When facing a situation as exceptional as the one we are experiencing in 2020, it is just as important to remain calm when dealing with stress as it is to know when to step on the gas. And in designing a world that seeks to best cope with the consequences of the pandemic, if there is one area where we need to step on the gas, it is in the digital transformation that was already gaining momentum at an increasingly rapid pace.
The expression "quantum leap" is becoming commonplace to refer to the acquisition of new skills and the assimilation of more digital work formats that has taken place in recent months. The evolution towards forms of productivity organization that are remote, and which, whether mandatory or voluntary, are absent from the need for close physical contact. And that's all well and good, but without data, it may be more wishful thinking than real evidence. So, the key question right now is: are we able to quantify these changes, to provide figures and objective truths about these developments?
The renowned multinational firm McKinsey has decided to "take the bull by the horns" and has undertaken research based on a survey whose results were released last month. Their work has been one of the first serious attempts to quantify these changes, as well as the shifts in mindset that companies, their managers, and their customers have experienced. Digital technologies have not only accelerated to levels that were unimaginable a year ago, but these changes are here to stay.
Three to four years is, broadly speaking, how much companies have accelerated the digitization of their interactions with customers, supply chains, and internal operations. The race is even more dizzying if we look at the proportion of digital or digitally enabled products in their portfolios, which has accelerated by seven years compared to what might have been expected. In other words, what would reasonably have taken several years to happen has become a reality in the space of a few months.
Thus, it is normal that for almost all respondents, the solutions designed to meet many of the new demands placed on them have become a reality "much faster than they thought possible before the crisis." What's more, most of those surveyed say they are already making the kind of investments that virtually guarantee they will remain in the future. In fact, they maintain that funding for digital initiatives has increased more than anything else in their companies during this period.
When it comes to the digitization of customer interactions, the consensus is global: as of May 2018, these interactions accounted for around one-fifth of the total, which had increased to one-third by December 2019, and during the pandemic crisis, they have exceeded half of the total in all cases. This is particularly true in the North American market, which was already in a leading position and where two out of three (65%) customer interactions are now digital.
The leap is also notable in the availability of purely digital products and services on the market, which accounts for exactly half of the offering in Europe (50%) and exceeds that figure in the Asia-Pacific market (55%) and in North America (60%). In the case of Asia-Pacific, the executives surveyed estimate that the acceleration of this adoption has been 10 years, compared to 7 years as estimated by their European colleagues, or 6 years as the average response from North Americans.
The elements of customer-oriented organizational operating models are not the only ones that have been affected. Similar accelerations have been seen in the digitization of core internal operations (such as back-office processes, production, and R&D&I), as well as interactions in supply chains. Unlike customer-oriented changes, the rate of adoption has been consistent across all regions.
But if any data is surprising, it is the acceleration in organizational or industry-wide areas, where acquisition speeds are truly remarkable. Executives were asked how long it took to implement a specific change and how long it would have taken under normal circumstances. In areas such as teleworking, this acceleration has resulted in an acquisition time 43 times faster than would have been imaginable before the outbreak of the pandemic. To be precise, the average acquisition time was 10.5 days, compared to the 454 days that would have been expected on average in other circumstances.
The items that have seen the most acceleration, in addition to teleworking, have been:
- Adaptation to online demand by customers, which has gone from 585 days to 21.9 (27x);
- The use of advanced technologies in operations, from 672 days to 26.5 (25x);
- The use of advanced technologies in the decision-making process, from 635 days to 25.4 (25x);
- The change in customer expectations or needs, from 511 days to 21.3 (24x);
- Asset migration to the cloud, from 547 days to 32 (24x);
- The change in ownership in last-mile logistics, from 573 days to 24.4 (23x);
- The increase in the outsourcing of business processes or, conversely, the insourcing of processes that are usually outsourced, from 547 days to 26.6 (21x).
As for why these changes had not taken place before the crisis, there seems to be a consensus that "they were not a priority." This contradicts the tendency to think that it was due to internal obstacles or a lack of leadership alignment. In addition to this lack of prioritization, there are other factors behind some of the main resistance prior to the pandemic. For example, the fear of resistance to change on the part of customers; or the significant impact on established ways of working, or even the lack of commitment expected in a silo-based organization. It took a crisis like COVID-19 to throw all that ballast overboard.
With regard to permanence, in addition to the above, there is broad consensus on the main items in the survey. Six out of ten (62%) executives believe that changes in customer needs or expectations will continue, estimates that are also pronounced in the case of remote working (54%), migration of assets to the cloud (54%), increased online demand (53%), and increased investment in data and information security (53%). Of all the items addressed, remote working is the change that most organizations are immersed in, to the extent that almost all (93%) say they are still experiencing specific changes, while only three out of twenty (15%) say they are in the process of change related to outsourcing or insourcing.
To all of the above, we could add the interesting perspectives recently provided by ThinkWithGoogle in collaboration with Boston Consulting Group on the importance of having your own data compared to companies with "little digital experience," which rely mainly on third-party data to develop their campaigns. "Without sufficient proprietary data, they are unable to connect their online and offline touchpoints, making it more difficult for them to get to know their customers well," they point out. "These less sophisticated companies are also less likely to use tools such as cloud-based analytics or machine learning," they add.
The idea of the complexity involved in this leap is conveyed by the fact that "even when they have the necessary data and tools, companies often lack the resources to achieve good results." But when the right strategies are implemented, the impact is also remarkable. Thus, a 2018 study found that "companies that had achieved the highest degree of digital maturity and were able to deliver relevant content to consumers at different points in the purchase journey saved up to 30% more in costs and increased their revenues by 20%."
With figures and data like these at hand, it is much easier to interpret the true scope of the changes we have experienced and those that are yet to come, as well as to have a solid basis for designing new scenarios for both competitiveness and customer experience. In other words, to embark with a spirit of success on the adventure of the "new normal."
Photo by Volkan Olmez on Unsplash
Text: APP / EKMB / BTCS
