Though there are signs now of the virus being in retreat, as it does so, it may fundamentally alter lifestyles and practices for all of us. In its wake, it could also leave many lasting changes in the way companies run their businesses. Four such changes are variabalisation, decentralisation, localisation, and virtualisation.
Variabalisation
Companies will strive to achieve close to zero fixed costs and overheads. It was already on the agenda for many startups and large corporates alike, as funding and liquidity became scarce over the last 12 months. Investors in startups had started to stress on ‘evidence of profitability’ as a prerequisite to provide funding for growth. There will be a much more aggressive push now towards converting all costs to variable costs directly linked to business volume, even if it comes as a slight per-unit cost premium. Owning expensive assets and high fixed rentals will become even more of a bugbear. Companies will seek more flexible rental payout structures, which could be tied to business volumes.
Companies will also look to variabalise employee cost to the extent possible. And for this, they will look to engage more freelancers or third party, specialist agencies for specific projects or jobs. They will look to outsource even some of the core business functions, such as accounting or sales and marketing. This will allow them to ramp-up or scale-down faster as the need may be. The ‘worker-supervisormanager’ hierarchy, which is still prevalent in many organisations, will get completely upended or, at the least, considerably flattened out as a result.
Decentralisation
This story is from the August 2020 edition of Indian Management.
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This story is from the August 2020 edition of Indian Management.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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