Navigating the New Reality: Restructuring for Growth

The transformational changes of the past year have turned restructuring into a value-creation opportunity

Covid-19 is testing European economies and industries to the limits of their resilience. While hitting some harder than others, the ongoing pandemic revealed multiple weaknesses. However unlikely such a crisis seemed – and it is always difficult to prepare for the unknown – businesses have no choice but to tackle today’s challenges head-on and strive to emerge stronger. This puts restructuring and transformation at the top of the agenda, and not only for the companies most affected by Covid-19.

Restructuring has been viewed in the past as a sign of failure. The economic and social turmoil in 2020 however made company leaders across industries see restructuring as a tremendous opportunity to reshape their business for a new era. This makes transformation an imperative for many, as it can tackle gaps that are difficult to address and that have been accumulating well before the crisis. It can be a powerful tool to set the foundation for more sustainable growth in the future; including enabling companies to repay loans needed to make it through the pandemic.

To successfully re-set businesses for growth, any change program needs to be carefully researched and thought-through. It will not suffice to cut costs across the board, or to invest without cutting sufficiently. Rather, companies must carefully assess all available options, and then take concrete action. To understand the extent to which companies need to transform and how their leaders view this challenge, we conducted a global survey and asked executives across 11 industries in North America, Europe, the Middle East, Africa (EMEA), and the Asia-Pacific region how they expect the global economy to develop, and what they think this means for their business development and renewal strategy post Covid-19.

“Covid-19 has now become a supercharger for pre-pandemic 'transformation' programs. In that sense, the current environment allows a historic opportunity to reset and generate significant new value - with stakeholders now more willing to support a transformation program, assuming it is done right.”

Mahadeva Matt Mani, Partner and Global Leader Transformation Platform, Strategy& Netherlands

Transforming like never before

The wave of restructuring and fundamental business transformation we are about to witness will be unlike anything we have seen before. Gone are the days of focusing exclusively on financial key performance indicators (KPIs) and aiming to survive until the next financial rebound. Now, it is becoming ever more important to reconfigure the business model when implementing restructuring efforts. The objective is to right-size the business for today and fundamentally reposition it towards new business and growth areas. Executives thereby need to overhaul their enterprise’s strategy, capabilities, and culture. Moreover, as the various teams and departments of a company are likely to be affected differently by current and future changes, each aspect of operations is likely to have different restructuring needs.

The results of our survey conducted with 250 senior executives from large, global corporations across a variety of industries and based in North America, EMEA and Asia-Pacific during March 2021, show three key insights:

  1. Companies plan for growth – and there is a significant increase in the importance of transformation on their agenda
  2. The primary focus is on building new business models and adapting the operating model to compete with new digitally-enabled capabilities in the future
  3. Efficiency goals are limited – they are focused on people and business operations, while being enabled by technology

Value-based restructuring for growth

Previous crises clearly show how companies that act boldly and early emerge stronger and better-placed to prosper in the aftermath. However, too many companies cut costs indiscriminately in order to survive, weakening their capacity to rebound. Others chase deals and investments to boost their valuation. This type of “traditional” restructuring almost always ends up destroying value and saps the organization’s energy and morale at the most inopportune time.

Instead, value-based restructuring offers a quick and effective model to strike the right balance when cutting costs and to establish a strong path for sustainable and profitable growth. It is based on a four-step approach:

Step 1

Start with a value perspective

Establish a clear position on where and how value will be created in the future vs. how you create value today. Which products/solutions, markets and customers add profitable value and which do not? Use this clarity to guide your investment choices.

Step 2

Simulate future profit scenarios to set the right targets

Static top-line assumptions no longer work to plan for the new normal. Modeling different scenarios holistically builds agility and the ability to respond to the next disruption into the plan.

Step 3

Zero base the affordable cost structure, differentiated for each business segment

Make “eyes wide open” choices about where to invest, where to cut deep and where to tread water in a way that is aligned with your value perspective.

Step 4

Do the work across the value chain

Get to work in every area of the business – including both what you do and re-aligning how you innovate, produce, sell, serve and deliver. This is not just a one-time exercise of cutting costs. To truly emerge in a position of strength you will need to challenge every part of the business, and transform the organization to enable savings and make the results stick.


Strategy&’s Covid-19 economic scenarios are based on a consensus of analyses that incorporates more than 180 sources and predictions (including from global research institutes, universities, investment banks, national governmental and supranational bodies, and ratings agencies), as well as financial data on 40 million corporations globally from 35 countries and 16 industries. Estimates according to the V-, U- and L-shaped scenarios at a country and industry level predict a K-shaped pattern as certain economies and sectors diverge. The scenarios have been updated regularly since March 2020.

Strategy&’s Restructuring Survey was conducted in March 2021 among senior representatives of ~250 unique companies globally, well balanced across 11 industrial sectors in North America, EMEA and Asia-Pacific. 93% of respondents reported revenues of more than $1Bn, with 64% reporting that they have 10,000 or more employees.

The authors would like to thank Tobias Baumer, Manager with Strategy& Germany, for their valuable contributions to the study.

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Mahadeva Matt Mani

Mahadeva Matt Mani

Partner, Strategy& Netherlands