Alessandro Chimera, Director of Digitalisation Strategy explains why the current social and economic climate, as a result of the recent global pandemic, has put companies in a crisis.
Unless they re-think their business operations, they will fail. The average professional is also facing a challenge, one where a change in their habits is top of the list. Suddenly, we are required to travel less, attend fewer meetings, not eat at restaurants. Still, at the same time, we are streaming more content, making use of food delivery services, attending virtual meetings, and using eLearning platforms.
One industry heavily impacted is the travel industry, which now needs to re-arrange their offerings to optimise their business. In short, what is now required is a form of “recasting your business” – the new business imperative.
If the current situation and history have taught us anything, it is that when a crisis happens, traditional operational models are no longer valid. Companies need to react quickly and create, validate, and adopt a completely new strategy to keep their business running, as well as generate enough margin to weather the crisis. But it isn’t just the travel industry that is impacted; financial services, telecommunications, manufacturing, transportation, retail, healthcare, government, hospitality, and the energy sector are all facing the same difficulty.
How to adapt
If we take a moment to analyse the actions financial services organizations need to take, the quickest action at their disposal is to speedily rebalance all of their investment lines and make smarter, event-driven decisions. On the other hand, a telecommunications business needs to gear itself to handle an increase in connections, additional load on their networks, and focus on providing reliable services to a burgeoning number of people whose only means of connecting with their communities is through communication services.
Another heavily impacted sector is manufacturing, as they see orders dropping or canceled because customers are focusing their primary needs elsewhere. There are delays in the supply chain, raw materials sourced internationally are delayed, and new procedures as a result of the pandemic are being implemented to ensure the safety of workers. Some of these businesses may well have to consider a temporary reduction in their workforce.
Transportation was the first industry to feel the direct impact as flights were canceled, borders closed, passengers assigned to new flights, and flight schedules have had to change and adjust at a moment’s notice. The IATA predicts that there is approximately a $63billion worldwide passenger revenue loss as a result of the current social distancing requirement.
The travel bans we are seeing from the US, Europe, Africa, and Asia have grounded thousands of flights. If 550 flights are canceled a day, that is a total of 125,000 daily passengers. Then there is also air cargo to consider. It was estimated that in January, which wasn’t even the peak of the crisis, air cargo decreased by 3.3%. We don’t have new figures, but that must have more than tripled by now.
Who is ready
Very few players in these industries were prepared; for the most part, the majority were utterly unprepared. Let’s look at the lockdown in Italy, my home country, when it was first implemented it generated an increase in eCommerce of 56,8%, mobile traffic doubled, and systems had to scale to support the additional loads they were experiencing.
Manufacturers started to optimise their processes and operations by analysing their data to create an understanding of how to best face the new climate they find themselves in. This was particularly true for food processing and manufacturing plants, who were experiencing a massive surge in demand as Italians were urged to stay home. Conversely, retailers and distributors evidenced a 12.2% increase in sales as a result of new demand.
On-demand media and streaming entertainment services also started facing pressure, a sudden surge in customers with more extended usage patterns had them reeling as the load placed on their networks had them at breaking point.
But not all have seen an increase in demand, and the entire hospitality industry had to come to a hard stop: major events were canceled or postponed, corporate travel restrictions have led to empty hotels, and major hotel chains are waiving cancelation fees for existing and new bookings, to at least ensure future business by not alienating customers.
We often speak about business evolution and business transformation and how it needs to happen at speed. However, no one could have anticipated the rate at which it has been forced upon us. Some countries are already under lockdown, which means their window of opportunity has passed. Others need to hasten in their efforts to reinvent their go-to-market strategy completely.
Unfortunately, for many, they never invested in the tools to better analyse and make sense of their data. This left them entirely on the backfoot as they can’t tell if the new business processes/models they want to put in play will work.
The spotlight is on all businesses to act quickly and to connect and unify their data sources to recast the value potential of this data and intelligence so that they can take advantage of new channels and customers and leverage new revenue streams.
It is a lesson in understanding and a call to better adapt to what customers are looking for, monitoring their current behaviour, and knowing how quickly you can adjust your business. If ever the term reinvention was relevant, it is now, in the current business climate we find ourselves. The key to this lies in knowing that decision-making relies on data-driven insights that provide you with the know-how of how to optimise your execution model to make the alternative business models you are exploring work.
Failure is not an option. Strategies need to be tested quickly and digitally, to predict an outcome. Lastly, but most importantly, you need to get closer to your customers. Understand that their buying power has moved online, they are more selective, more frugal and discerning, and that customer intimacy is now a digital concept. If you get this mix right, they will return, and when the world rights itself, their loyalty will see them return as a customer.