This week we were invited from TietoEVRY to lead a webinar at the West Sweden Chamber of Commerce, with the theme "Will the Corona crisis change your business model?". We were delighted with the large turnout with hundreds of business executives from companies in the region. We got the chance to share our insights and our knowledge, but also got an opportunity to tune out of the market situation right now, at the unusual time we are in. It turned out that more than half of the companies had over 40 percent of their workforce at home. These are companies in manufacturing and trade industry. Only 15 percent thought that their own operations would return to normal within less than one year.
A crisis of this kind is unique in the way it impacts demand when in many cases our habits are completely paused. Once we start to see the light in the tunnel and maybe want to buy that new couch or go out with friends for a birthday dinner - is there even an offer left?
We are seeing a sharp shift in consumption habits when 70-plus people start to buy food online and the food chains have to find new logistics partners and payment methods. Those who already have a business model that meets the new needs are seeing an increase in business. The "new normal" takes time to adapt to for those who didn’t see this rapid change in market needs coming.
Just as the communities that were well equipped for an unexpected event such as a pandemic are doing better, so are companies with a well-equipped business model. A study by the consulting firm McKinsey has shown that the airline industry is one of the most affected sectors. This does not mean that the aviation industry has not done its homework in digitization. The industry was digitized early, but since there are a number of areas in the business model that are not flexible, it binds the companies firmly. On the scale, we also see that companies in the oil and gas sector find it difficult, while at the same time tech companies and the pharmaceutical industry are largely unaffected. Traditional banks will find it a little more challenging than newer companies in the fintech sector.
So, how do we ensure that our companies survive this type of unpredictable crisis? We are convinced that the answer lies in being flexible and data-driven. Make sure your business is in the cloud. It provides an opportunity to scale up and down, even in times of crisis. No one knows exactly what market demand will look like in the future, but by being data-driven you can invite yourself into an ecosystem and make yourself relevant. With the help of AI we can make more accurate forecasts to understand what the journey back to the new normal will look like.
Solving the common challenges requires creativity, collaboration and a flexible business model. If you have not built a business model that can be stretched then it is high time now!
1. Business continuity. Securing business is a process. It's something you have to maintain and exercise. Test scenario plans and get help from experts. Avega, which is part of TietoEVRY, are experts in this are.
2. Secure the financial. It is expensive to change in crisis. Stress test the balance sheet!
3. Build digital relationships. Get the whole company started, partners, employees and customers. This cannot be done without having everyone involved.
4. Improve the business model. A flexible business model is the key to success here. Digitalisation alone is not enough. We at TietoEVRY are experts in digitalization and business development and are happy to help!
5. Create a digital culture. As a leader, you need to encourage creativity and a culture where it is okay to test new ways of doing things. Dare to distribute mandates.
6. Dare to invest in digitalization and digital transformation. This is where we see the road to success. The ongoing Corona crisis has increased the pressure and demand for digital services enormously, yet this is only the beginning. Digitization will not solve all problems, but it is a prerequisite for success with the rest. There's a lot of creativity out there! Make sure to use it!