Covid-19 – The Changer of Worlds
Published on : Tuesday 14-07-2020
Achyuta Ghosh elaborates upon how the Covid-19 pandemic is an imperative to reshape business models.
The world has changed over the last three months. Business and consumer demand has been heavily impacted, supply chains have been disrupted, millions of jobs have been lost, and fear of infection has led to unprecedented uncertainty. Add that to the rapid shifts in the way of work, and changing regulatory environment, Covid-19 has created megatrends seemingly overnight, which changes the world as we know it. We are already seeing rise of geopolitics as a key trend – demand for de-globalisation can impact supply chains, and create economic upheavals. It is likely that with data becoming crucial to restore consumer confidence, government spending on technology will rise significantly, driving up innovation and unlocking untapped demand. Healthcare will increase in prominence, and there would be new business opportunities for the stay-at home economy.
Business Models: Transforming For the New Normal
Business model innovation focuses on the way an organisation creates, delivers and captures value. There are many levers to deliver business model innovation, such as partnerships, collaborations, pricing, cost structures, distribution channels, and customer experience. To adhere to post-lockdown requirements of hygiene and safety, Zomato, the restaurant aggregator and food delivery start-up recently introduced ‘Contactless Dining’ which minimises physical customer contact, leveraging digital technologies. The menu is app-linked through QR codes, while ordering and payment happens digitally through the Zomato app. In response to closure of physical retail stores, Nike has strengthened its digital ecosystem to boost online sales. Nike created different ‘digital spaces’ where its customers could interact with Nike brand influencer athletes. It also made many digital content and platforms such as livestream workouts, digital fitness challenges, and other apps completely free, thus strengthening customer connect and retaining mindshare. Result – the Nike stock today is up 50% over March 2020.
Covid-19 has prompted Starbucks to try more efficient ways to do business – pick up stores. Starbucks want to open 400 new pick-up stores, where orders are placed on the mobile app. Store fronts have been redesigned to handle pick up orders, while the presence of digital screens and helpful baristas complete the overall experience. While pick-up stores will not address the lower volumes due to lesser number of people commuting to work, the lack of in- café dining will mean it will address customer needs for social distancing, and perhaps, one day, mobile ordering will become the new normal. Cosmetics giant Lin Qingxuan had to close half of its stores during the pandemic, including all the stores in Wuhan. Sales plummeted 90% during 2020 Chinese New Year shopping season. However, using cloud platforms, Lin Qingxuan redeployed its beauty advisors as online influencers, who used digital tools (such as Wechat and DingTalk) and live-streamed product recommendations on e-commerce channels. Sales in Wuhan went up 200% as compared to previous years.
Apple put the same chip in the $400 iPhone SE that it puts in the $1100 iPhone 11 Pro Max. Pepsi entered into a direct partnership with Dunzo, a delivery company, and Chinese heavy machinery manufacturing company XCMG has leveraged automation to achieve same levels of productivity as before with only 50% headcount. There are innumerable examples that point to the fact that Covid-19 has accelerated business model innovation at a pace so far unseen.
Digital technologies: Key enabler for business model innovation
Technology continues to be the lynchpin on which companies drive their business model innovations. Emergence of digital technologies has significantly changed how companies operate and deliver value to customers, thus allowing a complete rethink on current models and unlocking more avenues for innovation and impact. Digital has helped shorten product development life-cycles, and offer complete transparency, and increased precision to create resource efficient, region agnostic, self-replicable and adaptive business models. NASSCOM has identified nine key technologies that will play a significant role in re-shaping the way forward: three foundational technologies (cloud, big data analytics and cybersecurity) and six advanced technologies (AI/ML, IoT, additive manufacturing, robotics, blockchain and immersive media).
As the world shifts to a more digital existence, immersive media technologies such as augmented, virtual and mixed reality allows for created seamless digital customer experiences. As the world moves to a shared infrastructure and software as a service delivery model, cloud computing is quickly becoming the underlying infrastructure backbone of all organisations, while cybersecurity is becoming more critical in the new normal as businesses move towards a redistributed work model. Organisational success today is directly proportional to the analysis and usage of data at their disposal, so analytics is going to be a competitive advantage going forward, which will be enabled through artificial intelligence and IoT. Robotics and 3D printing will create massive costs efficiencies that can be passed on to end consumers, and blockchain continues to revolutionise payments and security.
2020 – India’s opportunity to lead
India has the 3rd largest GDP in the world in terms of purchasing power parity. India is home to over 20,000 technology companies, including 1200+ global capability centres, ~9300 tech start-ups that provide world class services and products. The rapid advancement in digital technologies is creating a level playing field for both – creators and consumers of technology to look at developing new business models. Indian technology companies are investing in creating IP, forging partnerships and upskilling talent to prepare for leadership in the new normal.
Achyuta Ghosh is a Digital Transformation Leader with over 16 years of Strategy, Management Consulting, Research and Business Development experience across diverse sectors. During this period he has developed digital transformation strategy, created successful teams, led new product development to build businesses, and generate revenues. Ghosh is an established technology analyst, with proven ability to drive change, lead cross- functional project teams and manage diverse stakeholders. Achyuta Ghosh was General Manager, Strategy – Ford Smart Mobility – the digital transformation arm of Ford Motor Company, before his present appointment at NASSCOM.