One silver lining of the COVID-19 crisis has been to show businesses how to manage better and achieve greater speed, quality, and cost control. A wartime mindset—decisive crisis management, scenario planning, and a human reflex attuned to the shocks affecting employees—has been the hallmark of leaders so far. Now, as the world feels its way toward recovery and new opportunities, another risk looms. It is that inertia will set in, along with a longing for a return to the operating style of pre-crisis days.
How can leaders avoid the impulse to abandon their progress in shaping a more productive and competitive company profile? The answer is a renewed focus on people and their capabilities. Over the past five months we have seen the edge gained by organizations and leaders with adaptable management and strong capabilities. Only by advancing new cadres of leaders, building a middle bench with skills to cut across silos, and treating technological acumen like a profit center will companies be able to work to further the broader transformation that has begun. The return on this people investment has never been higher.
We see three imperatives as critical for managing people and building capabilities to thrive in the post-pandemic period.
Put in tomorrow’s team today
As in many disruptions, leaders are finding that talent is stepping up in unexpected ways. Even before COVID-19, one European car and truck maker assessed its biggest value creators and found that two-thirds of its 50 most important value contributors were from one to three levels below the C-suite. Today some young middle managers are defying the problems and frustrations of this difficult period to demonstrate calm, champion diverse talent, and achieve far more than peer leaders do. Leaders have to celebrate and reward these rising stars.
Identify and elevate the business skills that matter most
Leaders and boards must identify the core capabilities to build a culture of adaptability to anticipate the next shock or black-swan event. To be clear, this is a prioritization of the handful of an organization’s most tangible and critical business skills and a commitment to driving them deep into the organization. The capabilities showing up now on our radar screen include these:
Managing in a transformational way. Modern management is about safe and incremental change. But by adopting a transformational mindset, companies accomplish so much more than they think they can. Rather than aiming for a 5% improvement, shoot for 20% to unlock energy and performance gains. Today, areas like digitizing customer engagement and launching new products attuned to a changing world are ripe for a transformational push.
Navigating and leading in a network of teams. The modern company is much more complex than it was 20 years ago. The need is greater to do away with rigid hierarchies and operate with agile, empowered teams able to get closer to customers. Executives able to navigate these will do better, but very few have been trained in these skills.
Supply chains. Sure, we know that it’s a perennial niche topic. But COVID-19, the possibility that the pandemic will have a long tail, changing views of China, and the importance of resilience in weathering crisis have moved supply chains from the back office to constant discussion in the front office.
Treat technological acumen as you treat profit targets
As companies have vaulted ahead in adopting and applying digital technologies, the metabolic rate of technological transformation has sped up. Those who master this massive experiment will gain a baseline technological advantage in applying the cloud, analytics, and data-management technologies, to name a few. Leaders should drive technological acumen into all executives and measure their proficiency and improvement in the same way they measure profit targets. This is akin to how some leading companies used lean process improvements in the 1980s and 1990s to encourage new management discipline in their organizations.
As executives feel their way out of the COVID-19 crisis, here’s one question that should be top of mind: What should be retained from this period of pandemic shock, uncertainty, and dramatic change in the ways businesses have reacted to crisis? We are convinced the answer is that those companies that invest in capabilities to empower leadership, teams, and technology will be well positioned to thrive in the post-pandemic era.
(To read the full-length report from which this essay was adapted, click here to visit www.mckinsey.com.)
Daniel Pacthod and Michael Park are senior partners in McKinsey’s New York office.
