When the pandemic hit, some companies reacted fast and came out on top. Sure, a few happened to offer the right products or services at a challenging time. (A year ago, who would have thought the must-have consumer item of 2020 would be … disinfectant wipes?) But the vast majority that thrived in these difficult times likely weren’t lucky. They were elastic: able to quickly switch how they worked, what they sold and how they marketed their products and services.
Their secret? In many cases, it was early and smart investments in digital transformation. Rather than chasing the latest, greatest and often exorbitantly expensive technology, companies should carefully choose specific digital tools for specific needs. Equally important: They should digitally upskill their people to use these tools.
Fast Pivots For Food, Lodging — And Marketing
Covid-19 battered many sectors, and the restaurant industry was certainly near the top of the list. Yet while lockdowns and contagion fears cratered restaurant sales in the second quarter of 2020, fast-casual chain and PwC customer Chipotle’s revenue only fell a modest 4.8%. How did they pull that off? By growing digital sales by 216%. By July, the company’s sales were rising again. Digital sales still continued to rise, too. They provided nearly half of Chipotle’s July sales.
This is elasticity — a quick pivot to digital sales, then keeping that online revenue growing even as in-person purchases pick up again. Another fast-casual chain, Panera, also pivoted fast during the epidemic’s peak. While on-site dining was shut down, Panera stores sold groceries and offered them for curbside pickup. Or consider lodging, another sector that the epidemic hit especially hard. Red Roof Inns seemed to realize that their “essential” offering was private space with WiFi — so they started offering day rates to people who wanted to work from anywhere but home.
These companies were elastic because they built out their digital infrastructure. In my own specialty, marketing, the epidemic obliged my team to work from home. Right after that, we put together a national CFO survey in two weeks. We managed that because we too were elastic. Our workflows, upskilling and collaboration were already digitized. As we built on that survey, our all-digital systems also had sophisticated data analytics to customize related marketing and track its efficacy.
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Why Some Companies Get Digital And Elasticity Right
When we conducted a global survey of digital transformation efforts, we found that a select group — about one in 20, who we dubbed the transcenders — consistently get the biggest rewards from digital initiatives. Those include greater internal acceptance of new technology, fewer roadblocks to innovation, greater ability to thrive during disruptions and idea generation from every level of the organization. Unsurprisingly, these transcenders reported an average of 17% higher profit growth than their peers.
Here are some tips on how to be a transcender and use digital transformation to help make your company more elastic:
1. Pay for it. Transcenders spent on average 33% more on the technology, processes, operating models and ways of working that help drive digital supremacy. It’s a lesson many companies should take to heart, as even amid recessionary cost cuts, they should spare digital transformation from the chopping block.
2. Reorganize for it. Technology alone won’t drive your digital transformation. Your people need new skills and your teams should have new ways of working. When Unilever aggressively digitized internal systems, it also added digital hubs so different teams could work together on new sales and marketing opportunities.
3. Mandate it. Eighty-four percent of these Transcenders report they don’t just encourage collaboration and cross-functional work, they mandate it. Digital should be a corporate strategy, not a line item or “special effort.”
4. Use it to be essential. As many companies may be struggling to replace lost income, determine what your consumers or business customers truly want and are willing to pay for. Then reverse-engineer your technology, tools and ways of working to provide it.
5. Be realistic about it. Not every company has the luxury to make big, long-term investments. Look for digital measures to help make you more elastic in the next few months. Whether it’s using more cloud-based services, providing digital upskilling or using digital platforms to reach new customers, you can do a lot quickly.
You May Have No Choice
Someday — soon, I hope — this pandemic will pass. But some other major disruption, one we can’t foresee today, will come. When it arrives, you should be ready. With digitized processes, ways of working and ways of marketing, you’ll be able to find new markets and revenue. Without that digital elasticity, you could be one of the many companies that don’t thrive in a crisis but may instead go bankrupt.
So if this current crisis revealed digital dysfunction, don’t wait until the next one hits. Get to work right now on the digital transformation that can make your company elastic, ready to move fast and keep growing during booms, bust and everything in between.