All companies faced extreme disruptions from COVID-19, but a subset faced an even bigger challenge: they had been struggling before the pandemic and were in the middle of a transformation to improve performance. For many of these organizations, the pandemic could have been the death blow, yet we identified some that managed not only to survive but to thrive.
These companies didn’t scrap their transformation plans when COVID hit but rather adjusted them. They redoubled their efforts and saw the pandemic as an opportunity to accelerate the transformation, building digital capabilities and introducing new ways of working. Now that the crisis is beginning to ease, their efforts are paying off, helping them compete more effectively and boosting their resilience to any future crisis. These companies were all were in major trouble, and all have significantly rebounded.
We believe that transformations can help virtually every company, from market leaders seeking to reinforce their lead to organizations in need of a structural turnaround. The companies we studied put that thesis to the test. Their stories—including a home goods company, a fleet manager, and a jewelry retailer—show that with strong leadership and a solid transformation plan, a company may be down but it will never be out.
PERFORMANCE IS IN THE HANDS OF MANAGEMENT
We looked at the performance of about 8,000 companies representing 17 sectors around the world over the past three years across a variety of KPIs: margin, revenue, cost of goods sold, sales, general and administrative expenses, and capex. The data told an interesting story about how companies responded to COVID-19.
The pandemic hit some industries much harder than others. For example, the automotive and fashion and luxury sectors saw revenue declines of 10% to 15% in 2020 compared with the previous year. Oil and gas companies saw bigger drops of more than 20%, and travel and tourism companies saw their revenue fall by nearly 50%. In contrast, biopharma and technology companies actually experienced an increase of 7% and 6%, respectively.
Similarly, geographic regions experienced varying levels of fallout. Companies based in Spain, Portugal, France, and India were the hardest hit, experiencing average revenue declines of 7% to 8% from 2019 to 2020. Faring slightly better were companies based in the UK, Germany, Austria, and Japan, which saw revenue declines of 3% to 5%. At the same time, some countries, like Brazil and Greater China, saw their overall revenue rise in 2020 by approximately 6%.
Yet even within the most hard-hit industries and regions, some companies managed to outperform the competition. Even more surprising, some went into the crisis facing their own internal challenges and had launched transformations that were underway in early 2020. Despite that, they still emerged from the pandemic ahead of their peers.
When entire industries are in crisis, some management teams may be tempted to use that as an excuse for subpar performance. But the key takeaway from our research is that even when an entire industry or region is struggling, companies can still take action to improve performance relative to their peers. They can also invest to position themselves for the coming recovery. READ MORE
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