McKinsey senior partner Mary Meaney joins IBM CEO Arvind Krishna and Unilever CHRO Leena Nair to discuss how companies can organize for the next normal.
The next normal: Reimagining the postpandemic organization
This collection is the third of five edited volumes to accompany our multimedia series, airing on CNBC, focusing on the forces shaping the next normal.
Imagine a world in which companies are defined by their ability to inspire, foster collaboration, and create experiences for employees and customers that are simple, meaningful, and enjoyable. Sound like some impossible, distant dimension? It’s not. All this—and more—is beginning to take place right now inside organizations that are leveraging these challenging and uncertain times to reinvent, reshape, and reimagine how they operate.
Talk to any business leader anywhere in the world, and one thing becomes abundantly clear: No one would have chosen this pandemic as a catalytic event. Yet, here it is, and this very reality is acting as an “unfreezing” moment, says Mary Meaney, a senior partner at McKinsey & Company and leader of the firm’s global organization practice. “There are huge learnings that are emerging from the pandemic,” she says. “Leaders have seen that their companies have been able to operate at an unimaginable pace and with so much resilience and creativity. Now they’re asking, ‘How do we hardwire these behaviors into the organization so that we are stronger in the years ahead?’”
The stakes requiring a new way of operating could not be higher. McKinsey research also shows:
Eighty-two percent of employees report that it’s important for their organization to have a purpose, but only 42 percent say their company’s purpose statement had much effect.
Contributing to society and creating meaningful work are the top two priorities of employees, yet they are the focus of just 21 percent and 11 percent of purpose statements, respectively.
Clearly, there’s a disconnect. But the companies that are bridging this gap, Meaney says, are the ones reimagining their organizations in the midst of COVID-19 by addressing three core questions:
Who are we? Do we have a compelling, standout identity that attracts and inspires employees, investors, clients, and partners? Do we convey why we exist through a resonant purpose, a strong value agenda, and our unique culture?
How do we operate? Do we have a nimble, flat operating model in place that fosters teamwork and rapid decision making, and that values and develops talent throughout the organization—not just at the top?
How do we grow? Do we have a robust ecosystem that values internal and external partners, leverages data-rich tech platforms, and is committed to doing whatever it takes to create and maintain a continuous learning atmosphere?
Leaders have seen that their companies have been able to operate at an unimaginable pace and with so much resilience and creativity. Now they’re asking, ‘How do we hardwire these behaviors into the organization so that we are stronger in the years ahead?’
Mary Meaney, Senior Partner, McKinsey & Company
The companies that are doing it right—the ones that are going to thrive in the Next Normal—have fast and flexible operating models underpinned by an unshakeable sense of purpose. Instead of control and hierarchy, they cultivate collaboration and teamwork. It’s what Bill Kozy, corporate advisor and former COO of Becton Dickinson, calls “purpose on steroids.” These are the companies with leaders who are “taking the time to provide meaningful targeted communication to their organization,” he says. “This is not a pep talk. It’s about linking the purpose of the organization to activities taking place right now that are impacting not only the company but the society in which it operates.”
The businesses profiled below are taking bold steps to reimagine their organizations—and the way they exist in the world—to reflect a new reality. They’re unleashing the inherent power of their workforce by addressing these three core questions and, in the process, are finding new ways to create, partner, experiment, and innovate.
The companies that are going to thrive in the Next Normal have fast and flexible operating models underpinned by an unshakeable sense of purpose.
If there’s any question about the veracity of the phrase “timing is everything,” look no further than IBM CEO Arvind Krishna. On April 6, he took over the top spot at the tech giant, just as it was sending 350,000 global employees to work from home as the coronavirus began to spread. In the weeks that followed, IBM began operating hundreds of data centers remotely, and rapidly trained leaders to understand their new responsibilities to connect with their people and customers in a drastically changed environment.
Today, Krishna says the company is in the process of reimagining how work gets done, and what that looks like. Prior to the pandemic, for example, a customer engagement would have involved “getting six of our smart people from one country on a plane, put them in hotels, and in two weeks the job is done,” he says. The new virtual environment we’re all experiencing, Krishna says, is allowing IBM to unlock the talent and potential of its people wherever they are and in whatever way best suits the customer. “Now I can take two really smart people in Brazil, maybe four people in California and have them work with that customer,” he says. “That’s probably far more expertise than the six people I had to fly in to that one location.”
Making that switch required fast decision making and trust at all levels of the organization. Although he was new to the CEO position, Krishna is a 30-year veteran of IBM who is intimately familiar with how the value agenda and the culture of the company are aligned. “That’s what’s enabling us to transform and adapt to a new way of working,” he says. “If a company doesn’t have that alignment, they’re going to be left behind.”
The new virtual environment we’re all experiencing is allowing IBM to unlock the talent and potential of its people wherever they are and in whatever way best suits the customer.
How does an organization grow when it’s already the largest player in its market? By being brave enough to reimagine another way to operate. That’s the position the State Bank of India (SBI) was in when it launched YONO (“You Only Need One”) back in 2017. The mobile app offers services for banking, investments, and trading as well as a platform for online shopping. SBI’s chairman, Rajnish Kumar, says the initiative was born of the belief that a bank needs to reimagine itself differently in the digital age.
That is an especially rigorous undertaking considering the size of the organization. SBI has more than 22,000 branches, nearly 450 million customers, and serves about one-quarter of India’s population. Still, as Kumar looked at India’s growing younger demographic, he realized how much of the bank’s business could be done virtually. COVID-19, and the in-person restrictions resulting from it, only accelerated that transformation and has now put SBI at the forefront of Indian companies leveraging technology to reimagine operations.
“The biggest shift we’ve seen come out of the pandemic is that when we’re thinking of doing something new, we first think about whether there is a digital solution,” he says. The bank is already reaping the benefits of that mindset shift: Kumar says YONO is helping attract younger workers and customers to the legacy bank. “Nearly 80 percent of our new customers are between 20 and 40 years old, so I would say that YONO has helped us achieve our objective of attracting that younger population,” he adds.
A leadership reset
Permira, a London-based private equity firm, is in the unique position of witnessing the changes that the pandemic has brought about through the lens of the 50 companies in its portfolio. What has quickly become clear, says Caroline Carr, chief human resources officer (CHRO) of Permira, is that strong leadership needs to be conveyed through crystal clear and effective communication.
“Most companies went into the pandemic already having a crisis communication strategy,” she explains. “This has now become the standard communication strategy.”
That means two things:
Leaders must communicate more frequently and across more and varied channels.
Leaders must share the strategy for how an organization is going to move ahead, and how well those initiatives are working, more openly and transparently.
The payoff from this leadership communication reset, she says, is powerful. “We did a session with the CHROs of our portfolio companies, and they said their people have never felt so connected,” Carr adds. “We’re seeing that in our firm as well.”
The biggest challenge is making sure these changes stick. To that end, Permira is reimagining communication with a three-pronged approach, Carr says. This involves:
New training of business leaders and managers to make sure they learn how to lead and manage better virtually, and how to recognize mental health concerns among workers before they become debilitating
Adjustment of compensation, to recognize and reward the people who have done an outstanding job leading the organization through the crisis
Pulse surveys at regular intervals, to get a read of how employees are feeling
“As we settle into this next normal, we want to be even more deliberate about strengthening connections at all levels of the company,” Carr adds.
A pathway through learning
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Leena Nair, CHRO, Unilever
Unilever is known for some of the most recognized brands in the world, including Dove soap, Hellmann’s mayonnaise, and Ben & Jerry’s ice cream. But for the consumer goods giant, the engine of success is fueled by continual learning. Part of reimagining organizations, Meaney says, is the ability to create an atmosphere where purpose and skill travel on the same path.
At Unilever, that’s being accomplished through the company’s Future Fit initiative launched earlier this year, says Leena Nair, Unilever CHRO. Every person in the company has this plan, which contains four elements, she says. Employees start by identifying their purpose. “We feel that people learn best in areas that they feel purposeful about,” Nair says.
From there, the plan addresses employees’ energy level and overall well-being, and how they can improve both; leadership training and areas of development; and, lastly, actual skills.
Nair says Unilever has created a learning pathway for all positions within the company. “We think our approach is unique and well suited for the environment we’re in,” she says. “There’s too much noise right now about what to learn; there’s too much coming at employees.”
We feel that people learn best in areas that they feel purposeful about.
Leena Nair, Chief Human Resources Officer, Unilever
Being actively involved in the process allows employees to take ownership of their career. “It’s not something being done to them,” she adds. “It’s them embracing the change they need, and the company needs, to move through and past this pandemic.”
As these companies demonstrate, there’s isn’t one path to reimagining the organization. But whatever method is chosen, leaders and their managers need to address the business as a dynamic system in which purpose, strategy, and learning are the necessary ingredients.
Go behind the scenes and get more insights with “ Mary Meaney: Reimagining how organizations operate for the future” from our New at McKinsey blog. You can also see the latest installment from the multimedia series, “ The path to true transformation.”