

Host: Kersty Bletso, Savannah Group Partner, Interim Management, Technology, Digital & Innovation Practice is highly experienced and well connected within the Digital and Technology community. She works across Private Equity, the FTSE, Fortune 500, AIM , TSX and SMEs globally. She is an advocate for Diversity and Inclusion within Technology and helping organisations bring Digitally Savvy NEDs onto their boards.

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Objectives and Study Scope

This study has assimilated knowledge and insight from business and subject-matter experts, and from a broad spectrum of market initiatives. Building on this research, the objectives of this market research report is to provide actionable intelligence on opportunities alongside the market size of various segments, as well as fact-based information on key factors influencing the market- growth drivers, industry-specific challenges and other critical issues in terms of detailed analysis and impact.

The report in its entirety provides a comprehensive overview of the current global condition, as well as notable opportunities and challenges. The analysis reflects market size, latest trends, growth drivers, threats, opportunities, as well as key market segments. The study addresses market dynamics in several geographic segments along with market analysis for the current market environment and future scenario over the forecast period. The report also segments the market into various categories based on the product, end user, application, type, and region.
The report also studies various growth drivers and restraints impacting the  market, plus a comprehensive market and vendor landscape in addition to a SWOT analysis of the key players.  This analysis also examines the competitive landscape within each market. Market factors are assessed by examining barriers to entry and market opportunities. Strategies adopted by key players including recent developments, new product launches, merger and acquisitions, and other insightful updates are provided.

Research Process & Methodology

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We leverage extensive primary research, our contact database, knowledge of companies and industry relationships, patent and academic journal searches, and Institutes and University associate links to frame a strong visibility in the markets and technologies we cover.

We draw on available data sources and methods to profile developments. We use computerised data mining methods and analytical techniques, including cluster and regression modelling, to identify patterns from publicly available online information on enterprise web sites.
Historical, qualitative and quantitative information is obtained principally from confidential and proprietary sources, professional network, annual reports, investor relationship presentations, and expert interviews, about key factors, such as recent trends in industry performance and identify factors underlying those trends - drivers, restraints, opportunities, and challenges influencing the growth of the market, for both, the supply and demand sides.
In addition to our own desk research, various secondary sources, such as Hoovers, Dun & Bradstreet, Bloomberg BusinessWeek, Statista, are referred to identify key players in the industry, supply chain and market size, percentage shares, splits, and breakdowns into segments and subsegments with respect to individual growth trends, prospects, and contribution to the total market.

Research Portfolio Sources:

  • BBC Monitoring

  • BMI Research: Company Reports, Industry Reports, Special Reports, Industry Forecast Scenario

  • CIMB: Company Reports, Daily Market News, Economic Reports, Industry Reports, Strategy Reports, and Yearbooks

  • Dun & Bradstreet: Country Reports, Country Riskline Reports, Economic Indicators 5yr Forecast, and Industry Reports

  • EMIS: EMIS Insight and EMIS Dealwatch

  • Enerdata: Energy Data Set, Energy Market Report, Energy Prices, LNG Trade Data and World Refineries Data

  • Euromoney: China Law and Practice, Emerging Markets, International Tax Review, Latin Finance, Managing Intellectual Property, Petroleum Economist, Project Finance, and Euromoney Magazine

  • Euromonitor International: Industry Capsules, Local Company Profiles, Sector Capsules

  • Fitch Ratings: Criteria Reports, Outlook Report, Presale Report, Press Releases, Special Reports, Transition Default Study Report

  • FocusEconomics: Consensus Forecast Country Reports

  • Ken Research: Industry Reports, Regional Industry Reports and Global Industry Reports

  • MarketLine: Company Profiles and Industry Profiles

  • OECD: Economic Outlook, Economic Surveys, Energy Prices and Taxes, Main Economic Indicators, Main Science and Technology Indicators, National Accounts, Quarterly International Trade Statistics

  • Oxford Economics: Global Industry Forecasts, Country Economic Forecasts, Industry Forecast Data, and Monthly Industry Briefings

  • Progressive Digital Media: Industry Snapshots, News, Company Profiles, Energy Business Review

  • Project Syndicate: News Commentary

  • Technavio: Global Market Assessment Reports, Regional Market Assessment Reports, and Market Assessment Country Reports

  • The Economist Intelligence Unit: Country Summaries, Industry Briefings, Industry Reports and Industry Statistics

Global Business Reviews, Research Papers, Commentary & Strategy Reports

  • World Bank

  • World Trade Organization

  • The Financial Times

  • The Wall Street Journal

  • The Wall Street Transcript

  • Bloomberg

  • Standard & Poor’s Industry Surveys

  • Thomson Research

  • Thomson Street Events

  • Reuter 3000 Xtra

  • OneSource Business

  • Hoover’s

  • MGI

  • LSE

  • MIT

  • ERA

  • BBVA

  • IDC

  • IdExec

  • Moody’s

  • Factiva

  • Forrester Research

  • Computer Economics

  • Voice and Data

  • SIA / SSIR

  • Kiplinger Forecasts

  • Dialog PRO

  • LexisNexis

  • ISI Emerging Markets

  • McKinsey

  • Deloitte

  • Oliver Wyman

  • Faulkner Information Services

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  • Ipsos

  • Mintel

  • Statista

  • Bureau van Dijk’s Amadeus

  • EY

  • PwC

  • Berg Insight

  • ABI research

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  • Juniper Research

  • MarketsandMarkets

  • GSA

  • Frost and Sullivan Analysis

  • McKinsey Global Institute

  • European Mobile and Mobility Alliance

  • Open Europe

M&A and Risk Management | Regulation

  • Thomson Mergers & Acquisitions

  • MergerStat

  • Profound

  • DDAR

  • ISS Corporate Governance

  • BoardEx

  • Board Analyst

  • Securities Mosaic

  • Varonis

  • International Tax and Business Guides

  • CoreCompensation

  • CCH Research Network

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Forecast methodology

The future outlook “forecast” is based on a set of statistical methods such as regression analysis, industry specific drivers as well as analyst evaluations, as well as analysis of the trends that influence economic outcomes and business decision making.
The Global Economic Model is covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure. We aim update our market forecast to include the latest market developments and trends.

Forecasts, Data modelling and indicator normalisation

Review of independent forecasts for the main macroeconomic variables by the following organizations provide a holistic overview of the range of alternative opinions:

  • Cambridge Econometrics (CE)

  • The Centre for Economic and Business Research (CEBR)

  • Experian Economics (EE)

  • Oxford Economics (OE)

As a result, the reported forecasts derive from different forecasters and may not represent the view of any one forecaster over the whole of the forecast period. These projections provide an indication of what is, in our view most likely to happen, not what it will definitely happen.

Short- and medium-term forecasts are based on a “demand-side” forecasting framework, under the assumption that supply adjusts to meet demand either directly through changes in output or through the depletion of inventories.
Long-term projections rely on a supply-side framework, in which output is determined by the availability of labour and capital equipment and the growth in productivity.
Long-term growth prospects, are impacted by factors including the workforce capabilities, the openness of the economy to trade, the legal framework, fiscal policy, the degree of government regulation.

Direct contribution to GDP
The method for calculating the direct contribution of an industry to GDP, is to measure its ‘gross value added’ (GVA); that is, to calculate the difference between the industry’s total pre­tax revenue and its total bought­in costs (costs excluding wages and salaries).

Forecasts of GDP growth: GDP = CN+IN+GS+NEX

GDP growth estimates take into account:

  • Consumption, expressed as a function of income, wealth, prices and interest rates;

  • Investment as a function of the return on capital and changes in capacity utilization; Government spending as a function of intervention initiatives and state of the economy;

  • Net exports as a function of global economic conditions.

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Market Quantification
All relevant markets are quantified utilizing revenue figures for the forecast period. The Compound Annual Growth Rate (CAGR) within each segment is used to measure growth and to extrapolate data when figures are not publicly available.

Revenues

Our market segments reflect major categories and subcategories of the global market, followed by an analysis of statistical data covering national spending and international trade relations and patterns. Market values reflect revenues paid by the final customer / end user to vendors and service providers either directly or through distribution channels, excluding VAT. Local currencies are converted to USD using the yearly average exchange rates of local currencies to the USD for the respective year as provided by the IMF World Economic Outlook Database.

Industry Life Cycle Market Phase

Market phase is determined using factors in the Industry Life Cycle model. The adapted market phase definitions are as follows:

  • Nascent: New market need not yet determined; growth begins increasing toward end of cycle

  • Growth: Growth trajectory picks up; high growth rates

  • Mature: Typically fewer firms than growth phase, as dominant solutions continue to capture the majority of market share and market consolidation occurs, displaying lower growth rates that are typically on par with the general economy

  • Decline: Further market consolidation, rapidly declining growth rates

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The Global Economic Model
The Global Economic Model brings together macroeconomic and sectoral forecasts for quantifying the key relationships.

The model is a hybrid statistical model that uses macroeconomic variables and inter-industry linkages to forecast sectoral output. The model is used to forecast not just output, but prices, wages, employment and investment. The principal variables driving the industry model are the components of final demand, which directly or indirectly determine the demand facing each industry. However, other macroeconomic assumptions — in particular exchange rates, as well as world commodity prices — also enter into the equation, as well as other industry specific factors that have been or are expected to impact.

  • Vector Auto Regression (VAR) statistical models capturing the linear interdependencies among multiple time series, are best used for short-term forecasting, whereby shocks to demand will generate economic cycles that can be influenced by fiscal and monetary policy.

  • Dynamic-Stochastic Equilibrium (DSE) models replicate the behaviour of the economy by analyzing the interaction of economic variables, whereby output is determined by supply side factors, such as investment, demographics, labour participation and productivity.

  • Dynamic Econometric Error Correction (DEEC) modelling combines VAR and DSE models by estimating the speed at which a dependent variable returns to its equilibrium after a shock, as well as assessing the impact of a company, industry, new technology, regulation, or market change. DEEC modelling is best suited for forecasting.

Forecasts of GDP growth per capita based on these factors can then be combined with demographic projections to give forecasts for overall GDP growth.
Wherever possible, publicly available data from official sources are used for the latest available year. Qualitative indicators are normalised (on the basis of: Normalised x = (x - Min(x)) / (Max(x) - Min(x)) where Min(x) and Max(x) are, the lowest and highest values for any given indicator respectively) and then aggregated across categories to enable an overall comparison. The normalised value is then transformed into a positive number on a scale of 0 to 100. The weighting assigned to each indicator can be changed to reflect different assumptions about their relative importance.

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The principal explanatory variable in each industry’s output equation is the Total Demand variable, encompassing exogenous macroeconomic assumptions, consumer spending and investment, and intermediate demand for goods and services by sectors of the economy for use as inputs in the production of their own goods and services.

Elasticities
Elasticity measures the response of one economic variable to a change in another economic variable, whether the good or service is demanded as an input into a final product or whether it is the final product, and provides insight into the proportional impact of different economic actions and policy decisions.
Demand elasticities measure the change in the quantity demanded of a particular good or service as a result of changes to other economic variables, such as its own price, the price of competing or complementary goods and services, income levels, taxes.
Demand elasticities can be influenced by several factors. Each of these factors, along with the specific characteristics of the product, will interact to determine its overall responsiveness of demand to changes in prices and incomes.
The individual characteristics of a good or service will have an impact, but there are also a number of general factors that will typically affect the sensitivity of demand, such as the availability of substitutes, whereby the elasticity is typically higher the greater the number of available substitutes, as consumers can easily switch between different products.
The degree of necessity. Luxury products and habit forming ones, typically have a higher elasticity.
Proportion of the budget consumed by the item. Products that consume a large portion of the consumer’s budget tend to have greater elasticity.
Elasticities tend to be greater over the long run because consumers have more time to adjust their behaviour.
Finally, if the product or service is an input into a final product then the price elasticity will depend on the price elasticity of the final product, its cost share in the production costs, and the availability of substitutes for that good or service.

Prices
Prices are also forecast using an input-output framework. Input costs have two components; labour costs are driven by wages, while intermediate costs are computed as an input-output weighted aggregate of input sectors’ prices. Employment is a function of output and real sectoral wages, that are forecast as a function of whole economy growth in wages. Investment is forecast as a function of output and aggregate level business investment.

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