Companies with high digital maturity suffered the least during the pandemic. To achieve this resilience, your company needs digital acceleration.
If you could turn stress into electricity, then the strain that the pandemic put on executives around the world could probably power the whole Earth for a year.
The need for digital innovation grew exponentially, and the deadlines for implementing new solutions shrank from years to weeks.
It may be that the worst is behind us (for now), but there’s no returning to business-as-usual as we knew it before 2020. The rules have changed, and you need to adapt to the new reality:
- Everything is online and in real-time now.
- Work is less repetitive and more creative thanks to automation.
- Data collection and analysis are fundamental business processes.
- Agile and customer-led business models and methodologies are standard.
- Great user experience is expected by default.
You also need to do it quickly, because the market demands unprecedented speed and agility. The answer to this new reality is digital acceleration.
From transformation to acceleration
It’s not a coincidence that most modern software is extensible and modular. This is by design so that you can build on top of it – it provides flexibility, speed, and a resilient foundation for business growth.
Technological progress in the past decade has given us multiple cloud services, endless software frameworks, headless solutions, data analysis suites, automation suites, low-code tools, and much more. Thanks to all this, supplying the right tech for your business initiative can happen much faster.
However, the pace of decision-making is lagging behind the speed of technology.
At the end of 2020, KPMG found that the biggest challenge for CEOs during this tumultuous year was “difficulty making quick technology-related decisions.”
In the past, difficult technological decisions were often mulled over for months, even years.
Down to the nuts and bolts, from start to finish, implementation details were often the focal point of digital transformation efforts.
Then 2020 happened, and suddenly there was no time for lengthy consideration.
Decisions had to be made immediately just to maintain business as usual. Many decision-makers, however, struggled to keep pace.
I saw it as crucial to make people understand that innovating within weeks instead of years was possible. We have entered the era of digital acceleration.
Coping with uncertainty
As the pandemic receded behind the curtain, inflation and war entered to dominate the stage. Supply chain disruptions became even more convoluted, and rising interest rates made financing difficult.
Amidst all this, the political and financial uncertainty around the globe has made us even more fearful, but it seems that this fear is unfounded as far as innovation investment is concerned.
There are many signals that the stock market is already rebounding. The S&P 500 went through the biggest crash of the past decade, but it’s quickly recovering and is now not far from all-time highs.
That’s what I see on the market. And what about inside the companies that drive the market?
A recent study from Wiley’s Strategic Management Journal examined company performance in relation to spending after the 2008 financial crisis.
The authors of the study concluded that “companies that sustained their investments in R&D and CSR exhibit higher performance in the post-crisis years, consistent with the argument that such investments contribute to companies' competitiveness in times of crisis.“
Now, the past is repeating itself.
The 2021 Global Innovation Index shows that “in spite of the massive impact of the COVID-19 pandemic on lives and livelihoods, many sectors have shown remarkable resilience – especially those that have embraced digitalization, technology, and innovation."
Likewise, the newest investment report from the European Investment Bank found that:
- Firms that have embraced digital technologies were better able to cope with the disruptions created by the pandemic.
- Digital firms tend to be more productive.
- Firms that have adopted advanced digital technologies are more likely to export goods and services to another country.
- Firms that have implemented advanced digital technologies tend to charge higher mark-ups.
Investing in digital technology is clearly worth it, even more so in volatile times.
A recent E&Y study of 1,500 C-level executives found that digital investment is only ramping up:
“Executives plan to allocate 5.8% of their revenues to digital as compared with 3.5% in the 2020 survey. To understand the significance of this increase, consider that for a company with $10 billion in revenues, 5.8% spending on digital would mean a bounce from $350 million to $580 million – an increase in spending of 65%.”
There’s just one caveat – the old approach to this type of investment is too slow. The authors of the report conclude:
“With record levels of digital investments on the horizon, driven by a need for speed, CEOs and other C-level executives are under more pressure than ever to select the right mix of investment vehicles and demonstrate measurable returns on digital investment.”
So what’s the correct approach to adopt?
Overwhelming need for speed
The main challenge now is to navigate complexity and uncertainty to speed up decision-making and move faster than the competition.
Priorities have realigned. Speed of innovation moved higher up the priority ladder, along with the need for continuous experimentation.
At Netguru, we’ve long been analyzing companies that accelerate successfully, and we see nine key differentiators between the old mindset and the new:
- Speed-to-value – smaller initiatives, more PoCs and MVPs, short innovation and iteration cycles that ensure agility
- Speed of decision-making – quick moves and boldness rather than lengthy consideration phases
- Speed of delivery – from years to weeks or months
- Speed of adoption – rapid time-to-market and short customer feedback loops instead of long, drawn-out implementation and feedback cycles
- Change of mindset – from keeping up with industry trends to owning the change
- Change horizon – from an A-B transformation model to continuous evolution
- Approach to change – from a sequential transformation to simultaneous and continuous decision-making, discovery, and delivery
- Model of change – surgical approach to innovation rather than massive transformation projects
- Source of change – from being led by experts to being driven by consumers
This is the high-level view of things. What does it look like in practice?
It can look like Żabka’s unprecedented rollout of autonomous stores.
Right as the pandemic was ramping up, Żabka didn’t budge at all and kept developing their autonomous store concept, Nano.
Their commitment to innovation allowed them to start opening Żabka Nano stores in June 2021. As I’m writing this, it’s August 2022 and there are already more than 50 Żabka Nano locations.
Or it might look like Careem, which grew rapidly despite the pandemic, going from a ride-hailing app to a super app with food ordering, a payment service, and more features to come.
Similar to Żabka, Careem expanded to new markets and exceeded 48 million users thanks to a bold commitment to innovation, and surgical application of data science and machine learning to guide decision-making.
Not taking any risks is the biggest risk you can take
Sinking money into a project that will never pay off is every manager’s nightmare, especially in times of market volatility.
I’d never advise people to throw money at any project possible just to see where it sticks, but some risk-taking is necessary to progress.
Luckily, you can mitigate risk by taking advantage of innovation consulting to assess the desirability, viability, and feasibility of your concepts before you spend a dime on development.
All of the signs are pointing towards digital innovation as the single best way to build resilience, so there’s no time to wait – you’ve got to accelerate.