Leading through digitisation as the economy recovers
The business landscape has changed beyond all recognition since Covid-19 emerged. Major cities around the world fell silent overnight, and daily lives moved largely online.
It’s become normal to watch on the TV as sporting events are played in empty stadiums. Schools had to quickly shift to virtual classrooms, GP surgeries had to provide remote consultations, businesses needed to harness contactless commerce and cashless payments. In the white collar world, we interacted via virtual meetings as we worked from our kitchen tables and home offices.
We had to adapt at breakneck speed, and our digital and real worlds became intermingled more than ever. We hear talk of a “new normal”, but in an increasingly complex world, there is uncertainty as to what this ‘new normal’ entails, both for the consumer and for business.
What is clear is that supply chains, distribution channels and customer behaviours have shifted forever. Businesses must respond quickly to these changes in order to grow in the new climate.
Can you remain agile when the economy is shrinking?
Such boldness is counterintuitive during times of a recession. When we face crises, it’s natural to feel threatened, besieged and vulnerable. Translate that to the business world, and we see organisations sticking to the tried and tested, reinforcing and replicating what they already do and trying to keep their head above water by not rocking the boat.
Yet there is a real danger facing those SMEs who unwittingly reinforce old ways of working and old mindsets about what business looks like. The world has changed, and if business doesn’t change with it, that business won’t survive through the recovery.
“Doubling down on what a business already does may prove effective in markets that change little following the pandemic,” says Professor Mark Healey of the Alliance Manchester Business School. “But in markets where competitors, customers or technologies are shifting, this kind of rigidity can be fatal to long-term prospects.”
Focus on the digital for operational agility
In a world of lower overall consumption, access to the digital consumer is shaping the new frontier. And the digitalisation of business must continue apace to ensure we have access to the kind of data to make operations more efficient and more streamlined, in turn helping business to remain competitive in the downturn.
Global lockdowns accelerated digital adoption, driving entirely new patterns of consumption in both B2C and B2B. The COVID-19 B2B Buying Trends Report conducted by Hanover Research on behalf of PROS in June 2020 shows that, since the start of the pandemic, 37% of businesses purchased primarily through digital channels. That’s an increase of 19% when compared to pre-coronavirus, and it’s expected to rise to 40% post-pandemic. 70% of buyers reported that current conditions are compelling them to shift their vendor preferences due to challenges in working with existing vendors – 19% of which said they were shifting preferences ‘a great deal’.
Online sales are not a new phenomenon, but the speed with which new generations of consumers have gone online has led to a change in demand that is unlikely to reverse. The PwC Global Consumer Insights Survey 2020 found that 63% of consumers are buying more groceries online/by phone than before social distancing and 86% are likely to continue to shop online/by phone when social distancing measures are removed. It’s also generating entirely new patterns of behaviour – for example, switching suppliers or vendors is easier, and has accelerated; consulting services can be supplied virtually; education has moved to the online classroom.
Studies by McKinsey and HBR both conclude that businesses need to focus on their digitalisation journey as the more efficient way to drive out of this recession and succeed in the new normal.
In essence, companies are having to rethink how their business models leverage virtual presence.
Leveraging technology to drive business resilience
What does this mean for your own business? That’s the big question, and the answer will depend on your business’s maturity in the digitisation journey.
In short, companies must move more quickly with their digital adoption to protect and maximise their revenues, and potentially gain first mover advantage. Those that are successful will ride out of this recession and gain significant advantage during the recovery phase.
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