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How the COVID-19 Crisis has Accelerated Digital Darwinism

Avoid becoming a victim of the next wave of business mass extinction

April 16, 2020  | by Wolf Ruzicka, Catherine Paganini

For those who were still debating whether they should hop on the digital transformation bandwagon, the COVID-19 crisis was a wakeup call, maybe even a slap in the face. Digital transformation is less about preparing your organization for doomsday, but about adapting to the digital world – a world we've been inhabiting for quite some time, enough to have an entire digital native generation.

What the current crisis suggests is that the term “digital transformation” doesn’t adequately reflect the needed urgency. “Digital disruption” or even “revolution” now seem more appropriate – a new phase of Digital Darwinism (Karl-Heinz Land, 2015) triggered by a Black Swan event adds a new level of urgency. When the next pandemic strikes, a new nimble competitor enters the scene, or revolutionary technology development emerges, if you are not able to pivot quickly you may face extinction.

While digital transformation clearly won’t work for everyone equally – some industries depend on in-person interactions (travel, beauty, and other service industries are good examples) – the truth is, most should be able to continue business as usual or at least at an 80% productivity rate during this time. Even those industries that depend on interactions can develop digital business models that may increase revenue during good times and become a lifeline during those of crisis.

For the purpose of efficiency, digital transformation is a process that can be broken down in three steps. First, you must enable employees and customers to do what they already do, digitally. Next, improve business-as-usual through data and new technology developments. Finally, create new digital business models. Depending on your maturity, you may already have completed some steps. Let’s take a close look.

Step 1: The human element, translate what you do in analog to digital

It’s no secret that the world is changing at an ever-increasing pace. Those, who have already embraced digital, have been able to conduct (uninterrupted) business during the last months and are already winning the race.

How? Let's break it down by starting with the human element. Every business has employees, partners and customers. Those, who mastered digitization, enabled some or all of them to continue business as usual – even in a world of pandemic, at least to some extent.

Empowered employees. By having moved most of their data to the cloud and leveraging (internal) cloud-based platforms and tools, digitally mature companies enable their workforce to access business-critical tools from their homes just as easily as if they were in the office. Yet only 3% of our data is in the cloud!

Additionally, these enterprises tend to leverage technology to automate tedious tasks, making employees more productive and able to focus on more complex tasks.

Our own team is a great example. The day we had to close EastBanc Technologies’ physical offices due to COVID-19, everyone was able to work from home. All our data is in the cloud and all collaboration is done via cloud-based tools. We were up and running without missing a beat.

Of course, this isn’t as easy for all organizations. Some are required to or prefer having certain data sets on-premise due to security or government regulations. The financial industry is a good example. But does their workforce really need sensitive data for day-to-day work? Probably not. More likely they are using reports based on aggregated data or metadata. While the data can live on-prem, these reports can live in the cloud.

Digital interactions. Interactions with customers, partners, and suppliers can all be transacted digitally via a website, APIs, or an app. That remains possible in normal times as well as during social distancing.

In short, step one is about replicating what you do in the analog world, digitally. At this stage, there is no additional benefit except, of course, if we find ourselves in the situation we are today, where analog is simply impossible.

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Step 2: Up the game through data and DevOps

Digital transformation goes way beyond translating what you do in analog to "digital." Its real power lies in the opportunities that suddenly emerge. And here, neither analog nor a mere digital replication, can compete.

Digital transformation is generating an unprecedented amount of data

All digital interactions generate data, creating real business opportunities. By capturing and leveraging it correctly, you can continuously improve those interactions, uncover new business opportunities, and identify actionable trends.

Here’s a timely example: Zoom meetings. In the current climate, everything has gone Zoom, leaving a potentially valuable digital trail. By analyzing internal communication, you could visualize communication flows and realize that there is a disconnect between how your employees communicate and how they are organized in teams. What if a different team structure would improve collaboration?

Consider communication channels at a large manufacturing company, now all taking place on Zoom. Numerous business units are in regular contact with their suppliers around the world. Now let’s say, something is going on in China, such as early in the COVID-19 pandemic. Suddenly there is a spike in communication between different business units that don’t normally talk to each other and their respective suppliers. For the individuals, this uptick in communication may appear as if they were dealing with a problem specific to one supplier whereas in reality an entire region is affected.

An analytics tool monitoring metadata from communication flows (not actual content of conversations) can detect trends and flag potential issues the team could investigate. Employees can then be interviewed to determine, if there is an issue or if it is something trivial. This empowers organizations to take corrective action or mitigate risks early on. If you’re using Zoom across the enterprise today, such a system could be in production within months – it’s not complex, but for some industries, highly valuable.

Analytics sped up by DevOps

Data is the oxygen breathing life into digital transformations. There is a lot of buzz around business intelligence, machine learning, deep learning and artificial intelligence – all potentially bringing valuable insights into your business. But how are all those brought to life? The answer is enterprise applications, and this is the other key piece of the puzzle.

To reap the benefits of data, you’ll need adequate tooling. The most valuable solutions are generally built in-house and tailored for a very specific use case. Most digitally mature organizations have a competent IT team acting as a key strategic partner for the business side. In some cases that team may be extended through a partner like us.

No matter how your IT team is composed, DevOps will have to be at the core of your digital transformation initiatives. A relatively new methodology enabled by technology developments such as containers, Kubernetes, and cloud native technologies, DevOps is speeding up the development and improvement of enterprise applications in a way that was unimaginable a decade ago. It has completely transformed IT departments. Organizations that want to remain competitive must adopt these practices. The difference between those who adopt them and those who don’t is digital survival and continuous evolution versus digital mass extinction.

In summary, step two on the path to digital transformation is about leveraging data generated through the digital trails of your day-to-day business. But to develop these practices, your IT department must adopt a new set of tools and best practices, namely DevOps. You need a strong IT department, empowered by the right tools, working closely with the business functions to develop the toolkit the business needs to increase revenue or cut costs.

Step 3: Develop new, digital business models

In step one and two, you’re still operating in your traditional space, you’re just doing it more efficiently, with more convenience, and / or cost-efficiently. In step three you may identify new business opportunities uncovered during steps one and two. Whether by identifying patterns in your data, uncovering new opportunities, or realizing that one of the internal tools you developed is actually a sellable product.

The Washington Post is a great example. In an attempt to solve the newsroom’s content management system (CMS) pain points, the “paper’s” technology department set out to create solutions customized for their specific needs. Module by module, solving one problem at the time, they began to build a robust content delivery platform, specialized for digital media organizations with a high volume of content and multiple media – from text to video to audio.

They soon realized they had a valuable product at their hands and are now successfully licensing their Arc Publishing product suite to other news organizations around the world. According to CIO Shailesh Prakash, this new business could turn into a yearly $100 million business.

As you analyze your data or develop internal tools solving an industry problem, new digital business opportunities may emerge.

A tech company that happens to do [insert your product or service here]

As more of our world moves into the digital realm, technology is being pushed to the strategic core of business. How you communicate with your customer base, how you deliver value, how your product or service is experienced, everything is technology-driven.

Look at Amazon and Netflix. Amazon is an online store. But no matter how good their products are, if the website or app continuously crashes, customers won't be able or willing to buy. The same is true of Netflix. While they are now in the movie production business, consumers won’t watch their movies unless they are buffering properly. Both are technology companies that happen to sell products or entertain.

Of course, your business is not Amazon or Netflix. But look at what The Washington Post has accomplished. It’s important to understand that the CMS project started long before Jeff Bezos bought the paper, so it's not the "Amazon-effect." Already today, everything has to be driven digitally. While your business is not alone in trying to figure it out, if it doesn’t take digital transformation seriously, it may very well be on a path to extinction.

To conclude, we are currently witnessing Digital Darwinism. Just like the dinosaurs, many businesses will go extinct. Others will adapt and transform into birds. To quote one of our visionary shareholders, Anthony Lanier, "safety is in the speed of change." So, move ahead, go digital, and uncover new business opportunities.