Insight
How to Respond in the Post-New Crown Era
[The article is reprinted from BMI - The Strategy, please click here for the original version].
Businesses and individuals have been impacted by the outbreak of the Xinguan epidemic, which is now under control, but many of the changes will become the New Normal. What should business operators do in the face of unprecedented uncertainty? Here are four observations and their responses.
Observation 1: Consumer values, preferences, and behaviors have changed forever.
The epidemic has changed consumer preferences and habits, and will continue to do so, according to McKinsey, which found that consumer behavior changed significantly during the epidemic, with a 28% increase in "buy online, pick up in store" in the U.S. this past February compared to the previous year, and 56% of consumers continuing to do so after the epidemic. The Accenture study also noted that changes in consumers' health concerns, conscious spending, and preferences for local or neighborhood small farmers and businesses during the epidemic will have permanent social impacts.
Because of the way:
Understanding your customers is the foundation of a successful business. Continuously engage with your key customers or die-hard fans to understand their emotions and needs, and quickly adjust your products and services to better respond. Your product, service, and experience strategies need to evolve with customers' needs and pain points in mind in order to win in the post epidemic era.
Observation 2: New work styles and business operations will continue to evolve.
The blockade of the epidemic has also brought about a change in the way of working: working at a distance has become the norm. Two aspects are of interest:
1. Changes in the way the organization operates
Toyota Motor Corporation President Akio Toyoda pointed out at the online seminar on May 14th that information is now more instantaneous in online meetings, and interactions with overseas colleagues are quicker, so there is no need to wait for arrangements to be made to fly to the local area. Toyoda therefore wondered whether the "on-the-spotism" that he has believed in for a hundred years needs to be interpreted in a new way, and whether not everything can be solved only by holding meetings on the spot. If even the paradigm of the hierarchical organization starts to think about changing its management style, we can foresee that many large corporations will accelerate their deconstruction, and the trend of flattening or even dividing the organization will accelerate as a result.
After a few months of working from home, companies have found many benefits: more satisfied employees, no reduction in productivity, less need for office space, and more flexibility in operations. According to Wipro and Tata Consulting, both Indian information service providers, working from home (or remotely) not only improves operational efficiency, but also brings more business opportunities when the industry considers it as a normal practice. Twitter announced the indefinite opening of work from home on May 12, and the organization has accelerated communication due to information technology, and the employees have more time autonomy as long as they can accomplish their work goals.
2. Miniaturization of Enterprises and the Emergence of the Professional Individual Worker
As the boundaries between organizations and the workplace blur and more and more businesses become miniaturized, individuals with highly specialized skills will choose to work independently. However, this trend will cause the labor market to move towards two extremes: high professionalism and high income on the one hand, and highly substitutable labor-type odd jobs on the other. For enterprises, they need to identify and consolidate their internal core talents; for individuals, they need to think about the future application of their specialties and skills, and the room for them to play their roles. If they fail to differentiate themselves, they will easily be eliminated by the next wave of recession.
Because of the way:
Post-Epidemic industries are being transformed, and the number of business models centered around miniaturized and personalized operations will increase dramatically. Corporate strategies will need to focus on creating the highest and irreplaceable value, while seeking to collaborate with key partners and professionals or organizations in other areas, allowing strategies and organizations to be more flexible and resilient in the face of increasing uncertainty. Management models and metrics also need to be clearer and more flexible, testing the ability of operators to use technology and data to keep track of progress, effectively shorten the gap between strategy and execution, and measure performance by results.
Observation 3: The wave of de-globalization
Because of the epidemic, coupled with policy changes in many countries, the global division of labor in the supply chain has come to an abrupt end. As a result of this restructuring, we are seeing corporate strategies move to two extremes: a more flexible and fragmented global presence, or a deeper local presence. For Asian companies, there are several possibilities:
- Enterprises capable of leveraging IT to expand their production and service areas, avoid political and economic risks, and improve their responsiveness to regional markets
- Choose to deepen the cultivation of the local market, create unique products and services, connect the local ecosystem, and strengthen the interactive connection and experience with customers.
- The U.S.-China relationship is tense, with each country building its own industrial structure and economic ecosystem, and key non-U.S.-China companies are forced to either fully invest or choose sides.
- Regionalized Markets Continue to Grow in Importance as Asian Influence Increases
In addition, many countries have seen changes in their local industrial chain structure as a result of the epidemic. For example, Taobao Live announced in early April that it would train more than 10,000 traditional retail store salespeople to become online salespeople, allowing merchants and salespeople to break through the traditional storefront sales reach and improve the efficiency of developing and maintaining customer relationships. Taobao Live will also train 200,000 farmers to sell their agricultural products on the live platform, allowing small farmers to build their own brands and specialties, skipping traditional channels and reaching consumers directly.
This change will also happen in the B2B business. The upstream is directly facing the consumers through a new type of middlemen. With this wave of consumers' increased willingness to buy online, middlemen and retailers who cannot add value will be gradually eliminated, and the profit distribution model and structure of many industries will be changed as a result.
Because of the way:
Some large corporations have started to expand their investment and deployment in local markets, which, coupled with the impetus of technology, has led to the emergence of new forms of business models that have changed the rules of the game in the industry. Managers must be on the lookout for new business models in your industry, and even proactively develop alliances or new supply chain cooperation models to capitalize on the assets and local advantages accumulated in the past, and to use technology to reposition their industry positioning and layout.
Observation 4: Digitization is now a must for the future survival of companies and individuals.
In the past, one of the major obstacles to digital transformation is that user acceptance is not popular enough, but the epidemic has accelerated the removal of this obstacle, has been ahead of the deployment of the enterprise, in this wave of the epidemic on the gap with the competitors.
Let's look at the example of Nike, most of the sales of Nike and Adidas are achieved through physical channels, but Nike has set a strategy years ago: to use digital technology to communicate directly with consumers. The epidemic caused 3.9 billion people around the world to be unable to leave their homes, Nike vigorously publicized its own fitness app, to keep in touch with consumers, and opened coaching classes, in China alone, the weekly active users of the Nike fitness app grew by 80%, although 75% stores in China were closed in February, but the digital sales grew by 30%, and when the two were added up, the overall sales dropped by only 5%, far less than the total sales. 5%, much lower than expected, at the same time Adidas global financial report for the first quarter, revenue fell 19%.
Because of the way:
Even if there is no epidemic in 2020, it will still be a critical year for technological change: 5G business transformation, artificial intelligence, big data, and the Internet of Things are maturing, consumers are rapidly embracing digitization, and direct-to-customer is the core of an important strategy after the epidemic, using technology to drive the overall, front-to-back customer experience and efficiency improvement. It is worth noting that digital transformation is a comprehensive enhancement and change in the business model of the enterprise, and it is important to change the process and mentality of all departments, and not to rely on the introduction of a single system or tool, or certain departments are responsible for it.
How do you develop a strategy for transformation and innovation in the post-New Crown era? Check out another blog post by Justin Lokitz: 4 Simple Steps to Redesign Your Future!
Looking to the future, enterprises and individuals need to have different abilities to cope with higher and more intense uncertainties. Strategies need to be developed in small steps, not all at once, but focusing on customer and market needs; technology should be used to maximize our strengths so that our organization and business model can respond quickly to external changes; and the mindset of business leaders should evolve with the times in order to grow and win.
[This article is excerpted from Steve Lin's article "Corporate Transformation Strategies in the Post-Singaporean Era" in the journal of the Taipei Chamber of Commerce and Industry, Singapore].
About BMI・Strategy
Business Models Inc is a global, locally-operated strategic design consultancy specializing in business model innovation and service design. We help corporations and start-ups develop sustainable, innovative business models through customized projects to gain a leading position in a rapidly changing world.