Redirecting resources to promote post-pandemic growth

• Published in: Strategy & leadership 2020-12, Vol.48 (6), p.45-50
• Main Authors: Bieck, Christian, Marshall, Anthony
• Format: Article
• Language: English
• Subjects: Artificial intelligence; Capital expenditures; Cash flow; Coronaviruses; COVID-19; Digitization; Executives; Flexibility; Pandemics; Workforce
• ISSN: 1087-8572; 1758-9568
• DOI: 10.1108/SL-09-2020-0121

Purpose A recent IBM Institute of Business Value (IBV) global survey of 3,450 business leaders, conducted during the full force of the pandemic, explored which business capabilities executives are prioritizing, and how they ranked familiar concerns: cost management and cash flow management. This article urges that cost cutting should be viewed as a mechanism to redirect resources to enterprise transformation investments. Design/methodology/approach Article warns that an organization that wants to cut costs and not invest in transformation does not effectively serve an environment is which transformation is a mandate. Findings In the course of the pandemic crisis that disrupted supply chains, executives have realized an underappreciated aspect of ownership: it increases independence and buffers against outside shocks. Practical implications A central theme in the search for cost efficiency is the question of investment and ownership, or capital expenditure (CapEx), versus operating expenditure (OpEx). Originality/value In a reversal of the OpEx shift paradigm, executives state they plan to increase CapEx and decrease OpEx. Organizations with a high agility score invest almost one percentage point more in CapEx. Also, an increase in CapEx has a small but statistically significant effect on revenue growth.