The “new normal” or “next normal” might be some of the phrases common in news and business articles today. You might wonder, what is the next normal? Originally attributed to McKinsey, it refers to the situation that goes beyond the COVID-19 crisis. It is a step above the “new normal” situation that will take shape once the pandemic is under control.
The threat of infection will not fully go away, but measures and new ways of doing things will be in place to prevent the re-emergence of the problem and to make the most out of the changes brought about by the health crisis.
At the center of all these changes is digital transformation. Enterprises, in particular, cannot downplay the importance of including digitalization in their plans. Many businesses are already using some form of digital technology, but not all of them are taking full advantage of the digital revolution. There is a need for businesses to step up their adoption of cutting-edge tech, processes, and materials for them to achieve their full potential, an OECD report says.
Increasing importance of digitalization
An analysis report by PwC views the pandemic as an opportune time to advance digitalization. “Despite the significant challenges ahead, the global pandemic has also presented opportunities for digital optimization and transformation. For many companies, accelerating their digital transition is the only way forward,” the report states.
Digital transformation is a key component in achieving a competitive edge. It does not only enhance operational resilience; it also enables flexibility. Being resilient and flexible are essential attributes in a (pandemic-impacted) new reality characterized by rapid changes and volatile market dynamics. Opportunities and threats are becoming more unpredictable. Businesses need to adopt systems that allow them to respond quickly to opportunities and avoid or mitigate the effects of negative developments.
One Fujitsu research echoes some of the ideas presented by the PwC report, revealing that businesses consider responsiveness to the market (37.8%) and competitive edge (23.3%) as the main benefits of digital transformation. However, the top benefits companies see in going digital is talent attraction and retention (43.1%). This may not make much sense now as retrenchments and unemployment continue to rise in the midst of the health and economic crises, but it will be an essential factor in the next normal.
With companies doing everything they can to take advantage of the economic recovery after COVID-19, human resources will play a significant role. There will be no labor scarcity by then, but the race to hire the best minds will be tough as businesses seek the most dynamic thinkers and versatile talents suitable for the rapidly changing new normal.
Other vital benefits of digitalization revealed in the Fujitsu research are customer retention and loyalty (37.3%), increased workforce productivity (36.7%), new value and revenue creation (27.1&), and the protection of core business operations (23.3%).
Essential for thriving
Digital technology is essential for enterprises to thrive in the next normal. This is an idea shared by most recent studies or analyses on the subject matter, including those from McKinsey and Accenture. Digital transformation is no longer just a process or future end goal in the next normal. It will become a defining factor in how businesses survive and thrive.
The markets have changed significantly. Customer habits, attitudes, and expectations evolve. Technologies such as artificial intelligence, deep learning, big data, and the Internet of Things will play crucial roles in the success of businesses. Business managers cannot stagnate in their traditional notion of the digital revolution. COVID-19 has caused changes that will likely be irreversible and should be addressed with a sense of urgency. Success will be elusive for businesses that refuse to act fast and smart.
In a whitepaper, McKinsey lists the acceleration of digital adoption as one of the four strategic areas companies should pay attention to as they reimagine their business models. “There are four strategic areas to focus on: recovering revenue, rebuilding operations, rethinking the organization, and accelerating the adoption of digital solutions,” the whitepaper reads. It is not enough for companies to plan how to become profitable again, reestablish their operations, and implement their previously planned organizational changes. They need to have a sound digital transformation plan. If they are already using digital solutions, they may need to reinvent their digital strategies in accordance with current needs.
Cataclysm or catalyst?
It appears the world is experiencing a sudden and forced digital change–a cataclysm of sorts. Most businesses have been forced to sell their products online, do business on the web, and adjust to remote work arrangements in response to the pandemic. All of these happened almost suddenly. Not many had the time to prepare for it.
In a way, digitalization has brought the shock factor to many. A great deal of businesses are still in the digital acclimatization stage and are unlikely to be fully ready to harness the full potential of technology for their operations. This problem exists even in rich countries. The difficulties encountered by some developed states in using online or hybrid forms of education, for example, says a lot.
However, an optimistic way of viewing the rapid unfolding of digital transformation is by focusing on how COVID-19 has served as a catalyst for the much-needed digital transformation among businesses. As inferred in the OECD report cited earlier, technology has been underused over the past many years. Many businesses failed to achieve their full potential at the desired pace because of delays in adopting new technologies.
For businesses to thrive in the next normal, a change in mindset or perspective is in order. Digitalization can be challenging, but it is a transformation many businesses should have already embraced early on. The pandemic has brought dire consequences, but not everything is heading for a dismal end. Digital technology offers suitable solutions, which enterprises should learn and take advantage of.