Almost overnight, the COVID-19 crisis widened a performance gap—between those organizations that invested in technology innovation at scale before the pandemic and those that did not—into a chasm. The challenge now is how to accelerate this kind of digital change during a crisis, even as many are slipping behind. To persevere and prevail, companies of all sizes across industries will need to employ a new strategy and mindset.
Accenture research conducted at the end of 2019 measured differences in digital technology adoption, depth and culture penetration and found that the top 10% of companies (“leaders”) grow revenue at two times the rate of the bottom 25% (“laggards”). The two groups’ approaches and methods are dramatically different. For example, leaders have adopted automation and AI five times faster than laggards, and have put in place strategies that give them high confidence in the reliability of their data. The same pattern holds true across other technologies..
Strong digital foundations are already helping leading companies adapt to the crisis quickly. One global retailer that invested for years in true omni-channel sales and delivery had already offered curbside pickup at 100 of its stores. When forced to close its physical stores due to COVID-19, in just 48 hours it was able to expand its curbside service to 1,400 stores while maintaining a majority of its revenue. Meanwhile, many of its competitors struggled to shore up their online channels.
In another noteworthy example, a global food manufacturer that had invested in “digital twin” modeling capabilities and AI-driven tools to optimize its supply chain before the pandemic could quickly access and analyze critical information, enabling it to move supplies as close to production sites as possible and avoid idling a single factory for lack of materials.
Not only are the digital leaders performing better through the crisis, we also see them doubling down on their investments to widen the gap. Laggards can still catch up, but they must jumpstart their digital journey with new urgency.
In our work with clients on their transformations, most CEOs tell us they understand the destination, but many also tell us they are uncertain how to move forward with enough speed and confidence in the ultimate value creation.
Facing ‘brutal facts’
This crisis is different. Billions of people around the world almost instantaneously changed their behavior, with profound and lasting implications for business. Companies can’t simply reduce costs and “freeze,” but must accelerate to new levels of digital performance to serve new customer expectations, adapt to the health challenges of COVID-19 and pivot to new growth opportunities.
The first step for CEOs is taking stock of their organization’s level of digital maturity. This is the time to heed sage advice from Admiral James Stockdale: You must retain faith that you will prevail in the end, regardless of the difficulties, and at the same time confront the most brutal facts of your current reality, whatever they might be.
For most companies, the “brutal facts” will reveal that they are even further behind on their digital journey than they realized and that the bar has been raised. To leapfrog the competition, CEOs need to rethink transformation and follow a new set of rules.
Fast-forward to the cloud. Leaders build a digital core and scale it across their business quickly. And this is only possible with a strong foundation in the cloud, which provides the innovation, efficiency and talent advantages to do things differently and fast. Ninety-five percent of digital leaders have significant cloud capabilities, compared to only 30% of laggards. Make this a leadership expectation; set a target of at least 50% of your business in the cloud in the next 12 to 24 months if you are early in your move to it, and at least 75% if you are farther along.
Build your digital “A-Team.” All companies must now be as good as digital natives to deliver the first-class experiences customers and employees have come to expect. But creating your digital foundation quickly cannot be done alone, and it requires new kinds of relationships with digital, technology, and cloud companies. Recruit the handful who can help you build and become part of your digital core, who are invested in your success and who will give your business the attention and resources it demands.
Be a learner. Organizations must think beyond traditional ways of doing business to solve complex problems. Learn from your customers, your employees, and the leaders in your own and other industries. In response to COVID-19, first responders in health and public sector organizations quickly adapted successful interactive virtual agent models from telecommunications and financial services organizations with great success.
Move at “lean” speed. Almost overnight, organizations moved fast to become more digital and work remotely, and CEOs are saying they “don’t want to go back.” To retain this level of agility, consider what internal barriers fell during the crisis. Then create lean decision-making and governance processes, streamline procurement, and evolve your culture to support a new way of working.
Act with purpose. Speed means you need your people with you. Clearly articulating purpose up front is essential to cutting-edge change management techniques that harness the power of employees to drive change and act with agility.
Companies that understand the unique nature of this crisis and apply these new rules of transformation have the opportunity to emerge even stronger and become the leaders of tomorrow.
Julie Sweet is the CEO of Accenture.
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