It will be quite a while before we understand the true impact of the COVID-19 pandemic. However, history tells us two things about major crises. First, that even in severe economic downturns, some businesses are able to exploit them and prosper. Second, that crises not only produce loads of short-term changes, mainly on demand, but also generate a series of longer lasting changes, which come to stay.
Companies seeking to emerge from this crisis successfully, or even position much more competitively, must develop an understanding of their customers’ changing habits as well as society’s on the whole. For many cases this will require a new process to detect and evaluate changes before they become obvious to everyone. The first step is to map behavioural trends and changes with the aim of identifying specific products or business opportunities that have potential.
For example, the pandemic has caused people to spend more time at home. This has implications for different sectors. If we take a look at food, obviously the number of meals at home has increased. This change in behaviour has created opportunities and challenges for restaurants, food shops and home-delivery businesses.
The next step is to categorize changes in demand using a 2×2 matrix, whereby one axis looks at whether the changes are short term, or long term, while the other axis indicates whether the changes already existed before or have emerged during the pandemic. This way we obtain four quadrants with a series of market behavioural changes for each of them. Using this as a basis, the company must identify opportunities to make the most of these changes.
Consider again the fact that, as a result of this pandemic, we are spending much more time at home, which has led to an increase in online shopping and a negative impact on physical stores. It is worth asking whether this will be a temporary change, or on the contrary it will keep on over time, and collaterally affect areas such as the sale and rental of business premises. Again, a behavioural change that generates threats, but also opportunities.
However, companies will not be able to take advantage of all changes. To decide which ones to back, they have to ask whether the behavioural changes are temporary or permanent. Many of the changes observed during the COVID-19 pandemic have been driven by the fear of being infected by the virus or imposed by the authorities to meet new standards, and consequently these are likely to be temporary. But others have been accompanied by greater comfort or have involved reduced costs and are therefore more likely to be sustained.
For companies, one outcome of the COVID-19 crisis has been a dramatic increase in the use of digital technologies that have made it possible to reduce face-to-face interactions and safeguard the health and well-being of customers and employees. These digital technologies include consumer-facing applications, such as home food delivery services, e-commerce applications, or videoconferencing platforms, among others.
Companies across all industries face rapidly changing opportunities and challenges due to the emergence of new digital technologies.
Specifically, digital technologies can be applied in three major areas:
- External and internal customer experience: companies can apply digitization to involve both their external and internal customers in new ways
- Operational processes: digital technologies enable large gains in operational efficiency of processes throughout the steps of the value chain
- Business models: digitization enables the development of completely new ways of creating, delivering, and capturing value. This includes, for example, completely new value propositions.
However, before investing in any digital technology and developing applications, it is necessary to examine the changes in how people or companies invest their time and money, and what those changes may mean for each company. Digital transformation is part of the response to many of these changes.
The road towards the new normal may be beset by many potholes, but for companies able to identify changes in their market and accelerate digital transformation to rise to the challenges or to take advantage of the opportunities created by change, it seems clear that such companies will be able to prosper despite the crisis.