**2. Emerging challenges for business after the pandemic**

As in any crisis situation, it has to be said that, even in the case of the Covid-19 pandemic spread, entrepreneurial ability, adaptability, and business dynamism will make the difference.

Although this principle is already widely expressed in the "classic" texts of business administration and economics [4, 5], it remains more valid than ever today and should not be disregarded.

In fact, it is possible to see that weak companies risk becoming weaker, while those that are already strong have the opportunity to become even stronger. The case of Amazon is a more than obvious example. It holds an entrenched business model aimed at providing online services, has exponentially increased its revenue and stock market value [6], and today demonstrates a high ROE of 25.6% compared with 19.9% for the industry sector [7]. In the analysis of the status quaestionis, it should be stressed at the same time that the income and wealth gap between households and individuals will also increase. This factor is by no means to be underestimated if we consider that in countries such as Italy, Spain and Greece—by way of example—the entrepreneurial fabric is made up for the most part of microsmall enterprises with family or unipersonal governance systems [8–10].

These perspectives therefore suggest how specific scenarios are emerging, harbingers of new needs and concerns but also the need for new bold actions by equally bold entrepreneurs.

The analysis of the trends outlined above in the introductory section demonstrates, therefore, some needs and challenges experienced by businesses today and can be summarized as follows:


Only by implementing a real trend reversal, thus trying to satisfy these three points as best as possible, companies will be able to adapt not only to the change related to the current pandemic but equally to the 4.0 revolution already underway [11].

#### **2.1 Toward a radical restructuring of the corporate business model**

Among the main needs highlighted by companies and the imminent challenges to be faced, we note first of all the radical restructuring of the traditional business model. One must then ask: why? What are the motivations behind this important choice? And again, what are the criteria for achieving this in the best possible way?

Motivations can have internal and external connotations. These include the following:


Analyzing the current economic environment in which businesses operate today as a result of the pandemic spread, it is practically possible to find both the validity and contextuality of all the conditions.

The drama is inherent in the fact that all these conditions are interconnected.

In fact, as graphically depicted in **Figure 2**, Covid-19 resulted in changing economic and market conditions due to the disruption of business operations with concomitant bankruptcy of many firms. In this case, in addition to the individual businesses, the entire supply chain was affected.

This situation was certainly supported by the regulatory impositions that limited the firms' activities during the lockdown. The same sanitary constraints, however necessary, have resulted in a real limitation in customer relations, leading to a distancing of the company from consumers. For many companies, particularly manufacturing companies, the business model tied to a traditional product has become obsolete. It has reached maturity because social distancing as well as the propensity to save has led to a change in the outlook of customers, who are more oriented toward online services and avoid products of secondary importance. These new needs, together with the specific tax benefits promoted by governments, have fomented the birth and spread of new companies (or the further imposition of large companies) aimed at filling the gap of traditional companies, not very accustomed to implement processes and offer technologically advanced services.

Consequently, the continuous and constant change in the articulation of processes and services has led to the imposition of new trends, with the need for *traditional* companies to adopt new systems in order to be competitive or, even more, to survive in a fierce evolutionary context.

It is, however, worth pointing out that the demand for services and products related to a *smart* business reality was not born with the pandemic. Covid-19 simply enhanced a process that was already underway, speeding up its deployment time but exaggerating the potential side effects for companies not yet involved.

Through the restructuring of the business model, the company must try to use its resources more efficiently, making management and operational processes more effective and simpler (**Figure 3**).

*Companies and Covid-19: Emerging Challenges and Recovery Strategies through Technological… DOI: http://dx.doi.org/10.5772/intechopen.102960*

**Figure 2.**

*Relationship between pandemic spread from Covid-19 and conditions for implementation of business model restructuring. Source: author's elaboration.*

But above all, precisely in light of the current needs induced by the pandemic spread, the restructuring of the business model must succeed in placing the company in a new context; we refer here to a new era of 4.0 operations that places the company in a new relationship with customers and employees.

#### **2.2 New logic of work and new internal communication systems**

Together with the need to reformulate the product or service, the way it is obtained and the way it is offered to the customer, in the era of digitalization it is essential to define new scenarios for the relationship with employees and collaborators.

The 4.0 revolution and even more so the Covid-19 pandemic have given a strong and well-defined impetus on the future of work within the company.

There are still many debates and uncertainties surrounding the issue of *smart* work, but it is also true that, without it, many activities would have come to a complete standstill.

For some years now, several countries around the world have been evaluating and attempting to implement new, more sustainable work systems, aimed at better respecting the private needs of workers and thereby increasing company performance.

#### **Figure 3.**

*Internal key points to be met in the reformulation of the business model. Source: author's elaboration.*

The so-called "short week" is an obvious experiment in this regard.

In Japan, the government has promoted initiatives to experiment with a 4-day work week for corporate employees.

In France, the working week has been reduced from 39 hours per week to 35. The Netherlands (29 hours), Norway (33 hours), and Denmark (33 hours) also have weeks with a reduced number of hours.

Between 2015 and 2019, a 4-day work week was tested in Iceland in the public sector with successful results, without reducing the salary of operational employees in schools, companies, and hospitals [12].

This is leading to a reformulation of the level of effort required of the human resources employed in the company, considering that more careful attention to the needs of individual employees can actually lead to greater efficiency in the workplace.

Unilever was one of the very few multinationals (along with Microsoft in Japan) to have tested the short week system in 2020 on a group of operational employees at its New Zealand headquarters.

Through the words of the CEO, Alan Jope, the company itself claims in fact that:

*"Traditional employer-employee dynamics are no longer fit for either individuals or businesses. People are increasingly looking for more personally and professionally satisfying work. They want to move beyond the traditional 40-hour/40-week/40 year employment contract to something more flexible that's tailored to their needs and stage of life. Older and more experienced workers are increasingly choosing to work for longer; and younger people are after meaningful jobs with more flexibility. And Covid-19 forced us all to think differently about how and where we worked. We see a hybrid future of work, where people might spend a couple of days in the office and two or three days at home or working remotely. This has unlocked tremendous productivity and flexibility in the Unilever team" [13].*

This vision is certainly forward-looking. It envisages innovative paradigms and "hybrid formulations" aimed at providing new stimuli for the HR working in the company.

*Companies and Covid-19: Emerging Challenges and Recovery Strategies through Technological… DOI: http://dx.doi.org/10.5772/intechopen.102960*

As analyzed with the empirical case provided by Unilever, the smart model is certainly the most suitable solution to pursue this objective. However, the digitization of the workplace and of communication systems, which allow information to be exchanged immediately but at a distance, is a prerequisite for applying this principle. Traditional models are not compatible with an initiative that has clear 4.0 traits.

The company should prepare a cost–benefit analysis to determine the impact that a new logic at the workplace may have on efficiency and performance.

*Smart* work should then achieve some specific objectives:

• Achieve a new level of communication with employees. The dramatic experience of Covid-19 should be used to establish new forms of communication with employees. It is critical to understand their needs in a time of crisis in order to identify how their role can be made efficient.

The management class must be prepared to respond as best they can to the concerns and issues of employees and contractors that have arisen as a result of the pandemic.

Sessions of meetings with staff can certainly allow the company to find out information about human resources and then define a new work organization strategy by introducing specific task forces or work units set up according to specific skills.

• Establish a sustainable level of optimized work. Transparency, Ductility, and Willingness should become the key words to allow employees to define new horizons of collaboration with the company.

Compatible with business needs, introducing a *smart* work system allows companies to choose the best options in order to optimize their time at work. Merely as an example, the closure of schools during the pandemic greatly affected the organization of employees with children, especially in the case of single working women.

The most recent reference literature [14] has defined the need for greater inclusion in the corporate environment not only as an ethical tool but for the purpose of value creation. It may therefore be strategic to ask employees on which time slots or days they prefer a reduction in their hours. Transparency must then emerge through an information system that leverages the company's website and social media. These tools need to be updated daily.

Obviously, it is essential that the company imposes logging and activity management systems to monitor productivity remotely.

• Achieve a new level of customer relations. Work-at-home arrangements do not mean absence from the workplace, but rather optimization of time, peace of mind, and availability. All features that can be turned into an added value.

Working remotely must be able to enhance digital sales potential. This can be achieved:


#### **2.3 The need for an innovative company upgrade**

Referring the reader to our specific paper entitled *Managing Corporate Innovation. Determinants, Critical Issues and Success Factors*, published by Springer (2020) for any in-depth study of the topic, we find it interesting to highlight the key features of what we have called the *Techno-corporate Gap*.

Could we ever think that Italy, one of the founding countries of the European Union but above all a destination symbol of good living, is today one of the European countries with a very high rate of *techno-corporate gap*?

According to a 2018 study [15], traditional companies, i.e., those that do not use 4.0 technologies nor have future interventions planned, correspond to 86.9% of the total.

The Center-North confirms itself as the main promoter of investments in innovation, while the South shows a very low propensity to change. As part of the transformation toward Industry 4.0, a greater propensity for process innovation is also considered, together with product innovation connected to a decisive research and development activity. From this point of view, large companies express a much higher potential and show a propensity to invest in both production and data technologies, while small companies (micro-small) prefer the specific use of data technologies [15].

If we consider the investments in a more general way, it emerges that the discriminating element among the different profiles is not to be found in the presence of a mere renewal of the physical capital, but rather in the willingness to act on the human capital together with the investment in ICT technologies. In fact, in order to satisfy their needs, companies resort mainly to human capital training (43.6%) and to the acquisition of external services (37.7%).

Analyzing this aspect also from the point of view of size, some substantial differences emerge, since the larger enterprises resort mainly to staff training and new hires, while micro and small enterprises, in addition to training, resort to a relatively greater extent to the purchase of services and external collaborations [15]. While on the one hand, such a policy may seem appropriate by virtue of a considered *make-orbuy* principle, it is worth stressing how much this situation can actually push toward a constant subjugation of micro-small companies to the wishes of service providers.

The Italian business context therefore shows a situation of enormous diffidence toward the use of technologies to support processes and products.

These data, which can be considered extremely dramatic if contextualized in an international economic system already largely centered on technological development, in our opinion clarify the presence of a limited *Company Logic* [9], in Italy still largely linked to traditionalist preconceptions. In spite of ourselves, this view is not only the expression of a *techno-corporate gap*, but as a whole it contributes to exalting an even more worrying technological gap with other European countries, as expressed by the indicators of the Global Innovation Index [16].

#### *2.3.1 The techno-corporate gap*

The statistical results achieved by MET [15] provide us with a very important tool to understand not only the renewal objective of companies but especially the strategy inherent in such processes on which the success of the investments themselves depends. Analyzing the raising of capital for reengineering from a qualitative point of view, it is possible to argue that the planning of a digitization process of the company is largely related to the governance structure. If we want to reason in systemic terms [17, 18], this assumption is expressed by the following relation:

*Innovation* ∝ *Technology* ∝ *Management* ∝ *Corporate Governance.*

*Companies and Covid-19: Emerging Challenges and Recovery Strategies through Technological… DOI: http://dx.doi.org/10.5772/intechopen.102960*

This concatenation is intended to underline how the ability to achieve innovation is closely linked to and depends on the technological skills of the company's scientific team; in turn, the know-how of a company is bound to the managerial choices in terms of development of a new product, research of new and specific technical skills to better face the market competition or more generally for the needs of company reengineering. However, the management is conditioned by the eternal debate on the creation of value for shareholders [19–23] or in small companies by the convictions of the founding owners (still linked to an artisan culture) and is largely conditioned by them. In order to avoid unnecessary misunderstandings, we believe it is useful to underline that when we talk about Corporate Governance, we do not refer to the simple shareholder structure but to the type of structure of the top management (shareholders and top managers) and the way they relate to each other and to their stakeholders [10].

In fact, governance establishes medium-long term objectives (in this specific case, the investment in innovation), but it is also constantly influenced by external dynamics that can be cultural (customs and traditions of the territory in which the company operates or the competence of the shareholders themselves and of the top managers), social (massive influence of stakeholders such as the mass media or political forces that discourage certain types of development), and even market (development of private equity initiatives, support of the banking system, high competition) (**Figure 4**).

Therefore, even if indirectly, the change in the governance structure and the perspectives connected to it can concretely act on the result in terms of innovation: recognizing the need to look for new managers specialized in innovation (innovation coach), approving new investments in the scientific sector, welcoming in its capital new partners to undertake new business initiatives and thus mitigate the risks, etc.

By using the "control theory" in terms of innovation creation, it is possible to identify different levels and levers that the company can use. The *techno-corporate gap* understood as the margin due to the ability of firms to create innovation (here expressed by the deviation between the target variable Y\* and the effect variable Y)—can therefore be reduced thanks to countless strategic choices taken by governance (XN levers) that can be adopted individually or in combination:

**Figure 4.**

*Cause-effect correlation system between corporate governance and innovation. Source: author's elaboration.*


In the light of the strategic solutions adopted, a series of causal diagrams [24, 25] will take shape, which will positively or negatively influence the achievement of an adequate level of innovation. As mentioned earlier, however, it is up to the system thinker or manager to be able to best identify the boundaries of the system being examined.

If we accept the systemic thinking according to which the variation of a simple variable has a cumulative effect on the entire system, and how the loops in which the variables act are repetitive and recursive, then, from the results obtained in the field of innovation and data relating to the level of openness of corporate governance, this correlation becomes clear, homogeneous in all its aspects. Applying the reasoning of System Thinking [17] to Control Theory [26], we can consider systems in terms of variables (input, state, output), and we can evaluate the way in which they are interdependent within the company system also for the purpose of pursuing innovative processes. But the company system is a simple element when considered within a larger context with which it constantly interacts and from which—as we have seen—it receives important influences. It is therefore useful to understand how these dynamic processes are also set in relation to the community, therefore, how the micro systems (or the micro behaviors) interact with the macro ones. To accomplish such an approach, it is possible to make use of the doctrine of Combinatory Systems [18].

This theory starts from the assumption that the collectivity is made up of elements or agents that, operating individually, adopt micro behaviors but as a whole are able to determine macro behaviors.

From **Figure 6**, it is therefore possible to observe the way in which the *technocorporate gap*—understood as the inability of the firm to achieve innovation becomes a crucial expression of "micro" behavior; if multiplied countless times, it can characterize the "macro" behavior of a community, which in our specific case consists in the inability to achieve innovation and, therefore, to increase the technological gap experienced by some countries—including Italy—compared with others. It is represented here how the propensity to innovate, stimulated by the different governance structures of a firm (micro effect), can express a general innovation potential when considered in its complexity. Collective investment in innovation has macro effects in terms of increasing or reducing the technological gap between countries and others. Let us consider first of all

*Companies and Covid-19: Emerging Challenges and Recovery Strategies through Technological… DOI: http://dx.doi.org/10.5772/intechopen.102960*

**Figure 5.** *Innovation control system with multiple levers and levels. Source: Rangone [8].*

that every company can achieve innovation according to the type of investment made or strategies adopted. Therefore, thanks to the numerous levers, the top management can consider to open the capital to new partners or follow new partnerships achieving a specific development strategy, and consequently, top managers can take decisions that spur the company to achieve specific objectives in the technological field. The particular governance structure that characterizes companies in a specific geographical area can therefore be a winner or a critical factor. We must not forget that a territory can be considered developed if the companies and bodies operating within it are efficient and not simply because of the ability of a single company—however large—to produce efficiently. The result is that the ability to open up to innovation of every single company in a specific territory, together with similar micro behaviors, will influence and compose the collective behavior in terms of technological development; the latter factor will be the source of macro effects that translate into a technological gap with neighboring areas, regions, and, as a consequence, competing countries, if we look at the process in macro terms. The core of the problem then lies at the heart of the company and must be analyzed there.

**Figure 6.** *Micro and macro effects in terms of investment in innovation technology. Source: author's elaboration.*
