Digital Innovation
Digital innovation is the differentiator in the post-pandemic economy. For many years in the tech community we have talked about something called “digital transformation” (DX) or as some call it, the fourth industrial revolution. At its simplest the concept is about shifting your business to use new digital technologies and strategies to modernize business models, business strategies, business operations, customer experience, and workforce experience. On one hand there are disruptive companies that emerged over the past 10+ years as “digital native”, having built their business strategy, model and operations from the ground up on digital platforms. Companies like Uber, Airbnb, Lyft, Stripe, Robinhood and Doordash created a new business opportunity by melding a digital platform with a business platform to solve problems and deliver product/service in a novel way. But the digital natives, as disruptive as they are, are only a tiny part of the business landscape.
Other than the digital natives, the complete transformation for most businesses is foundational and maybe even a bit radical. Some businesses are on the journey to varying degrees already, but many are very early and have quite a way to go. And then some businesses simply have not really made any progress at all, nor would they admit that they need too. Perhaps those will ultimately be the business casualties of the pandemic, since those that have not moved down the digital path quickly likely will not survive or at least suffer a diminished business as we move out of the pandemic. The pandemic was the lever and understanding had to follow actions as change was not something that could be avoided. The changes were creative if not necessarily optimal. At this point DX could be considered the effort after the rapid change to rationalize and optimize as the world moves through the next phases of recovery. Companies are already starting to make policies that allow remote work as a permanent option for the employees whose jobs can be done remotely. Offices are starting to reopen, but the approaches are quite varied at this point from full remote to full return to office.
Taking a step back, the crisis mostly accelerated changes that have been in motion for many years. The tools that were needed already existed as well as the vehicle for conducting business, the Internet. Software as a Service (SaaS) and Cloud Computing are readily available and are the major way most companies consume new / replacement technology. In the developed world high speed broadband is available in more and more places. The implementation of 5G networks is creating an even bigger explosion of broadband coverage. If we had to create these base level capabilities from scratch the economy and businesses would have struggled even more. The fact that some people did work remote before the crisis, that customers could get customer service with chat on a website, that you could have an online doctors visit (even if most people didn’t use it) or that you can take classes online, provided the roadmap for moving business quickly online.
The first wave of change was directly related to creating a virtual work environment, creating a way to interact with prospects and customers, and in some industries creating a virtual way to deliver the service. For remote work to function properly employees need tools to do their work (hardware and access to software systems over the Internet), tools to collaborate and communicate with other employees and partners, tools to provide needed protection for security and privacy, changes to business processes to account for remote work and maybe even more importantly a way to create a virtual company culture that keeps employees motivated, safe and feeling supported. For many companies the shift too remote selling was a very disruptive change and required new tools, or the expansion of the use of tools to interact with prospects and customers. Marketing had to shift to virtual events, maybe adding webinars for the first time, or learning to switch to digital marketing programs. For industries like education and healthcare the change to remote service delivery required new tools, or learning to use the tools they already had to teach and treat.
The second wave of change is perhaps a bit more complex. For lucky businesses the change might only have been the expansion of processes and use of tools already in place. Many businesses had to figure out how to move their business online. Tools like eCommerce platforms, payment gateways, gift card processing, transportation and logistics management platforms, eMerchandising, subscription management and enhanced security needed to be implemented, employees trained and new business processes defined and implemented. Supply chain disruptions drove businesses to create alternate sources of material and new ways of getting supplies. Shortages of key materials like silicon chips created by supply chain disruption are still having impacts across a variety of industries.
The third wave of change in progress now and for the foreseeable future, is optimizing the new processes, tools and business models to work correctly. Finding new ways to innovate, complete and grow is an imperative. Many companies learned new ways to incorporate data into their daily operation and in their ongoing strategic planning practices. Understanding what products and services are hot today in this changing environment, which vertical industries are growing and spending, which competitors are being successful and why are even more important that ever. New data sources are needed and new analytic tools, including artificial intelligence (AI) capabilities to make sense of the data, are not just a competitive advantage, but a competitive necessity.
All of these changes are observable and fundamental to keeping the business alive. They also play into the changes in buying behavior that have slowly crept into place over the past decade. Selling trends have not kept up, and businesses were essentially doing more of the same to try and make it work. Doing more face to face, more cold calling, more email marketing, more events, etc. is not successful anymore, and the crisis just highlighted the short comings. The pandemic changed that behavior quickly and radically. Doing business online requires developing the same level of trust as face to face, but it is much more difficult to build and much more fragile. Buyers have changed what they trust, how they make decisions and what they expect from sellers. In a recent G2 Buyer Behavior study of business to business (B2B) buyers and influencers 30% of the 1343 respondents said professional colleagues/professional network was the most influential in the purchasing process. Out of a list of eight different influencers ranging from peer review sites to internal influencers, vendor sales professionals were dead last with only 3% of the responses. In the same study 44% of the respondents indicated that they only contact the vendor sales professional after they have made the purchase decision.
The rapid adoption of digital business practices has radically changed the way many businesses work. In a post-pandemic world it is unlikely that the now digitally transformed businesses will revert back. The world itself will be forever changed as a result of the crisis as we adapt to the threat of recurring pandemics as these viruses continue to mutate and spread. The old way of doing business face to face will be greatly diminished in a business environment where we have been retrained to work successfully in a distributed, remote, digitally enhanced model. Digital transformation is here, but are you ready for it?
