Digital transformation post COVID-19
- Posted: 9th April 2020
- Written by:
Lorenzo Vasini, Chief Growth Officer
No longer optional
Graph showing interest in digital transformation over last 12 months.
For years now, consultancies and agencies have been telling anyone and everyone about the need to take digital transformation seriously. That they stand to win and lose in unimaginable ways in the future, if they didn’t act now.
And now that future has arrived. Early. In the form of a deadly pathogen, COVID-19, which has taken the world, except Bill Gates and a handful of Experts, largely by surprise.
Those accustomed to working from home, in white collar jobs, talk about how working from home is normal for them, and they’ve done it for ages. Well, newsflash, what we’re doing is not just working from home. It’s working from home, in a crisis – two very different things.
But I’m not going to use this article to talk about how to be more effective working from home, because my Linkedin feed is chocked full of those now.
I want to explore the impact of COVID-19 on companies’ digital plans.
Sir Martin Sorrell explained it neatly, as he usually does in a recent interview. The Corporate world is broadly split into two camps now, the Tech Disruptors and the Disrupted Analogues.
The Big Tech Disruptors
Google, Facebook, Microsoft, Amazon, Netflix, Alibaba, Tencent, Baidu etc.
These companies were born digital, have much higher profit margins, massive cash reserves, and many would argue monopolies, so have absolutely no need to transform.
In fact, the crisis has in some ways helped thaw their relationships with policymakers in Europe, as a number of swiftly added their support.
While airlines and hotels are asking for government bailouts, Facebook and Netflix both announced they will provide $100 million in funding to help small businesses and the creative community. Google has rolled-out online tools for teachers.
Netflix have also reduced the streaming quality to reduce internet traffic by up to 25% for a limited period.
And Facebook, once criticized for gathering too much EU personal data, is now asked to share anonymized metadata with the Commission to help predict the peak of the coronavirus outbreak.
They will continue to grow revenues and profits and continue with M&A activities. They will likely use this opportunity to take aim in other sectors ripe for disruption thanks to COVID-19, continuing their march to global supremacy. Their dominance will accelerate during this crisis, of that I have no doubt.
The Disrupted Analogues
Everyone else in the corporate world basically. All 200 million of them. Companies that have existed for decades, if not centuries, born pre commercial internet 25 years ago.
And ever since this point, they have been busy using IT to save cost and drive efficiency, to digitize, and some are beginning to take customer-centered views on change. Some industries have advanced more quickly, usually ones delivering services or that deliver products that are less physical and more immaterial than physical. Other more advanced digital sectors include those with more direct-to-consumer models and operate more global than local.
Leaders include Media and Finance. Laggards include Pharmaceuticals and large amounts of manufacturers.
The reality is most of these companies have been content to move forward largely in a steady state, reluctant to face the sometimes painful short-term effect of digital transformation. Because there was no real urgency. But the events of the past three weeks have changed the game forever, leading to a radical rethink around products, services and entire business models.
How will the events industry look in 12 months time? Very different I suspect. With digital at the core of the future of the industry.
Sport. How I miss the PGA Tour every Thursday – Sunday. Surely this will be the catalyst for sports franchises to double down on investment in digital business models, helping them increase their reach and engage with fans in new ways, thanks to this prolonged pause in live action.
Real Estate. It could be really bad for these guys, if we really change our habits the way we’re talking about. The shift in equity value from traditional companies like CBRE, JLL and Cushman and Wakefield basically moves to Zoom (at least for now…), Microsoft and Skype.
In one of my previous companies, we often used a great saying by George Westerman from MIT Sloan about Digital Transformation:
“Successful digital transformation is like a caterpillar turning into a butterfly. It’s still the same organism, but it now has superpowers. Unfortunately, when it comes to digital transformation, many senior execs aren’t thinking about butterflies. They’re just thinking about fast caterpillars.”
Too many IT Projects are billed as transformational. They’re not. When you transform, you can’t go back. And that is where many companies now find themselves,
When we emerge from the fog of COVID-19, if we have any staff left, companies will be happy to embark on these journeys that might lead to faster growth and increased long term profitability.
But to execute successfully requires a number of elements to come together to achieve success. According to McKinsey, the success stories in digital transformation are few and far between, in fact there are five times more failures than success. And interestingly, as someone that has been involved in many customer experience led transformations, these are the ones are more likely to fail. Not because aligning around the customer is the wrong thing, mind. This is a complex execution issue.
The 5 elements for successful digital transformation:
- Commitment – Top down, unwavering buy-in. It takes real career risk for people on the ground attempting to deliver these programs. Customer led transformations are almost impossible, without the complete support of the Executive Management Team.
- Clarity – Of the desired outcomes, which must be linked to value, whether commercial or customer or employee.
- Investment – The right resources allocated to the programme. Big gains are made when the appropriate technical skills are allocated, Senior Data and Digital Leaders in oversight roles.
- Accountability – Shared amongst divisions, to ensure collaboration.
- Agility – Used so often, but rarely understood. From the ability to pull the plug quickly if things don’t work out, to scaling agile teams and technology concepts to accelerate outcomes.
I can’t see into the future, but I am confident this pandemic will accelerate the shift to digital, driven by changes in consumer behavior, the decline in offline media and Enterprise need for reinvention.
I’m optimistic about what lies ahead and look forward to the challenge.