A new consumer study from FIS Global, a banking technology company has conducted a survey of over two thousand consumers to better understand how their behavior is changing as consumers navigate their way through the new normal. Not surprisingly, the results paint a clear picture—that business models who have invested heavily in digital transformation efforts and/or were built from the ground up as a digital enabled business will be ones who hold the advantage as consumer behaviors continue to shift.
Consumers surveyed indicated that 58% are spending more of their money online, while 27% acknowledged to subscribing to at least one new digital streaming service. And not surprisingly 42% acknowledged that they are purchasing more through mobile devices. The data affirms that online transactions are fast becoming a new normal for consumers as they swap physical shopping for digital.
These unsurprising findings underscore a basic fundamental truth—if a company is to survive and ideally thrive in an environment where new consumer behaviors are likely to stick, they must accelerate their digital transformation efforts to meet consumer expectations and demand. Accelerating digital transformation however is easier said than done and takes a mixture of both incremental adaptation and wholesale change. COVID-19 will be remembered for many things and what’s becoming indisputable is how it is rapidly transforming business. There are three factors a business must take into account what is needed to accelerate digital transformation:
Whether it be a small or large, it is the culture of a company that leads the way in how it adapts, changes and rises to meet new consumer behaviors and needs and leadership influences culture. It is the restaurant owner who understands that their menus be optimized for mobile devices because new regulations require QR code powered “touchless menus”. It is the executive leadership in a company who sets the example for others to follow. El Pollo Loco CEO Benard Acoca who helped the quick serve restaurant brand triple its digital sales in 202o, stresses the nature of culture as something that cannot be built overnight: “Companies can’t manufacture culture in the middle of a crisis. If you didn’t have a healthy, vibrant, people-centered culture going into this pandemic, you were automatically at a greater disadvantage in seeing your way successfully through it.” While many business leaders think the starting point to digital transformation is technology—it is actually culture that remains more foundational. Acoca’s reference of a “people-centered culture” highlights that a company can be laser focused on serving the needs of people whether it be its own employees or customers—and this becomes foundational for how effectively it can evolve.
While it’s often said that “culture eats strategy for lunch,” it is having the right capabilities at the right time which allows organizations to digest the lunch they are attempting to eat. Take IKEA for instance, which is reporting that its e-commerce efforts have doubled since COVID-19 began, yet in the same breath is struggling with the capabilities it takes to fulfill demand. A recent Fast Company article states:
“Ikea tells us its e-commerce business doubled over this time. But without the capacity to handle it, Ikea has fielded widespread customer complaints. We’ve seen stories of unfulfilled orders, inept customer service, and even, in one case, a 500-mile drive to pick up furniture that was marked “out of stock” 30 minutes before the customers arrived. Even now, as Ikeas have reopened around the United States, these problems haven’t been solved.”
IKEA’s challenges highlight what no doubt many organizations are experiencing—not enough operational investment in the right places at the right time. While some operational issues remain out of control of the business (shipping for example) there are still areas such as inventory systems and digital customer service that can make or brake brand loyalty for IKEA’s customers. Even categories that seem “disruption proof” such as healthcare have had to re-evaluate digital transformation investment. On the tension between cost-cutting and investing, Bryan Specht, Group President of the healthcare focused marketing agency W2O says: “We're seeing a hyperspeed acceleration of digital health and increased demand and adoption of telemedicine by consumers. Yet too many companies across all sectors are simply cutting costs rather than incubating on new technologies and capabilities...Investor expectations of slowed performance should provide an opportunity for R&D and innovation, instead of furloughs and layoffs.” The choice to invest in certain capabilities vs. divest in others remains as complex as always, but the luxury of time for many organizations has been dramatically condensed.
The time a business has to manage complexity is now significantly reduced as consumers, customers and even employees adapt to a new business environment. Managing complexity often brings with it the risk of “analysis paralysis” as organizations grapple with the balance of parsing data with the need to take action. In a recent Podcast interview, Dell’s Michael Dell highlighted this accelerated new normal in tackling complexity in an a compressed timeframe by saying “...what companies might have done in two to three years, they’re doing in two or three months.” With the speed of managing complexity being reduced to practically real time, it’s going to pressure test the ability of a business to solve complex problems and issues not only rapidly but often times unconventionally.
The reasons above only scratch the surface of why COVID-19 will go down as the great “accelerator” of digital transformation. Today’s business environment is pitting digital giants like Amazon against traditional retailers who are scrambling to accelerate how they adapt. It’s not just digital competing against traditional either—apps like Robinhood reflect not only digital capabilities but a culture that understands the millennial investor mindset. Ultimately, it is the behaviors and needs of consumers that have seemingly transformed overnight and continue to shift which led to the acceleration of digital initiatives businesses. It underscores the need for businesses both large and small to evolve their culture, capabilities and ability to manage complexity at the speed of acceleration.
Read more from Forbes
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