The end of the world appears to have been postponed indefinitely. Inflation and gas prices are falling. China has lifted its pandemic restrictions and reopened its ports. At the same time, many companies have readjusted and diversified their supply chains. Polycrises have become the new normal. So is it now time to exit crisis mode and concentrate again on day-to-day business?
The desire to leave crises quickly behind and to look ahead is part of the fixed managerial mindset. Crises have a beginning, a high point, and an end. But what if the exceptional case becomes the general rule? At first sight, many sectors are resuming a successful path. In Germany, many DAX companies are posting record dividends, and the order books are full through to April. But the position could dampen down by the mid-year point, as inflation fuels a wage-price spiral. The need for restructuring is likely to increase in the short term. That much is also indicated by the latest PwC CEO Survey1: 73% of the CEOs surveyed are working on the assumption that global economic growth will contract in the coming year. The last time CEOs were that pessimistic was 12 years ago. And according to an Allensbach survey, the general population in Germany is more pessimistic about the future than at any time since the 1950s2.
According to the latest survey by PwC3, 50% of German engineering companies are currently in a financially strained situation.
But is the conventional restructuring toolbox, generally based on cost reductions, still the right choice in times of disruptive transformation? Today’s generation of managers have spent the majority of their careers in a golden decade of growth and negative interest rates, and have only experienced time- or regionally-limited crises. For a very long time, the situation in their core markets was governed by very favorable conditions. But the current poly- or multi-crises demand that CEOs develop new crisis management strategies ̶ and a new view of transformation.
The transformation with which today’s companies are reacting to the disruptions to their business model can only be successful if it is understood not as a process, but as a mindset. Transformation as a mindset means a constant willingness to innovate, to be agile and to question one’s own actions and ways of doing business. Anyone failing to internalize this attitude quickly loses out.
To avoid that, we have identified four drivers that we see as the basis for transformation as a mindset.