It has been kind of surreal to live in a time when the world is experiencing a crisis like no other in recent history. Some have compared it to war, with no timeline for an end, uncertainty on who will be impacted, people sheltering at home and the economy brought to a standstill. But survival instincts are strong and companies that could, quickly changed their way of doing business. Whether you expect the economy to take a V, W or U shape, the road to recovery will involve a number of changes that have already been shaping up.
Business learnings of COVID-19
Unsurprisingly, digitally ready companies transitioned more seamlessly to the virtual working model and are generally better positioned for recovery. Companies with strong automation experienced less disruption, enabling processes and workflows to happen without reliance on people to make operations happen. Many consumer facing businesses could only continue operating if they had an ecommerce platform.
Similarly, the ability to remotely monitor assets and other ‘things’ across geographies proved invaluable for companies with large numbers of assets, as well as those relying on supply chains and logistics. Sending people was often impossible.
The common theme is obvious: being digital. A digital business has access to accurate, timely and tailored data, available to whomever needs it, wherever they are, to make better and timely decisions. It is the best strategy to react quicker and better to situations. Nothing new but everything is exacerbated in a time of crisis.
Another big realisation is the risk of limited supply chain resiliency or redundancy. Every company has fresh appreciation for its reliance on critical components which are sourced from only a few countries, such as China.
As business leaders absorb these realities and anticipate the rate of change and likely pace of recovery, focus will inevitably turn to cost control and looking for opportunities. Of course, there is the traditional or ‘analog’ way of reducing costs. Letting people go and reducing expenses and investments until things start picking up again. But that is reactive, inefficient, slow and unlikely to position companies for an upswing.
Separately, as is often the case with large unexpected shocks, there has been a collective re-awakening around our values, lifestyle choices, future aspirations and awareness of external crises. The prevailing trends such as greater work flexibility, more localisation of supplies and production, as well as care for the environment were just magnified by the COVID-19 crisis. It is no longer possible to say that working from home ‘doesn’t work’ or that human activity ‘doesn’t generate greenhouse gas emissions’.
These trends, and some of the values they reflect, are likely to become fundamental societal shifts with direct business implications.
As mentioned in one of my prior articles (No vaccine for climate), the environmental cost of rushing back to growth using the same tactics employed in the past risks pushing us into the next crisis linked to climate change. We need to plan a ‘smart’ recovery, enabled by technology that allows us to work smarter and more efficiently than ever.
Digitalisation, decentralisation, decarbonisation
What insights do these learnings and realisations bring us? Most clearly, digital transformation is no longer a ‘nice to have’ future initiative. A digitally enabled, smart organisation just became essential for businesses to survive, let alone thrive. Essential because digitally transformed organisations can improve business efficiencies, agility, communication, collaboration and the customer experience while saving costs and being more environmentally friendly.
The technological differentiators of successful digitally transformed, sustainable businesses often start with the ability to capture data from multiple sources and merge and analyse that data in real-time to drive business decisions. Increasingly those businesses are also moving towards remote monitoring and control, as well as smart and semi-autonomous assets and production facilities, all leading to the capacity to virtually run businesses across distributed environments.
This decentralisation trend is important to point out as it may not be as obvious as digitalisation. As is often the case, it is the result of several elements coming together. The main enabler is new technologies allowing distributed production, either controlled remotely or autonomously. This includes low-cost sensors and communication, near infinite computing power, effective artificial Intelligence, 3D printing and many more.
Another driver of decentralisation is the benefit of producing more locally, reducing transport and logistic bottlenecks. This can bring some form of on-demand availability (depending on the product) along with significant ecological benefits. Increasingly technology is also reversing the centralised advantage of economies of scale. The most obvious example of distributed assets is in the power sector with virtual power plants (VPPs) coordinating rooftop solar and batteries to produce power when needed.
At the opposite end, big data lets businesses uncover huge hidden value. From simple correlations enabling cost savings or better client service, to the value of accumulating large data sets over long periods of time to allow for greater predictive analysis. On that journey, AI, digital twins and automation will move from being very effective on localised or asset specific applications to increasingly broad and complex systems.
Overall, it is important to recognise this is a progressive journey. Very few companies are born digital, so the priority is to take real steps in that direction. Some companies and industries facing the challenge of technology choice have historically deferred taking action until a brave competitor made the first move. The good news is there are more and more technology options to solve specific business problems and even industry niche applications have reached industrial grade maturity levels.
This crisis is likely to be the last warning for the companies and industries technologically lagging. The practice of waiting for proven technology or slowly testing every element yields only slow incremental change which is unlikely to succeed in the future.
The recipe to effectively and genuinely drive innovation is well-known from leading businesses:
- try new small things first and do so in a limited, low risk environment,
- make sure that, at a system level, technologies are scalable, compatible and secure,
- quickly analyse results to change what doesn’t work, and
- repeat and expand, with pace, the elements that work.
In many cases, the biggest challenge is not making the wrong technology decision. It is making no decision at all. But this requires a mindset change, focus from the top and reallocating some internal people with business expertise to help develop solutions along with the technology experts (internal or external).
Rather than waiting for the next crises, this journey to our new normal presents the opportunity to take a large step toward digitalisation. As we move into the recovery phase, we have an incredible opportunity to use the learnings and leverage technology to reset how we work for a more agile, economically sustainable and environmentally secure future.