A Fresh Start: Business Trends For 2021 (Through The Lens Of Digital Transformation)
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It is an inconvenient truth that most companies are great at their core business, but they are not great at reimagining the future of their business.
A great deal of the work I do involves meeting, advising, and helping the CEOs and leadership teams of large, established organizations on the transformation of their businesses for a digital age. Despite the proud history of these companies, their leaders recognize they have a problem and an imperative to address it.
The hardest part of any personal or enterprise transformation can be the choices that we make every day to move toward what will drive our future success. Often, this will mean letting go of things that made us successful in the past, to make room for new skills, relationships, ways of working, and opportunities.
In a world where much of what we do and know has gone digital in the space of an average CEO’s career, and the rest of it is not far behind, businesses need help. They need help to balance the pressure to perform in their current context with the need to transform in the context of a digital world.
As disruptive technologies and companies continue to raise consumer expectations, business environments are constantly changing. Digital business transformation is what closes the gap between what consumers expect and what traditional business models can deliver.
All this was true even before the COVID-19 crisis came along to devastatingly illustrate how rapidly change occurs in today’s world. From a business perspective, the global pandemic has acted as an accelerant in the wholesale transformation of business relationships and interactions between companies, customers, suppliers, and employees.
This speed and impact were neatly summed up by Microsoft CEO Satya Nadella, when he said, “As COVID-19 impacts every aspect of our work and life, we have seen two years’ worth of digital transformation in two months.”
COVID-19 has magnified the rate of change in the world around us, including in the business environment. Countries, companies, and individuals rapidly moved from seeking to protect health to adapting our work and our lives to this new context. Therefore, challenges in our existing infrastructure and processes became apparent, but so did opportunities to do things differently and, potentially, better than before.
The connection between the existential impact of COVID-19 and digital business transformation is exponential change- the all-too-visible variety, as opposed to the rapid rate of technological change, which is often less tangible.
The pandemic will continue to be the main driver of business trends throughout 2021, and beyond. As well as economic turbulence in the months ahead, there will be bright spots. The crisis has profoundly accelerated the digital transformation of many sectors and many companies– and they are unlikely to take their foot off the gas now that they have survived and successfully navigated through the pandemic.
For companies built to identify and harness change, they can apply it in the context of consumer needs better and faster than incumbent brands, leaving those not equipped for that context left to react. That is the crux of the divide between digitally native companies and established businesses.
And that divide is what digital business transformation exists to address. With the added impact of COVID-19, organizations of all shapes and sizes would do well to audit themselves against the traits and behaviors of leading digital businesses– to ensure they are among the leaders and not the laggards.
There are six key things that leading digital businesses consistently do very well:
- Clarity on what problem they are solving.
- Understanding of the value to the customer that their product or service delivers
- Understanding of the value to their business
- A focus on designing the experience
- Powered by engineering
- Refined using data and artificial intelligence.
As a business leader, you will implicitly understand that these six steps are the criteria for success. But are you truly able to say your company is doing what it was born to do, that it has that kind of focus and driving clarity of vision?
That you understand the value to the customer, and consequently understand that value to the business?
That you are first and foremost focused on the experience– the physical experience, the digital experience, the entire experience?
That you are powered by engineering, as a technology company?
And ultimately that you use data and AI to constantly evolve the business– because that’s where you identify those adjacent opportunities, those areas of growth where you see businesses that started in one place, but morphed into another in order to be successful.
To focus on the positive business trends that will follow on from the pandemic, we will see more businesses optimize some or all of these qualities of leading digital businesses. It is acting as a launchpad for companies to take a fresh look at a changed world and reorient themselves to provide the products and services that create customer and business value.
One of the sectors that has outperformed most others since the outbreak of the pandemic is online grocery, with sales in some markets nearly doubling during lockdown.
In personal mobility, governments are reprioritizing transport policies to try to capture some of the environmental benefits that were witnessed during their respective lockdown periods. New cycle‐friendly initiatives are being rolled out in cities worldwide, amid a global boom in bicycle sales. Regulation to allow personal mobility solutions, such as rental e‐scooters, has been fast‐tracked– freeing the way for digital companies, such as Bird, Scoot, Lime, and Jump, to enter new markets with their nascent operating models.
Everywhere, established companies are reporting significant increases in revenue from e-commerce. L’Oréal, for instance, has seen significant growth in e-commerce even in its less developed markets– reporting an online sales jump of 300% in Latin America in April 2020, and 400% in Africa and the Middle East. In the first quarter of 2020, it saw e-commerce sales across the group grow by 53% compared with a year earlier. Crucially, the company believes many consumer behaviors, including the use of virtual try‐ons for make‐up and hair color and one‐on‐one beauty consultations via video chat, will last after the pandemic subsides.
These examples, and many more besides, show that it is possible to look at transformation through a wide lens and to include multiple facets of your business. It then becomes easier to identify a point of untapped expectation within the customer journey and use that to illuminate a path of transformation across the whole enterprise.
The true potential of transformation today –after a year that has seen irrevocable shifts in how we consume and how we work– is to develop a business capable of improving constantly to serve consumers’ changing wants and needs. Some updates will require retiring parts of your product or service, while others result in a complete revamp from one version to the next. Either way, each update -no matter how big or small, revolutionary or incremental– is an evolution that will serve you well in an era where standing still is not an option.