Can companies actually enable digital growth in times of crisis and beyond? My interlocutors have asked me this question again and again in countless phone calls and video conferences over the past months. One thing is clear: there is certainly no general answer to this question.
Because as diverse as the perspective on this topic is, as diverse were the people I spoke to. From sole proprietorships to startup founders to experienced entrepreneurs in medium-sized companies as well as board members of listed branded goods companies – across all industries.
To get one step closer to a substantive answer, we first need to dig a little deeper.
The fact is, real growth is simply impossible in some industries during a recession. Demand is almost at zero and global sales markets have collapsed. And what is made even more difficult during this pandemic and completely independent of the sales market: the procurement market and supply chains were/are completely interrupted in some cases.
One man’s suffering is another’s joy…
While many retailers and automotive suppliers are struggling to survive, on the other hand we are experiencing a boom in technology companies. For example at Zoom Video Communications. Over the past twelve months, the share price has increased 4.3 timesfrom around US$88.00 (early February 2020) to around US$382.00 (early February 2021).
In view of these extremes and looking back on my conversations, the question asked at the beginning of this article should first be answered by another question: How can companies drive growth in a recession? And only then to ask whether digital transformation can actually enable growth in times of crisis and beyond.
Also Read: How startups can tap community networks to pivot for growth amidst the pandemic
The example of Zoom Video Communications underpins one fact very clearly: growth in a recession is possible, but only if companies can solve the immediate problems of their customers.
And of course, technology as well as digital transformation can help to get a decisive step closer to this goal.
We have all experienced first-hand how technology can help fight the unexpected effects of COVID-19. Technology has not only helped us monitor the spread of the corona virus but has also enabled us to work productively from home. Technology has also ensured that our children can keep learning. And last but not least, that we can stay in touch with friends and family despite social distancing.
But back to the business area…
The pandemic has hit numerous businesses hard. So do numerous small and medium-sized companies. For many of them, the rapid transition from the analog to the digital world was of crucial importance. Offering and selling services and products directly online to their customers has not only ensured their survival but has even made some of them flourish.
And although there is no tried and tested playbook for our special crisis situation today, the above examples are more than illuminating. The ability to quickly adapt existing products, offers and services to new consumer needs is essential. Adaptability is the key!
Another key aspect is to prioritise the right customers and create an investment plan for the move to digital. See the crisis as an opportunity and sensitise your entire team to the “new normal”.
A look back at 2008 also makes it clear how much potential there is in the current situation. Back then, the financial crisis was the hour of birth for many technology companies worldwide that are successful today. This includes Slack or Cloudera, for example.
Also Read: Survival vs growth: ShopBack co-founder shares 3 golden rules to withstand the pandemic
TechCrunch’s comparison between Asia, North America, and Europe underlines that especially in Q3 2020 with 24 billion raised venture capital dollars in Asia is one of the most successful in recent years.
The future will belong to the prepared…
Lessons from the last two recessions suggest that companies that have balanced growth and cost management have outperformed their competitors in the aftermath.
According to McKinsey’s analysis, B2B companies embarking on digital transformation tend to generate 8 per cent more shareholder returns. And on top of that a five times higher sales growth than its competitors.
Another example is the e-Conomy SEA 2020 report “At full velocity: Resilient and racing ahead” published by Singapore-based investment company Temasek in collaboration with Google and Bain & Company. The report shows that Southeast Asia’s internet economy is on track to hit over US$300 billion by 2025.
Back to our initial question …
Companies can enable digital growth in times of crisis, even beyond. The prerequisite for this is to harmonise the framework conditions of the crisis, the needs of customers and the relevant levers for value creation. It is important to understand that there is a great opportunity in every crisis – for you and for your business.
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