Andy Grove, the late founder and CEO of Intel wrote a book whose title will be forever remembered, Only the Paranoid Survive. He advised executives to always be on the lookout for destructive forces impacting their business. He challenged executives to exploit these forces as opposed to being overcome by them.
While most executives, including Mr. Grove, did not predict a pandemic to be a major disruptor to the world’s economy, Mr. Bill Gates did in 2015. But it does not seem that many listened.
Regardless, many executives foresaw the benefits that digital transformation can bring to bear and forged ahead with its implementation.
Those that did, are faring much better during this pandemic that those that didn’t.
Executives that embrace digital transformation are paranoid about streamlining their mission-critical processes. They seek ways to improve their value chain and to enhance the operations of all their departments, including marketing, sales, operations, customer relations, accounting, human resources and information technology.
At a recent webinar presented to over 180 attendees by the SCORE Manasota chapter on the CARES Act, a survey responder asked the panel to offer a future webinar on “things to work on during this downtime.” Our resounding answer is: digitally transform your operations!
Here is why you should digitally transform your small business, particularly during a pandemic!
Digital Transformation Allows for Business Continuity
The above graph may seem too complicated to read. It isn’t. The greener the row, the more digitalized an industry is, the redder the less. Look at the industry sectors on the left and note the top listed industries. Aren’t they also the industries that are the least disrupted in the COVID-19 economic crisis? Do you know why?
Companies that have digitally transformed themselves were much faster to react to social distancing directives issued by the CDC and OSHA, with minimal disruptions to their operations. They immediately instructed their employees to work from home and enabled them to continue to do the vast majority of their daily tasks while telecommuting.
Employees with home access to all the needed tools, data and communications, labored on. In many cases, this new work environment created even more efficiencies. Distracting events like longer than scheduled meetings, water cooler chats, and putting up with traffic on the way to and from work, are now drastically minimized.
Unessential companies that have resisted the digital transformation, or that work in industries that structurally cannot take advantage of it, came to a grinding halt. They are suffering the most during this COVID-19 economic crisis.
Additional Benefits of Digital Transformation
While the ability to telecommute will save the digitally transformed companies during these difficult times, there are many additional benefits to list still.
Maintains the Value Chain
Your value chain is the lifeblood of your business. In a pandemic, it is critical to keep your value chain operational. Pursue the implementation of redundant systems including identifying backup suppliers. Seek digitally transformed suppliers to minimize your value chain disruptions.
Improves Workforce Efficiency
Digitalization facilitates automation of repetitive tasks within each department. When you digitalize your value chain, you can allow the automation of many processes. The less you depend on labor during a pandemic, the higher will be your chances to minimize disruptions.
Minimizes Routine Work
Many employees become complacent, burn out or get demotivated when expected to do the same task repeatedly for a long period of time, particularly when working from home. Automation that ensues digital transformation improves employees’ productivity and morale. Both are very critical during a pandemic.
Creates Competition’s Barriers to Entry OR Creates Competitive Advantage
When you institute an agile culture across all your departments, you will affect a competitive advantage over the competitors that have not yet digitally transformed. Yes, there are many difficulties to overcome during digital transformation. But the difficulties you overcome become your competition’s barriers to entry.
Ameliorates Customer Experience
Keep the communications open with your customers and adopt transparent policies via all the digital channels, including your website, social media channels, email and teleconferencing. Your customers will appreciate your business continuity during the pandemic and reward you with repeat orders and favorable social proof. An engaging and transparent customer experience coupled with a prolonged company lifespan strengthens customer intimacy.
While it is hard to increase profitability during a pandemic --unless you offer critically needed products like PPEs and ventilators-- maintaining your company’s profitability brings a lot of benefits; most are obvious ones. Here are a few:
Less Worrying About Cash Flow
Although the CARES Act is designed to help small businesses deal with their cash flow problems, it is at best a short-term solution. Also, the clamoring of companies to apply and get funding is a scene that most executives prefer to avoid.
Funds New Investments and Diversification
Having a strong cash balance during a pandemic enables more economical investments into the business or into acquisitions. While most companies now are starving for cash, your cash-strong position enables you to help them while helping your company.
Maintains Generous Retirement Plans
Let’s face it, employee 401(k) plans don’t do well during a pandemic. By telling your employees that you will keep matching their retirement deposits, they can invest at the lower market prices and ride the stock market slump.
Prolongs Company Lifespan
With an uninterrupted value chain, higher employee morale, higher barriers for competitor’s entry, lower costs, maintained profitability, and better customer experience, your company’s lifespan increases significantly. Particularly when faced with an unrelenting economic crisis!
Is Digital Transformation for Everyone?
While the depth of digitalization in each industry varies, all companies can benefit from a digital transformation. Many CEOs and small business owners use the size of their companies as an excuse not to undergo a digital transformation. They fear that they cannot compete against much larger organizations with their relatively unlimited resources. They are mistaken. Being a small nimble company is an advantage, not a liability.
According to a McKinsey study in Oct 2018, “At organizations with fewer than 100 employees, respondents are 2.7 times more likely to report a successful digital transformation than are those from organizations with more than 50,000 employees.”
Without a definite end of this pandemic in sight, why not leverage the idle time that you and your employees are experiencing right now? Use the funds the CARES Act is providing to keep your employees on your payroll over the next 8 weeks and do all you can to affect the digital transformation of your company. Who knows? It may be the single best decision that you will make in 2020. It can influence your business for many years to come.
Don’t wait until your business flatlines! If you need help with digitally transforming your small business, contact SCORE today.