Doing business post COVID - How to play when the rules have changed

Like many industries,?Covid-19?has been a game-changer?in?consumer products. For years, CPGs feared?that direct-to-consumer?(D2C)?sales would hurt critical retailer relationships,?which prevented?investment?in these?channels.?But?as?stores closed,?changing not only the market environment but the entire ecosystem, they were?finally?given the opportunity – and the push – to?take the leap?and sell direct.?

The effect, however, rippled?beyond CPG.?The majority of?companies?had to suddenly digitize their business. And while?some have already?reaped the benefits,?it’s not too late?for others?to?act.?But with?customer preferences?for online solutions?here to stay?long-term,?digital value propositions?are?no longer optional,?but a necessity.??

No going back?

Our?latest?purchasing behavior?study?shows that Covid-19 has driven a surge in online shopping, with?53% of?consumers?doing this?more or for the first time?since the pandemic began.?More?importantly, 36% of?them?say?it?has become?a?new habit,?revealing?how quickly?purchasing behavior?has?adapted.?And while?B2B companies?might?feel?that?this doesn’t concern them,?they should?think?again, as?the same?person buying?furniture?and other goods for their home via?e-commerce will demand the same experience and usability when?they’re at work.?New?rules are?in place?across?the board,?driving every?company?to find?its?new place.??

Putting?digital?transformation?into?action?

Going digital can be?difficult – and?intimidating. But that doesn’t mean?it’s?impossible, and we have a five-step plan?for?putting?your?transformation?into?action.??

1. Know your starting point?

The most important thing to grasp upfront is that digital?takes work,?ambition?and strategic?prioritization.?That means aligning?your corporate strategy and?level of?digital maturity?– it can’t just be a copy-paste job from someone who’s gone there before you. To do?this,?it’s critical to?understand?your?digital starting point. What are your?existing challenges?and triggers??For example,?since the 2000s,?the increasing?trend towards?health?and wellbeing?has?led to a?rapid?decline?in the tobacco industry,?accelerating?demand for?new?capabilities and products. As a result, Risk-Reduced Products (RRP)?like?vapors?and?heated tobacco?have come to the fore, with?online channels playing?a key role?in the consumer journey, while a?dynamic?regulatory?environment?has made?agile ways of working?indispensable, especially in legal departments.??

Knowing?when to?take action?and?make digital transformation?a key?strategic?goal?is just as important as doing?the?actual?legwork?inside?the organization.?

2. Build a strong foundation?

One common misconception is that?introducing?new tools and?technologies will be enough to?digitize the business or even?create?a?new?digital?business model. However,?digital goes?way?beyond?technology, and this must be reflected in?a holistic strategy?that?sets?a?clear vision?and?encompasses?both organizational and technological enablers.?Needless to say, it’s?crucial to?align?this with?your?overall?business objectives?– creating one common goal and allowing digital efforts across the organization to be prioritized for resources and investment.?

It’s also crucial for your new strategy to be centered around what customers want.?As we’ve seen,?Covid-19 has?changed?this in many respects.?One major shift is the desire to?see?real?products before?making a purchase. Whereas last March, only 24% of customers said they didn’t need to see a product in store before buying it, by November 60% were comfortable to do this.??

To succeed,?a strong?digital?foundation?must be?built?and aligned to your?organizational context and objectives.??

3. Focus your priorities?

To execute?your?digital transformation?in an?efficient?and?agile?way,?it’s recommended that you incubate the new?functions and?capabilities required by?spinning?off?some?existing teams into?a?discrete?digital unit. This way, you?can?enable?rapid experimentation?and?accelerate?progress.?Many companies adopted this approach when first embarking on their digital journey.?Nike for example has a “digital center of excellence”, where new digital capabilities?for marketing & sales, supply chain, product management and other functions are first developed centrally, before being rolled out into the markets. ?

To prioritize activity and initiatives, first assess the current?and desired?capability levels within the digital unit,?in line with your overall strategic direction.?Then use these to build?a?detailed?roadmap that?takes you towards your goal?in a controlled way.?

Setting discrete priorities by building a digital unit?allows to accelerate the digital transformation journey.?

? 4. Uplift the organization?

To fully establish your new, digital-first?business,?the entire organization needs be brought along: Both from a people and an infrastructure perspective.?The tech stack?needs to reflect your changing, dynamic business needs. Here,?a modern and flexible application architecture is an essential success factor.?Further, there needs to be extensive upskilling to enable employees to?understand their changing objectives,?be able to use new technologies and adopt agile ways of working.?Dedicated learning families, curricula and upskilling programs?are best use to do the job. For a global?pharma company, we developed a comprehensive learning academy that trained 750 key employees across five distinct learning families in the first 12 months.?

Once digital skills,?technologies and?ways-of-working?are?established?in the digital unit,?they?must be diffused across the organization?to enable digital transformation.?

5. Make it?business?as usual?

Now it’s time to?bring?everything?together?and?make the digital mindset and?agile?ways of working?a normality?throughout?the?entire organization. Prioritizing digital initiatives, being familiar with digital tools and?working towards digitalizing all processes should become the?norm, thereby?turning your company into a fully digital one.?Many companies, once?accomplishing their first step-change in business model, focus on gaining full operational efficiency across all their functions.?Philip Morris, the?company behind both Marlboro and IQOS, after deciding to exit the cigarette business and?turn to?smoke-free, reduced-risk products in 2016, focused on building up digital marketing, sales and technology capabilities for the first 4 years of their digital journey. Now,?they work on diffusing digital across all corporate functions (e.g.?supply chain, finance, HR) to gain efficiencies.?

Integrating a digital mindset and ways-of-working across all members of the organization and assuring application?during business as usual is critical for a full digital transformation.??

The?need?to?go?digital is more important than ever before.?But it’s also a huge opportunity to?transform,?and?put your business on a?better?footing?for the future.

Want to get started on your own path to?digital?success? Let’s talk.?

Contact?us?for further information:??

Sebastian Schoemann, Partner, Munich?

Sabine Spittler, Principal, Berlin?

Roberta Roeller, Manager, Berlin?

Aviella Schaechter, Consultant, Vienna?

Seraina?Mueller,?Student?Consultant, Zurich

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