Rethinking Retail’s Post-Pandemic Operating Model

In a whirlwind of supplier shutdowns, virtual showrooms and order cancelations- to name just a few of the Covid-induced business challenges- business leaders scrambled to adapt strategies and business models to drive value in the new environment. Demand patterns and customer expectations changed, the competitive landscape shifted and retailers and brands took action- enabling touchless pick up or deliveries, adjusting product assortments, etc. Many clients achieved success as they pivoted but were left with an unsustainable operating model: ineffective and inefficient business processes, unclear or disincentivized roles and unrealistic timeline expectations.

As the global pandemic gives way to a global recession, RFA executives are once-again rethinking what it will take for them to compete and win. Economic uncertainty forces leaders to proactively manage expenses, quantify risks, invest with great scrutiny and optimize operations. These opportunities are especially timely coming out of the last few years. To drive and sustain results following any strategic or business model transformation (whether a reaction to the pandemic or currently in flight in anticipation of the downturn), organizations should re-assess their Operating Model to complement and uphold the strategy. Otherwise, it’s like having a picture of an exquisite meal but only using the ingredients that are in your pantry: the ingredients may or may not be what is needed for the meal, and without a recipe or plan you won’t be able to bring that picture to life.

Questions to Ask Yourself

Is your organization’s operating model built to support your post-pandemic strategies? Can it sustain more shifts as you continue to adapt strategies into 2023 and beyond? Beyond simply “fixing what was broken,” have you truly enabled the Digital Thread?

If these questions resonate for your organization, consider the following:

• Will the business process achieve the desired result as defined by the strategy or vision? Do the planned activities and tasks support the corporate strategy or initiative?
• Is the development and go-to-market calendar effective? Are teams meeting deadlines? Is product launching on time?
• Are decision owners clear? Do decision owners have what they need to make informed decisions (supporting data, context, etc.)?
• Are role definitions leveraging your best strengths and enabling the optimized process? Are there significant pressure points for certain roles throughout the cycle? Could they be alleviated or leveled to improve quality of output?
• Do we have the right people? Do they have the right skills?
• Do we have the right data and technology? Are there redundancies, risks of error, opportunities to digitize or automate?
• Does the organization have a clear understanding of how success is defined and measured?

To drive and sustain results, companies and brands should ensure that they are ready to operationalize their strategy- otherwise, they risk doing the wrong work. Work that was based on old strategies is not the right work to sustain and support the new value proposition. Wrong work creates the wrong output- likely resulting in inventory turn issues, markdowns, margin erosion, organizational frustration, increased employee turnover, etc. To build on a prior metaphor, even if you have the correct ingredients on hand, you must also follow the proper sequence and proportion in order to achieve the desired result.

Steps to Take

As you envision your future OpModel, consider taking these steps:

Assess the Symptoms:

• Is there a clear business process? Are individual roles clear on their responsibilities? Is it effective?
• Which milestones are consistently late? Are decisions truly locked?
• Do teams understand how their work is impacting downstream activities? What effort is not producing value?

Identify the Opportunities:

• What elements of the process feel inefficient? Redundant? Wasted?
• Where are hand-offs required? How could the process be more agile?
• Where are the disconnects from the front end to the downstream activities? How might you evolve the end-to-end process from digital moments to a true Digital Thread?

Diagnose the Root Cause:

• Are there corporate culture elements at play?
• Do people have what they need to perform the expected activities?
• Are the calendar and planned end to end process feasible?
• Is there a plan for managing exceptions?

Determine the Priorities:

• What is the level of impact and level of effort to implement the potential solutions?
• What initiatives can achieve near term ROI?
• How should initiatives be sequenced to prevent re-work?

Getting Started

Before you get started, set your foundation and be prepared to iterate:

• Establish your guiding principles: What are we willing to compromise and what do we need to protect? These should tie back to corporate values, vision and mission.
• Start from the top down with the requirements for what the solution(s) must achieve- but don’t stop there. Be willing to work through what is possible from the bottom up, challenge assumptions and determine the critical enablers to success.
• Reconcile your top-down objectives with the bottoms-up approach to construct a future state that meets the business objectives with an achievable solution- one that is feasible and with a clear plan to execute.

We at Kalypso are experienced in guiding RFA executives and their organizations through these types of transformations- and doing so in seasons, not years. If you want to learn more about how to get started with your own OpModel assessment, reach out to me or any member of our RFA leadership team.