In a recent BCG investors survey, 90% of investors want CEO’s to prioritise long-term advantage through building business capabilities, while at the same time 69% want businesses to focus efforts on financial resilience through the crisis.
That’s a big responsibility for CEO’s to oversee, some would say that’s just the role of a CEO and ultimately they are responsible for driving business performance and leading both the short- and long-term strategy. But while CEO’s work with company directors to decide on the best short-term crisis response plans and determine what their business will look like over the next 12 to 24 months, where should CEO’s focus the business’ efforts?
Reducing cost across the company
A BCG business leaders survey found that to ensure business survival during and after the pandemic, 90% of company leaders are planning company-wide cost-reduction programs. With the top three areas expected to see a significant cut being facilities/general CAPEX, operations and workforce (PwC CFO Survey). By working with the CFO and cutting or pausing investment and costs, CEO’s can protect the bottom line and minimise the impact COVID-19 will have on the business. We’ve covered this topic in more detail in a previous blog which you can read here.
For many businesses, the pandemic accelerated digital initiatives with 80% of business leaders stating that digital transformation played an important role in navigating lockdown (BCG business leaders survey). This isn’t surprising, as many leaders moved their entire workforce to work from home, communicating through instant messenger and video conferences as well as exploring digital offerings to improve customer experience and value.
As well as managing the crisis, investment in digital technologies can enable significant cost reductions. BCG has found that through digital tech business leaders can reduce costs by 10% to 30% in their supply chain and manufacturing functions, 10% to 20% in procurement spending, and a further 20% to 40% in shared services. This is something we can relate to, as our tech solution usually finds in excess of 20% of energy is waste, and by eliminating this increases a business’ energy efficiency and also unlocks cost savings.
Measuring and improving business performance
Yes, cost-reduction programmes and digital transformation can help CEO’s improve business performance to succeed in both the short- and long-term but how can leaders monitor the impact of these initiatives and present findings to the board?
As a CEO you’ve re-evaluated your current budget and cashflow with the CFO, set up weekly and monthly reviews to gain insight on the landscape of your finances and you remain in regular contact with the CSO on sales opportunities. You’ve also agreed on the new social distancing measures with your COO/Ops Director who’s confirmed new work rotas and is conducting productivity impact analysis to review the actual and potential impact of COVID-19.
These are all good measures to have in place but something that we’re finding is being overlooked is the energy efficiency and cost implications of these changes, an important consideration for those working in energy-intensive industries and those who are making significant operational changes.
Being able to understand the impact any changes will have on your energy consumption can provide critical information to inform the overall budget, cash flow and provide insight into the overall efficiency of these changes. CEO’s can achieve this by conducting an energy budget impact assessment.
This assessment analyses your consumption data and combines it with your proposed operational changes, identifying the likely impact on your energy consumption and more importantly, costs. We go into detail about the financial benefits in a previous blog you can find here.
So, there you have two areas CEO’s can focus their business efforts to improve performance post lockdown and beyond. With the backing of the C-Suite and employees, CEO’s can support short-term financial resilience by actioning an effective cost reduction programme and build long-term business capabilities through digital transformation.
To support the business community we’re offering a limited number of Energy Budget Impact Evaluations (EBIE) free of charge to help businesses take control of their costs post-COVID, for more information or to discuss arranging an EBIE for your business follow this link.
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