Operatively agile companies will thrive in the post-crisis operating environment

The second part of the Economic First Aid Course was held on Thursday 24 September at the Valkoinen Sali (White Room) venue in downtown Helsinki. Amid the corona crisis, the name of this year’s event was changed from Economic Defence Course to Economic First Aid Course, and it was held online without a guest audience.

The event discussed why Finland needs radical structural reforms and which changes should be prioritised. Aalto University Executive Education (Aalto EE) and Helsingin Sanomat have been organising the Economic Defence Course since 2015, which makes this the sixth course. The cooperating partner was K Group.

In the opening speech of the event, Pekka Mattila, Professor of Practice at the School of Business Department of Marketing and CEO of Aalto University Executive Education (Aalto EE), discussed what we can and should expect from the future.

‘We are in the middle of a health crisis and, in parallel, an economic crisis. Many decision-makers have to balance their choices in the context of these crises. Companies are becoming familiar with coping. Numerous large corporations took proactive measures already in January and February after observing the developments of their operations in Asia.’

‘Many companies have already learned to cope with the situation, but now is the time to consider how to move forward. Decisions must be made on the distribution of attention and effort between short- and long-term operations. Long-term plans cannot be undercut by short-term solutions because in the end, future success will be decided in the long run. The challenge of allocating the available resources correctly is both strategic and tactical. Moreover, the challenge involves a communicational aspect as it is crucial to know how to give stakeholders a credible story that holds a promise for a better tomorrow.’

According to Mattila, there are three types of agility: strategic, portfolio-related and operational agility.

‘Strategic agility refers to the ability to identify opportunities and risks faster and more efficiently than competitors and to prepare new business plans accordingly. Portfolio-related agility entails consideration of which product lines, brand portfolios and services a company should invest in and which ones it should renounce.’

‘The third type of agility, operational agility, means our ability to move and redistribute resources based on market requirements. These times marked by COVID-19 test the level of operational agility in particular. The requirements associated with operational agility include resourcefulness, that is, the company’s capacity to transfer investments and human resources between activities. In the long run, companies that are dynamic and operationally agile are remarkably more valuable to their owners than those that are not.’

‘Many organisations begin to resemble onions’

When assessing the layered nature of organisations, Pekka Mattila argues that in the future, we will see an increased likeness between organisations and onions.

‘An organisation has a solid core formed by the functions the company is adamant on performing in-house. The core involves those employees whose skills are close to irreplaceable and whom the company absolutely wants to keep on its payroll. The next layer involves various partnership and advisory models. These relationships are often very long and marked by the absence of an “us and them” mindset, even if the arrangement is based on consultancy. Persons involved in such relationships can simultaneously sell part of their effort to another party. This middle layer is firmly based on trust and cooperation.’

‘The outer layer contains conventional subcontracting and outsourcing activities. Here, the winds of change can blow hard: tendering can be intense, contracts may be terminated, and prices can skyrocket at the peak of demand. The onion model will become increasingly prevalent in the future. This will increase the bargaining power of the core, that is, the skilled elite, whether it consists of artisans, experts or managers.’

Mattila concludes his presentation by stating that in order to succeed in the future, companies need to restore the sense of significance and the idea that there is hope for the better.

‘If the management fails in this respect, the prospects of a new upturn will diminish dramatically. Fortunately, according to the annual survey on Finnish large corporations, almost three out of four large corporations consider their duties to include solving societal issues. This provides the entire personnel with a sense of significance.’

Other speakers of the event included Minister of Economic Affairs Mika Lintilä. He responded to interest and service organisation representatives’ questions on the impact of the pandemic on different business sectors and the state’s support measures for companies in coping with the crisis.

The event could be followed online at the newspaper Helsingin Sanomat website, hs.fi, and the topics were discussed on Twitter with the hashtag #tpk2020.

Text: Terhi Ollikainen