The alphabet soup of business models has left everyone speculating about the shape and timing of the recovery. Those who believe in a “V” shape believe in a sharp recovery, a “U” shape expect a prolonged recover, “W” believers are betting on an episodic recovery, while “K” believers think there will be both winners and losers. No matter how you spell it, leaders have discovered that the manufacturing sector is experiencing positive results.
In countless first-person interviews over the last six months, the storyline for most C-Suite executives has been one of cautious optimism. This viewpoint is backed by forward-looking metrics by the U.S. Census Bureau and other credible sources that indicate that all sectors, except transportation, are at or above last year’s demand for durable goods, with strong forward momentum. Some manufacturers are racing to quickly ramp up after cutting too much production earlier in the year.
What we are discovering is clear. Things are getting better for those who used the lessons of 2020 to transform for 2021 and beyond.
The lessons were different for each company depending on how they approached these novel events, resulting in three categories of organizations:
It is not uncommon for companies to cross their fingers and hope for the best, relying on past successes. Embracing the lessons of 2020 requires a dramatic cultural change to survive and thrive in the coming years. We discovered that some leaders felt that their employees had “been through enough,” showing a hyper abundance of caution for reinventing their culture.
Waiters also focused on traditional go-to-market paradigms, including time-worn sales motions and channels, assuming that buyer behaviors had not changed. Bringing back furloughed sales staff without examining account lists and failure to prioritize virtual selling environments result in fewer competencies in the marketplace. The competitive landscape also changed, requiring leaders to review new competitive threats, often from non-traditional sources.
What fueled this reticence to change? Fortune 500 leaders reveal that Waiters did not make the appropriate investments in digital enablement and engagement. They did not cut costs. They did not map out new buyer behaviors or align their organizational capabilities to emerging needs. They were neither proactive nor reactive but laid stagnant as the world around them changed.
No matter what recovery model you believe in, quickly embracing the lessons of 2020 while remaining attentive to market conditions, has been the key for manufacturers to move forward. In discussions with forward-thinking Fortune 500 leaders, they are rethinking how their products and services will lead to outcomes that benefit their clients. They are willing to make calculated investments that will move them forward while still watching the bottom line.
Belt Tighteners and Transformers stand to make the most of the coming year. They quickly realized that in crisis, there is an opportunity to survive and grow in a new economy, but only if they moved past outdated business models. They had to be willing to throw out what did not work, experiment with new go-to-market models, and use detailed analytics as proof points to guide their behavior.
Is there any hope for the Waiters? They must first learn that waiting is not a strategy. Not making decisions is making a decision, potentially to fail. Waiters need to look to both Belt Tighteners and Transformers to leverage the lessons that both COVID-19 and 2020 taught the marketplace. For Waiters to change, they must:
Things are better than we thought because the manufacturing sector learned to immediately respond to business disruption by lessons from an emergent crisis to create a new future. The year 2020 will soon be behind us but embracing these lessons learned is how we will evolve and grow our economy.
For more information on how Alexander Group can help your firm succeed in 2021, please contact a manufacturing practice lead.