The New Normal is Online: COVID-19 and Digitalization in the Business World

Mike Schavemaker, Innovation Transformation Lead and senior innovation consultant at Royal Philips, and member of the FINDER Advisory Board, and Barbara Voelkl, FINDER PhD, share their thoughts on the aftermath of COVID-19.
Disclaimer:
The content of the FINDER blog is not an expression of Royal Philips, nor created on behalf of Royal Philips. The content is created and contributed by private persons.

COVID-19 is first and foremost a tragedy affecting the life, health and existence of hundreds of thousands of people all over the globe. From the perspective of today, beginning of April 2020, the outbreak moreover severely impacts small, medium and multinational businesses. With governments implementing strict or soft lock-downs, physical distancing measures and closures of non-essential businesses, the way of working for those lucky enough to continue to do so changed drastically. COVID-19 forced us to make digital the new normal.

The FINDER program deals with digitalization in the business world, more specific in the financial sector. As such, we start to cautiously think about a post-crisis time given that safeguarding lives is the utmost priority. Will COVID-19 drastically change the way we work and life? Will digital solutions, now starting with all forms of collaboration tools, start to thrive? As BCG (2020) report, the tremendous success of Alibaba and JD.com is often credited to the SARS outbreak in 2003. It is highly likely that COVID-19 functions at least as a catalyst for slow processes to scale up solutions around data, Artificial Intelligence and digitalization.

Digital Only as the New Normal

Working remotely, teaching online, digital conferences and meetings require existing technology to be tailored, powerful and agile. In addition, existing academic research shows the benefits of face-to-face meetings (Kirkman et al., 2004, Andres, 2002) and different requirements for leaders of virtual teams (Malhotra et al., 2005) to be taken into account to guarantee productivity, collaboration and innovation in digital settings.

COVID-19 not only changes the way we work, but also the way we consume. The current state of “Digital Only” increases the significance for incumbents and techs to access and accompany customers online. Consumption patterns changed already and will continue to do so. With lock-downs and #stayhome being the reality, e-consumption in the food, health and wellbeing industry are growing to an incomparable extent. Post-crisis, consumption patterns could continue in a way that the initial algorithm or e-commerce aversion by a systematic share of the population is replaced by favoring digital over real-life solutions. Artificial Intelligences support businesses in detecting consumption patterns, predicting human needs and personalizing offerings to sustain their customers. Given drastic job losses around the globe, particularly nonessential goods and services can benefit heavily from Artificial Intelligences, given that a high competition for revenue after the crisis is likely. COVID-19 therefore can be regarding as a stimulus for flux in the economic, and social system – for better and for worse – but surely will create a flux of innovation spree.

The Power of Digitalization in the Value Chain

Following the supply shortages and tremendous impacts of local lockdowns, multinational companies are likely to rely less on just-in-sequence supply chains based on selective production in countries with lower labor costs. Rather, scaling up existing technologies – 3D printing, Artificial Intelligence, specifically Machine Learning– helps to create safety through redundancy while at the same time increasing predictive precision and balancing costs. COVID-19 will therefore likely impact the surge of insourcing: creating simpler – and in part , more national bounded – supply chains which are less prone to political or biologic triggered quarantines and more automated to off-set the costs of labor using robotic process hyper automation and virtual assistant robots. Investing and developing solutions to adjust resources, offerings and supply chains in real-time supports companies in coming back strongly and thrive with new business models.

Again, here we argue that businesses that are focused on the bottom righthand side of the business model canvass will surge, i.e. focus on designing their capabilities in service of unlocking revenue models sustainably and not looking to the concept of a revenue model as a ‘bumper sticker’. In our earlier blog we did not elaborate how these revenue models are in their turn indirectly subject to the political -and economic biotopes and directly to legal frameworks and its subsequent institutional agents of distributions of wealth (or lack thereof), like for example national health systems, national energy systems and the like.

While we are hoping for the best that governmental and health institutions progress in combating the virus, we hope for strategic business progress in the post-crisis rather than businesses seeing digitalization as the crisis mode while in lock-down. Drastic changes towards digital business and revenue models are needed to use of the power of data, digitization and digitalization to create sustainable revenue models for aftermath.

Sources

Andres, H. P. (2002). A comparison of face‐to‐face and virtual software development teams. Team Performance Management: An International Journal.

BCG (2020). The Rise of the AI-Powered Company in the Postcrisis World, available at: https://www.bcg.com/publications/2020/business-applications-artificial-intelligence-post-covid.aspx (06.04.2020)

Kirkman, B. L., Rosen, B., Tesluk, P. E., & Gibson, C. B. (2004). The impact of team empowerment on virtual team performance: The moderating role of face-to-face interaction. Academy of management journal, 47(2), 175-192.

Malhotra, A., Majchrzak, A., & Rosen, B. (2007). Leading virtual teams. Academy of Management perspectives, 21(1), 60-70.

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