If we thought business moved fast pre-2020, the luxury of time has completely disappeared, and with it, the traditional ‘test and learn’ approach that organisations previously took with digital initiatives. There were reasons why accelerated digitisation wasn’t the norm pre-pandemic.
As McKinsey’s research points out, in ‘normal’ times, customer and market penalties for errors could be too steep, shareholders of public companies demanded immediate returns – not long-term initiatives securing a future-proofed competitive advantage – finance departments didn’t typically approve the funds required to move new initiatives along at pace, and there were many organisational obstacles preventing widespread digitisation within companies, including deeply grooved silos that hindered collaboration and agility.
In many ways, organisations have spent the past decade in a Catch-22 situation. Most C-Suite decision-makers have been aware of the need for widespread digitisation, but the cost of change versus the perceived benefits have been too high. The problem hasn’t been limited to organisations alone: Customers have also been slow to adjust to new ways of working, as adoption curves have shown.
What’s interesting is that despite this inertia, McKinsey research shows that when companies have gone against the grain, adopting digital technologies early and at scale, and combining this with a heavy allocation of resources to ensure the fast delivery of said technologies, the result has always been greater value creation.
When we compare McKinsey’s research of organisations that were able to leverage design thinking and artificial intelligence during the Covid-19 crisis because they were already technology-led businesses versus more ‘traditional’ companies, a theme quickly emerges.
Both types of organisations made similar use of digital versions of formerly analogue products (29% in digital-led businesses versus 33% in more traditional companies). When it came to existing products that simply enhanced service with new digital features, traditional businesses accounted for 39% of their offering in this way, versus only 25% in tech-first companies. The real difference can be viewed in entirely new digital offerings – 46% in digital incumbents and only 28% in traditional incumbents.
There are two important factors to consider: First, digital incumbents were able to respond at speed to an unprecedented crisis. It’s worth noting that many of the barriers previously experienced by digital initiatives were removed, particularly an unwillingness from customers to adapt to new technologies, solutions or ways of working. Digital-first quickly became the norm. The difference was how prepared businesses were for the ‘new normal’. The second is that according to McKinsey, the top economic performers were very clearly in the digital incumbents’ group – the tech-first businesses that were able to bring entirely new digital offerings to market quickly and efficiently.
Finding a new normal in a post-pandemic world
The big question now is: Where to next? If the sudden move to Working From Home (WFH) has taught us anything, it’s that businesses that were able to embrace digital solutions quickly and effectively have greater resilience and were able to pivot from playing defence to chasing growth in a matter of months (if not weeks).
Digitisation has proven multiple advantages, including streamlined operations and automated manual processes, resulting in less waste, greater speed, and more focus on revenue-generating activities and a productivity advantage – employees who made the seamless shift to working remotely were able to focus on leveraging collaboration tools and technology to maximise team productivity and sustain company culture.
There’s an agility advantage too: digitally-transformed businesses are able to leverage data-driven insights to not only make decisions faster but act on them faster too. This built-in cultural flexibility allows them to adapt or change course at any point.
The challenge with any big change, however, is sustaining it. Companies are now faced with returning back to the office with their huge overheads and rigid working hours or downsizing their real estate in exchange for maintaining the benefits of remote working through hybrid models, for example.
Similarly, will the same level of investment continue to be allocated to digital initiatives – and even increased?
Leverage the right tools for success
The big difference between solutions available today and a few short years ago is that any business can achieve and maintain digital transformation. For example, at Paracon, we have partnered with Huawei Cloud to offer our customers the cloud, AI, 5G, and IoT technologies that will drive every industry in every country by 2025. Disruption has taken place. How businesses deal with it from an innovation, technology and skills perspective will determine how competitive they are in this new world.
The falling barriers to experimentation, improvisation and digitisation amongst customers, markets, and organisations present a unique opportunity for businesses and employees alike to find – and embed – a better way of doing things.
We know that some things will snap back to previous form. But others will be forever changed, and the organisations that leverage the opportunity to sustain the gains we’ve made will be well placed in the future.