- May 5, 2020
- Posted by: Ramkumar
- Category: Digital Transformation
Digital Strategy for Companies Post-COVID-19
If the speed of the pre-coronavirus world was already fast, the extravagance of time now appears to have vanished entirely. Companies that previously outlined the digital strategy in one- to three-year phases must now scale their actions in a matter of days or weeks. The COVID-19 crisis presents a swift flash into a future world, one in which digital has become fundamental to every interplay, driving both organizations and individuals to further up the adoption curve virtually overnight. A society in which digital channels become the primary (and, in unusual cases, sole) customer-engagement model and automated processes become a prime driver of productivity—and the foundation of resilient, transparent, and steady supply chains. A system in which agile ways of working are a necessity to adhering regular changes to customer behavior. Hence it has become critical to expediting the digital strategy for companies post-COVID-19 crisis.
In this unprecedented moment, companies can discover and grow more swiftly than ever before. The ways they learn from and adapt to today’s change will profoundly affect their performance in tomorrow’s evolving world, allowing retaining higher readiness as well as more intimate ties with customers, employees, and suppliers. Those that are fortuitously able to make gains “stick” will likely be more strong during recovery and beyond.
Now is the moment to reassess digital initiatives—those that render near-term help to employees, customers, and the extensive set of stakeholders to which businesses are increasingly responsible. In this life, some things will catch back to the earlier form, while others will be eternally changed. Playing it safe now, evident as it might seem to do so, is frequently the worst decision.
A disaster necessitates audacity and learning.
Every business understands how to steer new digital initiatives in “normal” times, but very few do so at the scale and speed quickly needed by the COVID-19 crisis. That’s because, in regular times, the customer and market trials for extensive “test and learn” can appear extremely high, and the organizational barriers too steep. Shareholders of public companies command instant returns. Finance departments keep a firm hold of the stocks needed to drive new initiatives ahead immediately. Customers are usually reluctant to adapt to new ways of doing things, with regular adoption curves indicating this built-in inertia. And organizational culture, with its strongly grooved silos, impedes skill and collaboration.
As a consequence, companies often traverse at a speed that fails to meet the rate of change around them, reducing their ability to learn quickly enough to keep up. Additionally, they seldom espouse the intense action required to scurry from piloting initiatives to scaling the successful ones. Research from McKinsey shows that strong moves to use digital technologies early and at scale, coupled with a substantial allocation of resources against digital initiatives and M&A, correspond profoundly with value creation.
As the COVID-19 disaster necessitates the customers, employees, and supply chains toward digital channels and discrete ways of working, now is the moment to question: What are the fearless digital actions one has stopped to proceed in the past, even after identified they would ultimately get mandatory?
Digital Strategy 1 – Reinvent the business model at its core
Moving beyond comfort zones entails taking an end-to-end view of the business and operating models. Companies should concentrate on transforming their core business as this will give the best odds of success. Firms that execute slight adjustments to the edges of their business model almost invariably fall short of their goals.
While the results will differ significantly by industry, a few familiar themes are emerging across areas that signify “next to normal” shifts to cost structures and operating models going ahead.
- Supply-chain clearness and adaptability. Near-daily report narratives link to how retailers around the globe are encountering stock-outs during the pandemic, like toilet-paper shortages in the United States. It’s also apparent that retailers with complete supply-chain transparency before the crisis—as well as algorithms to identify purchase-pattern variations—have done a better job steering during the crisis.
- Data security. Zoom succeeded in navigating the scaling of its usage volume effectively, but it too went into security gaps that required immediate address. Many businesses are undergoing similar, severe lessons during this time of crisis.
- Remote workforces and automation. Another popular theme emerging is the generally held wish to develop on the flexibility and heterogeneity brought through remote working. Discovering how to sustain productivity—even as we retreat to office buildings after the lockdown finishes, and also as companies extend to automate activities—will be crucial to obtaining the most value from this real-world experiment that is befalling. In retail, for instance, there has been extensive use of in-store robots to take over more transactional jobs like checking inventory in store aisles and remote order fulfillment. These investments won’t be released postcrisis, and those that have made so will discover themselves in an advantaged cost structure during the recovery.
Digital Strategy 2 – Fearlessly develop your business portfolio.
No firm can expedite the delivery of all its strategic imperatives without looking at mergers and acquisitions (M&A) to race them along. It is especially true with digital strategy, where M&A can assist companies in obtaining talent and developing capabilities, even as it gives access to new products, services, and solutions, and a new market and customer segments.
Companies that buy when valuations are low exceeded those that do not. These companies divested underperforming businesses quicker than their peers early on in a crisis and then changed gears into M&A at the earliest sign of recovery.
In more normal times, one of the foremost hurdles firms encounter in their digital transformations is the necessity to acquire digital talent and capabilities through acquisitions of tech companies that get typically valued at multiples that capital markets might see as dilutive to the acquirer. The current downturn could eliminate this final roadblock, particularly with companies momentarily free from the severity of quarterly earnings expectations. Because valuations are depressed, the crisis and its immediate aftereffect may warrant a suitable opportunity to pick up assets that were earlier out of reach.
Mastering while ascending
While companies often pilot new digital initiatives to discover from them before they roll out broadly, these trials and pilots, in standard times, examine one dimension at a time, like the conversion rates of unique customers, the unit economics of a particular transaction, or the user experience of a given digital solution. Companies in crisis mode expose themselves to a distinct type of pilot: Digital programs at a large scale.
Don’t go it solo
People and companies absorb more swiftly as an outcome of network effects. At a time of crisis, transforming demands drive accelerated shifts in employee mindsets and practices that play out as a greater zeal to attempt new things. Firms should look not just in the confines of their own business but across enterprises to include its channel partners, vendors, and suppliers. Possibilities are they will be more amenable than ever to collaborate and share data and learnings.