Digital transformation post covid-19 is on the minds of the entire workforce. From entry-level to c-level, everyone is feeling the shift. The question is, what does digital transformation entail in the new path forward, after the coronavirus is no longer deemed a pandemic?
Many businesses were forced to speed up their digital transformation to keep some level of productivity. Social distancing restrictions prevent a Business As Usual approach in nearly every sector.
Now that the restrictions are gradually lifting, what does digital transformation post covid-19 look like? Which implementations remain and what will be phased out?
Here I look at the insights of what digital transformation post covid-19 really means and how it affects business as we know it. But most importantly, how executives should approach digital transformation post covid-19.
What Is Digital Transformation?
Digital transformation is often a misunderstood concept. Many people hear the word digital and automatically assume it is about switching to more technology and cloud-based business. Although technology is an integral part of a digital transformation it goes far beyond that.
Digital transformation can mean different things for different companies as this McKinsey report shows. However, there are common traits in most approaches.
The first common trait is an internal shift in operations to use more technology-based tools. Examples include working on the cloud or data-driven R&D.
The second common trait is an external shift. It is rethinking the product or services. This often means switching to technology-based products or services.
A true digital transformation incorporates both traits. Gartner defines a digital transformation as ‘the process of exploiting digital technologies and supporting capabilities to create a robust new digital business model’. Since a proper business model includes both internal and external factors, this is one of the better all-encompassing definitions.
What We Learned About Digital Transformation During Covid-19
The biggest names in business insights have not been sitting still during the coronavirus outbreak. Here are some of the key findings on digital transformation and what the economic effects of covid-19 show us.
1. The Fast-Acting Companies Survive and Thrive
The covid-19 outbreak is a major catalyst for digital transformation. According to Mckinsey, 92% of companies already realized they need a new business model to survive the digitization of the economy. Yet, many do not have a viable strategy in place.
In the same article, Mckinsey highlights one of the major pitfalls in digital strategies; not realizing the gravity of digital disruptions. Not taking bold enough measures only widens the gap between market players. In the end, those who dared first and those who dared directly after become the market leaders. The rest never catch up.
We see this happening right now. The businesses that immediately reacted to the new reality of living in a pandemic have a head start. Meanwhile, the business that froze are scrambling to navigate what digital transformation post covid-19 entails. Embracing digital transformation allows businesses to make smart decisions and implement quick action.
2. Digital Transformation Post Covid-19 Makes a Business More Resilient
Halting operations during the covid-19 pandemic is not a death sentence. Consider it an eye-opener. For many businesses, it is proof that digital transformation is a necessity, requiring proper focus and dedication.
Mckinsey recommends the twin approach for a successful digital transformation post covid-19. The first element is internal digital transformation. In other words, (further) digitizing operations. The coronavirus outbreak is a learning moment, explicitly showing which operational elements require digitization to allow for business to continue.
The second element is embracing digital transformation for market growth. There are two main approaches, both of which have potential. Successful businesses either rethink their core business model in the light of digital transformation or they expand their portfolio to include goods and services for a digitized economy. Arguably, a combination of both approaches is most effective.
These two key findings clearly suggest that there is no ‘back to normal’ post covid-19. At least, not a BAU that supports continued growth. What changes does digital transformation post covid-19 bring?
How Digital Transformation Post Covid-19 Changes BAU
Coping in a highly digitized post-pandemic economy requires a change in mindset and a new understanding of digital transformation. As you are setting up your digital transformation post covid-19, keep in mind these important lessons.
1. Digital Transformation Post Covid-19 Starts Internally
Before rushing towards any changes, think about what we learned about our business model in the past few months. Which specific elements were a hurdle and what actually proved advantageous?
Digital transformation post covid-19 should not be about tacking on as many technologies as possible. Technology is a tool in digital transformation. First, identify what needs changing in-house.
2. Digital Transformation Requires Human Skill
A Harvard Business Review article puts it poignantly ‘the creative aspect of innovation is entirely dependent on people’. Technology and cloud-based tools are great, but their effectiveness depends on how people use them and adapt to the changes they bring.
A separate HBR article points out 4 domains essential in digital transformation; organizational change capability, technology, process and data. These domains are interconnected. Your talent must see this, understand this and be comfortable with the changes that it brings. Better yet, they must be capable of driving new development.
3. From Reactive to Proactive Agile Businesses
Punit Renjen of Deloitte adjusted the metaphor; ‘whereas organizations used to describe agile change as “fixing the plane while it flies,” the COVID-19 pandemic has rewritten the rules of upheaval in modern times. Those of us leading any organization—from corporations to institutions to our own families—are not fixing the plane in midair, we’re building it.’
In other words, it is no longer enough to simply cope with market changes. The only thing companies can be certain of is change and in the digitized economy this change occurs at a blinding speed. So, your business model and corporate structure must be able to adjust, on the fly.
4. Remote Work Is No Longer a Novelty
If anything, covid-19 paints a stronger picture of the delicate work-life balance. Working from home became the norm and we learn two things from this.
The first is that there is more opportunity for working remotely than many businesses realise. It provides your talent with much desired flexibility in the work-life balance without compromising the workflow.
The second lesson is an improvement point. Allowing employees to work from home is only secure and sustainable in the long term with the appropriate digital structure.
Think about the opportunities that remote work brings and what internal digital transformation is required to fully utilize those opportunities.
5. Automation in Jobs
One of the most concerning aspect of a digital transformation is the creative disruption. Although the pandemic has shown the potential for remote work, it also shows the need for automation in certain sectors. Not everyone can work remotely but the job still has to be done.
Any big economic shift makes certain jobs obsolete. However, as Deloitte points out, the digital economy will create more jobs than it loses. The issue is that this transition in the job market is a painful one.
During the covid-19 outbreak and even during the easing of regulations, we are seeing businesses becoming more reliant on technology for tasks otherwise performed by employees. This is not a new trend, but the social distancing regulations have sped up the process.
Herein lies the dilemma of a digital transformation. This business model shift offers plenty of opportunities, but it also takes away certain opportunities. I emphasized that digital transformation requires a human touch but does your current talent have what it takes to keep up? How can you find a balance between the economic pressures and caring for your staff?
I hope these insights and lessons show you that digital transformation is essential in a post covid-19 economy. Digital transformation is how our businesses become resilient to the onslaught of creative disruption. It starts with preparing our business and talent for continuous change, even though it may be painful.