The new normal is coming. For companies, now is the time to invest.
The pandemic has disrupted so much of the way business is done, and there's little reason to think things will go back to the way they were, according to Accenture's North America CEO Jimmy Etheredge.
Remember March? For many people, it will feel like centuries ago, and for others, it feels like it's still going on. In the U.S., the pandemic has continued to draw out over the summer, and companies have had to rethink their long-term strategies for our new reality, as it's not clear when life will start to get back to normal — or even if it ever will.
Since May, Accenture has been surveying close to 1,000 CEOs about their feelings on the economic impact of the pandemic. In its first survey, many CEOs were optimistic of a quick rebound, but in Accenture's most recent survey from late July, nearly half of the executives polled said they believed the economic recovery will be U-shaped rather than V-shaped. Many CEOs have started shifting investments to areas that they hope will set them up for long-term success, or pushing ahead with things they were just thinking of trialing before the pandemic, according to Jimmy Etheredge, Accenture's North American CEO.
Protocol recently spoke with Etheredge about how the pandemic has changed how CEOs are thinking about the future of work, the role of cloud and automation in the recovery, and what the new normal will look like.
This interview has been edited for length and clarity.
In your new survey, more CEOs believe that the economic recovery from the pandemic is more likely to be U-shaped rather than V-shaped. How is that affecting how CEOs are planning for the future?
The CEOs that we surveyed and the ones I talk to are certainly more pessimistic now than they were in May with what the shape of the recovery is going to be. They are leaning much more into investments, shifting a little bit from what had been just day-to-day crisis management to recognizing that the recovery is going to be slower, and this is an opportunity to accelerate investments in digital transformation.
It feels like we've moved from this moment where we're all running around with our hair on fire to trying to live with this now. Do the investments CEOs are now making around reflect this?
From what we see, it is cloud, cloud, cloud. And I think what companies are looking for is ways to make investments in innovation that is going to be at the core of their strategy. And cloud is where they see the ability to be thoughtful about cash. Because in periods of slow growth, cash is king, so everybody becomes very conscious of that, and they look at cloud as a way of leveraging the technology from some of the big ecosystem players, the hyperscalers, to be able to accelerate that innovation. If you look at the survey results, there was a 26-point leap in two months of the companies that said that they were going to accelerate their investments with an emphasis on cloud.
Is that an acknowledgement that they want to invest in the future, or that they already are? I've got to believe that sort of work is difficult now, given the world we're living in.
The migration to the cloud will be fundamentally accelerated by what's happened with COVID. I see that in every conversation I have with CEOs of our clients, and we saw that in our research as well. So some of it are things that pre-COVID our clients were talking about doing, and they've just rapidly accelerated. One of the areas I see that in particular is around the deployment of change. A lot of our clients, both B2C and B2B, have seen the customer experience and the way they interact with their customers completely disrupted, and they have leveraged technology to respond to that.
A very large big-box consumer electronics retailer was, right before COVID, planning an 18-month rollout of pickup-from-store that we stood up in a matter of weeks. A couple of the large grocery chains in North America, we helped set up dark operations so that they could have employees pull products for fulfilling orders from customers. Again, this is something that clients were thinking about piloting in a couple of stores for a quarter and then thinking about rolling out. All of the sudden, it was, "How quickly can we get these changes in place?" So some of these were ideas that they had pre-COVID that got accelerated, but I think some of it as well is a fundamental change where the C-suite is stopping, looking and considering, "What does this mean for our business, and how do we accelerate?"
With the pandemic, it seems like a lot of things have already come to bear for B2C companies and how they've changed the way they interact with their customers. But for B2B companies, how are they thinking right now about client management in this socially distant world?
On the B2B front, they're really trying to borrow ideas that they see working on the B2C side. It has been very disruptive on the sales and marketing front. It's obviously shifting more towards online relationships and interactions. Before it was a lot more client entertainment and use of trade promotion funds, that kind of thing. Candidly, it's one of the reasons why at the start of COVID, we did an acquisition of a marketing services firm, Yesler, which is completely focused on B2B and provides full-service digital marketing. We saw that already our B2B clients were looking for more of that.
Two weeks ago we announced our acquisition of CreativeDrive, which is a content production player. We're seeing a strong interest from B2B about looking at how to reinvent content creation and use that for digital and commerce channels that before they were not putting as much attention or investment into. Typically they had that face-to-face salesperson with some collateral who would talk about the products and services, and now they recognize that they really need to borrow some of these ideas that have worked for B2C.
In the survey, the CEOs' responses have changed over time. Do you feel like CEOs are kind of stuck in this position where they need to prepare for what comes after, but also not knowing when what we're in will end?
I certainly think that no one feels confident with their crystal ball when this is going to end. Most executives think that the next six months are going to be a lot of headwinds around growth. Our survey said only 20% felt like they would have 5% or more growth, but, if you look at North America, the view is, Q2, Q3 of next year is when really they're expecting this growth to come back. So I think some of it is what things they feel like they're going to need to be able to drive that growth, and some of it is a recognition that the way they work is fundamentally never going to go back to the way it was before.
A lot of discussions I have with clients are around collaboration technologies and cybersecurity, because they anticipate that they are going to have people working remotely to an extent that they never had before. They were already kind of anxious and dealing with the cybersecurity challenges that you have when you're got so many people working from home. But I haven't talked to a single executive who thinks when we come out of the other side of this that we aren't going to be talking about a new normal or next normal.
Has that affected the way they're thinking about hiring right now?
I think for a lot of them, ourselves included, who leverage apprenticeships and internships, as far as the hiring process, that's all had to become virtual. Taking an internship and looking at how that would work, I think in general, they're trying to look at how people work and what sort of culture and mindset do you need to succeed. This was something we asked about in the survey, and three-quarters of the companies said we're going to need to fundamentally redesign this.
There's a lot of discussion as well about the role of automation. I see increased interest in AI and automation, and really thinking about what impact that's going to have on some roles. In some cases, some roles might go away; in more cases, the way the role works would change. And then what does that mean for the skills and capabilities that you would want for the individuals in those roles?
Having these conversations that you've been having and the surveys affected the way that Accenture thinks about its own business moving forward?
Yes. The main reason a lot of our people travel is to be at client sites to deliver services. So I'm always asking my clients, "When do you think you're going to be back in the office, and when do you think you would want partners like us back there?" The more pessimistic the clients are about the timing of returning to the office, the more we kind of push out our thinking of when we are really going to get back on the road. Almost all the clients I've talked to are pushing that timeline out. I certainly have no crystal ball, right, but we've told our employees that we're not anticipating any travel for internal needs until the spring.
Beyond the pandemic, are any of the other massive issues of the day, like climate change, the natural disasters we're having in this country right now, the Black Lives Matter movement, are C-suites talking about these issues?
Yes, there is a lot of attention placed on the well-being of the employees, not just the physical well-being of the employees, but also the mental well-being. In our research, three in four C-suite executives said that they believe they should be responsible for ensuring the well-being of their employees, and I'm like, who are these one in four that don't think they should be responsible? Because I haven't run into any of them. There's a lot of those things from a mental health perspective that are really important that we're trying to do.
But to your other point, with what's happening right now around race and the challenges of the systemic racism in our country, that is also creating a tremendous mental challenge and burden for our people and for the C-suite. It means there's an expectation that you're going to live up to the values that each of your corporations have. Most of those, ourselves included, are inclusion, diversity, equality — these are core values, and the expectation is we need to be living within the four walls of our corporations, but also having a positive impact in our community. So there is a lot in addition to thinking about COVID. There's a lot of other things that C-suites really having to grapple with right now.