Digital to enable innovation or just a band aid

In “Digital strategy is dead, long live the digital world”, we were discussing in February 2019 the relevance of strategy, what it means in the digital world and that it is key to pursue value streams in digital transformations.

In the last couple of weeks and months COVID-19 has challenged our ways of doing things, and due to the lockdown many industries and businesses started to use remote working, eCommerce, and digital payments as the new norm. Organizations, which continued patterns of the past underwent a crash course and had to scramble to get virtual collaboration methods, among others, up and running. In conversations with various educational organizations in summer 2019 about enriching the face-to-face channel with eLearning formats like providing content online, providing simulations and testing online, this was not considered relevant for the schools and the educational experience. Similarly, many retailers by now have an online channel, but the user experience - when trying to configure and order an article - is very cumbersome at best. Even worse, in some cases, the channel was temporarily out of service in a time when it is critical to have the online channel up and running! In other words, many retailers still rely on the bricks & mortar channel for the buying decision and the online channel is more or less just an “information gathering” channel. On top of that, it did not help that logistics providers also faced challenges to scale operations.

What to do? Hope that COVID-19 will disappear, the government will support businesses financially, eventually waive the need to pay back the credits and with that we will go back to “business as usual” again? Or, is there a more structural break at play and businesses that have embraced the new way of things will emerge as the winners, while others, that only used “band aids” will be challenged and may face turmoil and demise?

In this context, one of the key questions is how to move from crisis response mode to operational resilience and strategy? Organizations that take this serious, e.g., by analyzing failures of their current operating model, questioning the conventional wisdom of strategy to date, are designing a target operating model aligned with strategic scenarios and establish coherent actions, may be better off in navigating what is ahead of them. For instance, it is worthwhile to analyze what is the complexity of the business infrastructure to keep an asset productive such as a production line or a knowledge worker. Cutting costs may not be enough; simplifying processes may be a better answer. In more general terms: Analyze the root causes of failure, identify and evaluate economic scenarios and the implications on the business model and revenue model upon, maintain and improve the operational resilience, and, last but not least, leverage opportunities that open up new markets and new revenue streams.

To conclude: While digitization of processes and digital monetization is not the answer to everything, it is definitely a critical option to pursue. This also needs to include key stakeholders of the organization and what is in it it for them – in other words: What shall be the user journey across channels and how does the value realization map look like across all channels. As various organizations may struggle because they are stuck in the old ways of doing things and have not really evolved in the digital world to increase operational resilience, I hope this is a wake-up call for many of them to re-look at their business operations, their business and revenue model and the inherent operational and market risks. Otherwise, they may face the risk of becoming the dinosaurs of the 21st century.