Having ventured out a bit more recently following a stringent lockdown in Dubai, it’s made me appreciate how quickly we become accustomed to change.
Temperature scans, masks, bottles of hand sanitiser on tables and social distancing have all become part of everyday life.
Face masks hiding facial expressions and greetings without the customary handshake have all changed the social dynamic and the feel of business meetings; the fist or elbow bump takes a bit of getting used to and then there’s the now customary wave at the end of video calls.
We’ve all experienced and have had to adapt to considerable change over the last six months with a lot more to come. But the human race adapts quickly.
Businesses are also adapting. Those that fail to do so may not survive.
COVID-19 has highlighted weaknesses in business structures
With significantly reduced revenues, rapid cracks began to appear in many businesses through Q2 20. It’s no surprise that many boardroom discussions immediately turned to cutbacks including reductions in workforce as a first step in the road to survival.
Video calls and the resultant drop in travel costs over the first half of 2020 have caused many businesses to question their historic travel spend and future budgets. Virtual meetings have become the norm for many businesses and even the airline industry predicts that business travel will not return to pre-COVID levels.
Many are also reconsidering real estate costs in the form of office space and questioning the need to sustain these expenses given the perceived success of the working from home initiative. UAE Free Zones may be protected to some extent against real estate contraction due to their visa/sq. meter business model, but private landlords will almost certainly be impacted.
Weekly liquidity analysis has become the norm and the term ‘cash is king’ has become ever more relevant; businesses with a strong cash balance have weathered the storm better and generally receive a more sympathetic ear from banks when requesting covenants to help weather the storm.
But it’s not only about cutting costs
Successful businesses have had to focus on more innovative differentiation and out of the box thinking to maintain and increase their share of a smaller market.
Improved operational efficiency, enhanced procurement strategies and a redesigned supply chain are all part of the play.
Urgency and Resilience
There is a real need for urgency. Businesses with lengthy approval processes via vertical authority levels have had to reduce the approval time and allow decisions to be made at the coal face to increase the pace of implementation. Many have already seen the benefits of this streamlined approach.
Those that have already adopted digitalisation, AI and automation have had an easier ride than businesses with no digital footprint. A 2018 survey by McKinsey identified a significant and increasing skills shortage in this area across the Middle East by 2030, which will ultimately equate to more jobs in this sector over time.
People will need to retrain and adapt and businesses will need to further invest in AI to ensure they remain resilient and efficient.
Cybercrime is a growing and significant risk as opportunists use the current climate to target organisations’ often less than adequate IT defence systems, often exacerbated by remote working access. Universities are now offering ‘Ethical Hacking’ qualifications and this knowledge will likely be in great demand from businesses when these students hit the job market.
We as a race will adapt. Survival is instinctive and in our genetics.
Businesses are also adapting. But this will require visionary leadership, a change in strategic thinking and an innovative approach to managing spend and this needs to happen today.