COVID-19: eight safe & successful relaunch actions - McKinsey

As Europe starts to emerge from lockdowns implemented due to COVID-19, we look at McKinsey’s eight actions for a safe and successful economic relaunch. 

“A new phase in the COVID-19 pandemic is upon us,” comments McKinsey. “It is a time for hope but also for caution. The end of the lockdown will not spell a return to the old “normal”, nor will it be universal. The opening will take different shapes, with different countries, different regions, and different business sectors opening up in different ways and at differing speeds. The virus still lurks and the ability to contain its spread will dictate what happens next; any resurgence will likely bring about renewed restrictions. Large-scale testing and tracing, the broad availability of masks, and sufficient intensive-care capacity in hospitals will determine the pace of recovery.”

As restrictions begin to loosen, McKinsey stresses the need for a holistic approach when it comes to restarting the economy. Based on research and speaking with leaders in Europe, the consultant company has highlighted eight key actions for the economy based on a broad view of issues and concerns relating to the end of lockdown. 

  1. Creating a detailed relaunch map

Shattering many of the tools and assumptions that leaders rely on for decision making, McKinsey details the importance of defining a solid framework for action in a highly volatile environment.

“The best approach is to develop a detailed relaunch map—country by country, site by site, segment by segment, customer by customer, and product by product—in order to prioritise recovery opportunities. This map will guide production, supply chain, and marketing and sales efforts, and help determine a recovery timeline for each site. It will also enable business leaders to get a head start on reassessing investments and prospects for changing the geography of their value chains, for example through relocation of assets. It may be appropriate to freeze some planned or ongoing projects until the company has the capacity to reassess them,” says McKinsey.

  1. Providing customers with safety guarantees

As Europe emerges from the lockdowns, clients and customers will become more vigilant when it comes to health and safety. This will result in the need for organisations to provide products and services that adhere to the most rigorous health and safety conditions, as well as having the ability to be able to show or explain their measures to clients and customers. 

  1. Safeguarding the health of employees

While many employees are eager to return to work, organisations will need to reassure their employees about safety as well driving motivation within the workforce post-lockdown. 

McKinsey highlights three actions that will help to stimulate this:

  • Ensure employee safety in the workplace

  • Extend protection measures to employees outside the office

  • Remobilise employees

  1. Reviving demand

McKinsey’s analysis shows that demand constraints were responsible for 85% of the weekly GDP loss recorded at the beginning of April in Germany and over 70% in France. “In a large majority of the 25 sectors we studied, the effects of the demand shock on value added outweighed the impact of the supply shock. This was linked to the availability and productivity of labor or raw materials and components,” says McKinsey.

“One imperative for businesses will therefore be to revive their customer base. They will then have to stimulate demand, guarding against any risk of distorting price models or, worse, fueling a deflationary spiral.”

  1. Rebooting operations and supply chain

“The optimal restart of operations requires returning to the market at the desired speed to serve the demand accumulated during lockdown—but without going faster than the pace of recovery. At the same time, CEOs will seek to consolidate their company’s competitive position,” comments McKinsey. Noting that several prerequisites will need to be met:

  • Secure the supply chain on strategic procurement 

  • Strengthen the company’s ability to anticipate and meet demand

  • Set out a phased recovery, site by site

  • Reassure all partners about operational reliability

  1. Shifting IT and technology to restart mode

“From the start of lockdown, chief information officers (CIOs) and chief technology officers (CTOs) have made heroic efforts to cope with spiraling new demands against tight deadlines. They have had to orchestrate the massive and sudden switch to remote work for employees, using new collaborative tools in a way that is both efficient and cybersecure. They have had to ramp up digital channels to serve customers, even as they solidify their company’s IT infrastructure at a time of very large load increases,” comments McKinsey.

However, as Europe begins to emerge from the lockdowns, new opportunities will arise, with the importance of digital technology accelerating among customers and suppliers, resulting in the need for rapid digitalisation plans. 

  1. Steering the restart with care

When it comes to taking care when steering the restart of the economy McKinsey highlights that there are two priorities in this area:

  • Increasing the speed of decision making

  • Providing impetus through the optimal use of working capital

  1. Sustaining value creation born from crisis and reinvesting in recovery

“Many companies with the ability to continue at least partially during confinement periods had to design and adopt a radically new “under strain” operating model within a few days. Some have succeeded in pivoting a large part of their activities,” comments McKinsey. 

Due to the impact of the virus many organisations have had to adopted rapid changes to their operations including:

  • Working from home

  • Eliminating travel

  • Adopting more flexible business models

  • Rapid upskilling of staff 

  • Innovation

  • Strengthening relationships with customers and suppliers

“For leaders, it is now important to determine which of the developments imposed by circumstance may have generated value, financially, operationally, and for their people. Some of these could then be incorporated into future thinking about the reorganisation of work and reinventing the business model.”

To read more on these eight actions for a safe and successful economic relaunch, click here!

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