Beyond COVID-19: Strategic focus for the board - The Deloitte Academy
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Beyond COVID-19: Strategic focus for the board The Deloitte Academy| 27 May 2020
Agenda
Introductions – William Touche, Deloitte
Key economic indicators and issues to be factored into long term strategy - Ian Stewart, Deloitte
UK Chief Economist.
Strategy Considerations – Alex Curry, Head of Monitor Deloitte
Reflections of a CEO;
- Peter Duffy, Just Eat
- Pano Christou, Pret a Manger
Panel Discussion
The Deloitte Academy www.deloitteacademy.co.uk 2
Ian Stewart
Deloitte
3
Regaining activity lost in recessions takes years, not months
2020 COVID-19: -21%
2.5 years to regain peak
2008-09 Global Financial Crisis: -6.1%
5 years to regain peak
1990-92 recession: -1.9%
Almost 3 years to regain peak
The Deloitte Academy www.deloitteacademy.co.uk 4
UK GDP forecast: massive volatility ahead
UK GDP forecasts
2020 2021
Deloitte: 18th May -11.7 +8.5
Consensus, 11th May -7.9 +6.1
The Deloitte Academy www.deloitteacademy.co.uk 5The Deloitte Academy www.deloitteacademy.co.uk 6
COVID-19 hit to growth & bounce vary by sector The Deloitte Academy www.deloitteacademy.co.uk 7
Theme 1: Quantitative Easing + debt boom = inflation?
The case for inflation The case for deflation
The Deloitte Academy www.deloitteacademy.co.uk 8Theme 2: Soaring Government debt = unsustainable government debt? The Deloitte Academy www.deloitteacademy.co.uk 9
Theme 3: Globalisation in peril? The Deloitte Academy www.deloitteacademy.co.uk 10
Alex Curry
Deloitte
11Looking beyond Covid-19; the Board inbox …
1 Think hard about how your operating environment is changing
2 Identify the areas of impact for your business
3 Challenge the strategy and support that challenge
12The changing operating environment
Government, regulation, and taxation
Financing environment and M&A
Social attitudes, consumer habits, and lifestyle
Technology and data
Climate and sustainability
13Potential areas of impact
The crisis has demonstrated the adaptability of certain enterprises: particularly cloud & platform based, data-rich, multi-
channel ones. Enterprises will need to hasten decision making processes and increase their flexibility and adaptability so
Enterprise
1 as to manage a changing environment and exploit opportunities for growth, as well as increase ROIC and productivity.
Agility Regardless of what immediate decisions enterprises make to navigate the crisis, they will need to ensure that investments
in the future allow them to be as nimble as possible.
This is about strategy.; we believe that many management teams will take this opportunity to question fundamental
aspects of their business which have to date been “too hard” to consider - as a way to boost productivity and profitability
2 Reinvention in the future. In the short-medium term this may result in substantive reworking of operations and overheads so that
enterprises deliberately reshape as they come out of the crisis. As enterprises look towards the future however they will
want to consider how to re-direct investment towards agile business models.
The crisis has highlighted the lack of operational resilience (supply chain, production, technology, go to market) for many
enterprises. We expect Boards to place a renewed emphasis on resilience and be prepared to accept higher costs or
Operational
3 inefficiency to secure it. This could take the form of a combination of ‘shorter’ (less complex, more localised) and ‘wider’
Resilience (more diverse to mitigate reliance on sole suppliers) supply chains, higher levels of stock, and greater use of data and
analytics to understand the full breadth of interactions along their supply chains.
Managing through crisis, either with government assistance or without, is rapidly increasing debt levels. Going forward we
believe that many organisations will struggle with high debt, constraining growth and productivity initiatives. There will
Financial be a surge in refinancing activity, capital raising, equity, restructuring and M&A activity to address these debt levels. We
4
Resilience believe medium sized enterprises will be disproportionately affected by the crisis as they have limited access to capital,
are administratively harder for Government’ to support, lack scale and resilience and are many in number. Yet they’re
politically important as employers, sources of entrepreneurialism and mainstays of many economies.
14Potential areas of impact
Government deficits will increase dramatically (as in the GFC) as will their role in many aspects of national
Relationship life. Governments will face real challenge to reform and increase productivity whilst managing public expectations around
5 with sanctity of key parts of government (Health) and avoiding a return of, or perception of Austerity. This is likely to lead to a
Government higher tax environment. We also expect governments to take a more active role in industrial and M&A policy, and to take
on new responsibilities as business owners, operators and influencers as a result of stimulus measures.
Managing the crisis requires a much greater use of data on population, movements etc. (e.g. contact tracing apps). Whilst
easier in certain countries e.g. China) this will present significant privacy and data management issues in Western Europe.
6 Data & Privacy That said public perceptions – and enablement - of government use of individual and collective data may be changing
which presents huge opportunities in healthcare provision. Additional consideration is evolving relationship between
governments and big tech firms (Google, Facebook etc.).
The way people work has changed considerably, both physically and in the systems they use. This has implications for
Future of property and office space, remote training, talent and resource management and leadership in a remote environment.
7 There may be implications for global workforces and mobility. There is an additional issue around worker protection,
Workforce
future of 0 hours / gig economy and worker protection, which we expect to ascend the political agenda.
During this crisis the trials and tribulations of the EU and US / China have hit the headlines and exposed institutional fault-
lines. This crisis has challenged cooperation within blocs, but also between blocs. Much has been written about the roll-
Global
8 back of globalisation. We don’t anticipate a wholesale retreat from globalisation, but risks will increase. We believe that
Cooperation the crisis will lead to a fresh look at national strategic industries, the impact of foreign ownership of enterprises and the
need for a strong and resilient local footprint and tax contribution.
15The impact on strategy
How is our environment changing?
What are our goals
and aspirations?
Where will we
play?
What is the 5-year How will we
growth ambition? win?
– What metrics Which consumer How will we
will define our segments should configure?
What is our What management
success? we prioritize for
differentiated value systems do we
growth? How do we allocate
What market proposition for the need?
position do we Which needs prioritised segments? financial and non-
aspire to have? should we address? financial resources
What is our product /
What geographies to drive returns? What critical
offer?
should we focus What are the capability gaps exist,
What pricing? and how will we fill
on? capabilities required
What is the cost to capture these them?
structure that will allow growth areas? How do we
us to support sequence our
What networks /
investment in these growth initiatives,
partners should we
growth areas? and where do we
leverage?
In which channels start?
How can digital
should we distribute How do we manage
technologies enable
our products? our initiatives?
our strategy?
16The impact on strategy
1. Define the key 3. Take a view on
2. Take a view on 4. Identify where 5. Decide on actions
assumptions longer term scenarios
nearer term scenarios assumptions have and commit sprint
underpinning your for the post-
and business impact changed the most teams to their pursuit
strategy pandemic world
Make sure short term actions don’t
impact longer term flexibility and
optionality
17An example of scenarios
• Consumer attitudes to how they wish to live • The crisis leads businesses, workers and consumers
and how they wish to work are significantly to realise that legacy ways of working and ways of
changed – attitudes to travel, commuting, doing jobs (broadly defined) are incompatible with
health, leisure and consumption culture are all the needs of 2020s society
impacted leading to a new zeitgeist • This leads to widespread change in the way
New normal
• Traditional businesses, however, do not draw business is done, with a high degree of dialogue
emerges
the same conclusions and retain their pre- 2 4 between businesses of all scales with their
crisis models “New wave “Economy and consumers and with each other
• This dissonance leads to explosive growth in accelerates” society remade” • Sustainability, inclusion and cultural digitisation
alternative business models and an become central features of business models at a
accelerated decline of incumbents in many rapid rate as the economic recovery progresses
sectors
Lifestyle
• As the crisis abates, people and • Businesses discover that outcome-based, data-
Reset to pre-Covid
organisations very rapidly return to pre- centric, machine-assisted and location independent
3
crisis life and work patterns 1 working is more productive as well as more flexible
norms
• Existing ways of working appear to have “Old product, new • This realisation drives accelerated transformation of
“Business as usual”
delivered sufficient business and economic machine” operating models and increased cloud-based
resilience to avoid lasting long-term effects technology investment as the economy recovers
• New (often digital) business models and • Consumer demand, however, has rebounded,
channels played only a minor role in meaning that large-scale reinvention of the value
sustaining people and businesses and thus proposition is not required
continue to play an ‘edge’ role Reset to pre-Covid New normal • Lack of comfort with new ways of working
norms emerges disadvantages a generation of knowledge workers
Productivity who are unable to adapt to the change, increasing
the discomfort of the middle aged, middle class
18These slides have been prepared in general terms and therefore cannot be relied on to cover specific situations. Application of the principles set out will depend upon the particular circumstances
involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Deloitte LLP would be pleased to advise attendees
on how to apply the principles set out in this presentation and the handouts to their specific circumstances. Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person
acting or refraining from action as a result of any material in this presentation and the handouts.
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