As the daily count of new cases of COVID-19 drops gradually, a few countries, including India, are already planning for a phased exit from the lockdown. The International MonetaryFund (IMF), in its recent world economic outlook, has forecasted that the economy will be downby 3% due to COVID-19, which implies that the global economy will lose US$ 9 trillion. Economistsacross the globe are trying to predict the nature of recovery of the economy post-COVID-19. Will it be V, U, W, or L shaped recovery? The possibility of a W-shaped recovery seems to be more likely, i.e., the ease of lockdown restrictions initially boosts activity, but unemployment and corporate bankruptcies will hit the economy again.Many advanced and developing economies have announced financial supports to small businesses and daily wage laborers. However, the stimulus packages are not enough to kickstart the economy and bring it back towhere it was before.
COVID-19 is, in a way, responsible for accelerating the Digital transformationfor non-digital natives through a digital crash course.However, most of the industries are impacted, and the impact worsens as people will have less money to spend, and will reduce spending on non-essential commodities, bad debts will increase.
For most organizations, recovery post-crisis will make organizations digital-ready, resilient. However, it will bring some organizations to the moment of truth and will bring about a Kodak moment in others. As organizations try to respond to the situation and ensure business continuity, now is the best time when the champions of tomorrow are reimagining the new-normal while the rest are still struggling with their BCP. The new normal will have digital technologies(Cloud, AI/ML, IoT, Drones, AR/VR, Robots, 3-D printing) at the core of the business and the operating model. Lean agile organizations effectively utilizing digital technologies to rethink industries, reimagine processes, and solve complex problems will become the digital leaders in the post-crisis world.
What will set digital leaders apart from the digital laggards?
Things will not be easy& will never be the same. The path to recovery for sectors like hospitality, Oil & gas, apparel, fashion, luxury, movie theatre, and public entertainment is challenging. Organizations are perplexed with numerous questions as they prepare to come out of this situation like
- What are the lessons learned during the crisis? How to increase the intensity of learning to navigate the uncertainty ahead?
- How to reduce operating costs?
- How to build resilience into operations?
- How to engage customers and provide superior omnichannel experience as their preferences change? How to retain customers that will fuel growth?
- How to build innovation into organizations’ DNA?
Digital natives will have an initial edge and will be able to recover quickly with minimal impact. Most organizations will need to create a detailed business planto accelerate through the recovery and also craft their digital strategy to be successful in the post-COVID-19 world. Organizations need to think about reinventing their business model to compete with the digital natives.
Framework for Digital leadership
A framework to achieve digital leadership should have four components by putting digital technologies at the core of the business and operating model.
The four components are
- Re-define customer strategy with the changing customer preferences
- Re-evaluate valuechain by building resilience
- Re-build workforce strategy
- Re-focus on the innovation strategy
A digital frameworkwithout a well-thought-out data strategy is meaningless. The data strategy should align with the organization’s digitalization efforts with robust data governance. A recent HBR study reveals that 69% of the organizations have not created a data-driven organization.Data is the biggest asset in the digital economy, and if properly harnessed, can itself become a competitive business model.
Re-define customer strategy with the changing customer preferences
Consumer behavior and pattern will change as they will prefer online shopping, contactless delivery, spend less on non-essential commodities. Understanding the consumer’s need, providing recommended offerings/discounts, omnichannel experience, flexible payment and no-contact delivery options, one-click payment & quick delivery will help organizations deliver the right experience and engage the consumers in the best possible way. AI and ML will enable them to provide “hyper-personalized” products/offerings. Pricing strategy and migration of customers from loss-making products to profitable products will be a quick-win. Cognitive bots can help provide information to the consumers on the products, invoicing, etc. An expertly designed customer strategy can help a digital leader to have a more significant share of wallet, 20% lesser customer attrition, 20% - 30% higher NPS. Organizations can create a marketplace similar to Alibaba’s TMIC consumer analytics platform to develop new products tailored to consumers. Samsung Electronics is partnering with Benow to build an eCommerce platform to sell smartphones and onboard offline retailers. Similarly, other brands like Xiaomi, Apple, OnePlus, Realme, and LG are taking the same route.
Re-evaluate value chain by building resilience
Organizations need to reduce operating costs by re-imaging the processes from scratch to unearth process efficiency, productivity gains along with organization re-structuring as required. Lean inspired process transformation supported by digital technologies will help organizations drastically reduce cost, reduce time to market, and improve process efficiencies. Post-COVID-19 virtual banks will grow, several physical branches will close down, and AI/ML will help banks optimize the physical presence. Even the old financial institutes will digitize their process to enable remote working, and reduce the cost of serving customers.
Similarly, customer service will be hosted on the cloud to reduce costs and provide additional security to work remotely. Organizations will increasingly use robots, drones for warehouse, logistics, and fulfillment to gain significant cost reduction. Smart asset tracking, predictive maintenance will help to reduce the failure rate. Building redundancy and reducing dependency on one region/country will be part of the supply chain strategy. The additional cost to build redundancy and source raw materials from different geographies will be offset by the cost reduction initiatives employed by intelligent use of digital technologies. A case in point is India’s fifth-largest bank,which has decided to transform its technology-based systems to provide high availability for their digital channels to offer customers core-banking services from home.
Re-build workforce strategy
While the shift to remote work due to lockdown was temporary, it has shown that a majority of work can be done remotely. Due to massive layoffs across the globe, the workforce is anxious about their job future in the current organization, but the best thing about the current situation is that it will give a boost to gig-economy. Organizations will learn than a lot of work/meetings/sales enablement can be done through video conferencing that can reduce a lot of travel time and significantly reduce travel costs. Though the hospitality sector will take longer to come back to the normal due to this measure, for many industries, it can be a quick win. Organizations will cut through hierarchical layers and departmental silos, optimize the workforce using AI and cognitive automation, and run a Lean-Agile team to run the business. AI will enable organizations to do betterworkforce planning.
Humanoids will complement the workforce, and resilience will be build so that AI can perform some of the activities to eliminate total shutdown in the future. Cross-skilling on Digital technologies for the workforce should be a priority. Change champions should be identified to drive change within organizations. An Australian operator has decided work-at-home as a permanent feature of its call center operations that would reduce the dependency on the offshore call center model.TCS has planned to change its operating model, and by 2025 they will have only 25% of the workforce in office as per their 25/25 secure borderless workplace (SBWS) model. The model will not only be employee-friendly but will reduce the operating cost drastically.
As organizations get used to the “new normal,”they need to be extra careful about the digital risks around cybersecurity, data security, and privacy, compliance around regulatory requirements. Organizations need to modify their risk management framework to be more agile and incorporate policies around “working remotely,” data sharing, data confidentiality. The organizations provide adequate training to the workforce on digital risks and implications on any breach.
Re-focus on the innovation strategy
Post recovery from COVD-19, the competitive landscape will change faster than it was before the virus shut down countries contributing to more than 50% of the world’s GDP, the digital economy will blur industry boundaries and organizations will need to have innovation entrenched in their DNA to succeed. Leadership should drive the innovation strategy and adopt the right mix of sustaining and disruptive innovation. As per Clayton M. Christensen’s theory of disruptive innovation, “sustaining innovation” is more about continuous improvement of existing products, disruptive innovation is to reinvent a business model to serve low-end footholds or new-market footholds. Organizations need to build a robust governance model and collaborate with digital tech startups and partner ecosystem to drive innovation at scale. Airtel is partnering with Vahanto connect millions of jobless employeeswith potential employers.
The world has never seen this and hopefully will never see such a crisis to humankind again. Though it looks like recovery will not happen before the end of 2020, going by history, some organizations will come out stronger post-crisis. Alibaba’s turning point was the SARS outbreak in 2003 when the Internet emerged as a truly mass medium in China. Businesses that were never digital is trying to go digital during COVID-19 but organization that will embrace their strategy around those four key components underpinned by a robust data strategy will come out as winners.