Financial services, education and journalism are among the industries poorly prepared for digital transformation, and will need to make tough decisions to thrive or fail in the post-pandemic world.
“There’s the winner category, then there’s the loser category … which is just bad luck really if you’re a hotel or an airline,” said Michael Wade, who consults on strategy and digital business transformation for organizations including Credit Suisse, Honda and Cartier. “Then there’s the really big middle chunk called the in-between category… and we don’t know how things are going to pan out for that category.”
Education, which falls in the “in-between” category that Wade mentions, is struggling as classes migrate to laptops, and both teachers and students adapt to contingency plans. Universities have complicated revenue models that include tuitions, grants, donations and contracts, with a framework involving many stakeholders. New competitors in the form of education technology startups are sprouting up as legacy institutions grapple with the move online.
In the publishing sector too, where ad revenues were already dwindling because of social media marketing, COVID-19 has thrown another spanner in the works. In March alone, nearly 33,000 workers at news companies in the U.S. were laid off, furloughed, or had their pay cut as clients stopped advertising.
Wade, who is the director of the global center for digital business transformation at IMD in Switzerland, was speaking on PDD Podcasts about digital disruption in today’s world.
The coronavirus pandemic has claimed nearly 300,000 lives so far and caused an unprecedented shutting down of the global economy, threatening the livelihoods of billions of people. At the same time, stay-at-home orders have accelerated the shift to online services, forcing employees and students to work and study outside the office and classroom. Corporate chieftains like Microsoft CEO Satya Nadella have described this sudden wave of online adoption as cramming years of digital transformation into a couple of months.
Companies will need to think beyond temporary hurdles and invest in resources to make long-term digital transformations, according to Chengyi Lin, who teaches digital strategy and innovation at INSEAD in France. Lin has developed programs that have benefitted tech companies like Microsoft and Accenture.
“If sales revenues continue to be a challenge in the scenario of long-tail recovery or even a recession, companies may not have the financial and human resources to upgrade their technology infrastructure,” said Lin.
While many predict that the digital way of working may become “the new normal” after the crisis, Lin fears some businesses could easily fall back to the “old normal” if they don’t upgrade their business models.
“Take retail for example,” said Lin, “consumers may not have a good experience in online shopping or delivery during the crisis due to long waits, lack of selections and low quality of fresh produces. They may fall back to shopping in store.”
Both Wade and Lin believe companies need to know what they want, what consumers want, and have an open and flexible mindset, among other factors, in order to navigate the digital future. This will help them make pro-active investments in innovative technologies and also build digital capabilities through partnerships.
“What Pinduoduo is doing in China is very interesting,” said Wade, who holds the Cisco Chair in Digital Business Transformation, citing examples of social and livestreaming e-commerce, a business model not yet popularized in other parts of Asia or the West.
The education sector, however, is the laggard, as it lacks infrastructural investment to develop training in any other form than face-to-face, according to Wade.
“Maybe this is off topic, but I’m not sure if we’re really preparing our young people for the skills and knowledge that they need to succeed in the world that’s coming,” he said.