Businesses are changing as we speak. The uncertainty of the current situation demands a degree of agility to focus on needs, such as
- The need to transform digitally
- The need to serve customers better
- The need to have more data.
Noted author of Digital Darwinism: Survival of the Fittest in the Age of Business Disruption, Tom Goodwin recently conducted a webinar on ‘How Leaders Should Prepare for Success in a Post COVID-19 World?’
The health crisis due to the coronavirus pandemic has led to lockdown of businesses sending economic shockwaves and behavioral shifts. However, it’s important that we unbundle these three things from each other in order to have clarity.
1] Health Crisis – Delving into the Unknown
The current health crisis revolves around a lot of uncertainties. We don’t know the notion of the virus mutating. There’s uncertainty about how lethal or how contagious it really is. There’s uncertainty around things like transmission vectors. There’s uncertainty about the vaccine, it’s invention and time for distribution. These uncertainties block businesses from taking any action.
2] Economic Shockwave – How it trickles down
The shutdowns have sent economic shockwaves that many companies were not prepared for. Footwear retailers are considering quarantining shoes that are returned. Book retailer, Waterstones, is planning on putting books away for 72 hours if people touch them. Clearly these measures have a significant business impact and it’s based on assumptions about the virus which may not even be true.
3] Behavioral shifts – Butterfly effect
Whether we like it or not, customer behavior is already shifting. For instance, American Airlines has started to fill up its flights with social distancing in place. Restaurants are adapting to curbside pick-ups and delivery. Even bars are offering cocktails and beers to-go. Business models are transforming due to habit forming adoption spikes.
Path to recovery?
We’re still not sure of the shape of recovery. Will it be a V shape or a slight pivot point or a deeper, longer recession? We just don’t know yet.
But what we do know is, there is enough data to support the idea of a recovery. Jobs are mostly lost in economic sectors that are fastest to recover. Unemployment claims are dropping much faster than anticipated. Consumer sentiment is now on a rise. People are now earning more because of stimulus and spending less because of the lockdown. As a result, we are witnessing an unprecedented amount of saving.
The new economy is ready
There is a pent-up demand in the economy right now. Looking at various industrial indexes around the world, we see in many ways the economy is already back to normal in the financial markets. However, understanding this can be complicated.
The key takeaway here is that uncertainty is new, NOT the pace of change. Most changes have started happening already. It’s time for companies to focus on customers and adapt to this change. Digital transformation is vital now more than ever.
Digital Transformation is NOT about technology
Tom Loose has defined digital transformation as “Applying the culture practice processes and technologies of the internet era, to respond to people’s raised expectations.”
Today, digital transformation is not about technology, but about our understanding of people, their expectations and demands. For example, when people are able to watch many TV channels from all over the world, they expect to do the same with radio. Similarly, if they are able to process transactions immediately through a banking app, they get disappointed when a store takes longer to process their refunds. Companies need to understand the expectations of their target customers to provide them with the services they need.
Peeling through the Layers
Digital transformation can happen in two ways
#1 By augmenting the physical structure: Introducing new technology to add to what we’ve built already by augmenting the processes, business models and physical structure.
# 2 By rebuilding what’s needed: Building new technology ground up by reimagining the process. So, rather than taking a banking lobby and digitalizing it, we reimagine what banking should look like in this age and build on that vision.
The second way is the secret of success for most companies. Each company is like an onion. The outermost layer is the communication layer that consists of PR and advertising. Underneath that is the marketing layer where you see the products and services. Then there’s the distribution layer, that focusses on building these products. At the very core of a company is its vision, business model and its reason to exist. But customers often miss seeing the core of a company through these layers.
Focus on the ‘why’ for your company and ‘what’ for your customers
It is hard for companies to go back to their business model to evaluate their products or service offering. But companies today need to constantly rethink the core of the business to take advantage of the opportunities out there.
If not digital transformation, go for digital creation. Companies are also going digital by acquiring startups to grow the company in another sector or by setting up a new unit.
For example, Netflix went from being a postal service that posted CDs/DVDs to people to becoming an entertainment company that made TV shows and some of the best entertainment. Another example would be Microsoft that went from being a company that sells software on DVDs to a company that is a cloud-based augmentation to our lives.
This kind of transformation needs a whole culture built around it. You need to be empathetic; imaginative and genuinely care to create real innovation. Only companies that have truly gone through digital transformation would have the resources and culture to support this re-haul.
So, a key question to ask is – Are you prepared to only digitalize your business, or can you go much deeper to change the core? Can you really rethink what you make and how you make it?
This period of volatility and unprecedented change could mean that we are at a stage where we can try almost anything. We have the time. We’ve seen rapid innovation around the world and the essential nature of digital transformation. Now is the perfect time to go back to the core and to rebuild your business model.
About Tom Goodwin
Tom is the Head of Futures and Insight at Publicis Groupe and the author of Digital Darwinism: Survival of the Fittest in the Age of Business Disruption. He has been voted as the #1 Voice in Marketing on LinkedIn globally, four times, with over 700,000 followers. Business Insider named him one of 30 people to follow on Twitter. He is a provocateur, keynote speaker and commentator on the future of business.