Retooling for growth opportunities in a post-COVID-19 world

The pandemic will eventually recede, but its impact will be lasting. How should businesses think and act as they adapt to the new normal?

COVID-19 fundamentally disrupted the global economy in 2020, wreaking havoc in some sectors and providing unforeseen windfalls to others. The pandemic also accelerated a sweeping digital transformation, as consumers and businesses were forced to do in months what would normally have taken years. As in any crisis, opportunities abound for businesses positioned and willing to take advantage of them. During a recent Financial Times webinar, Reid Hoffman, cofounder of LinkedIn, and Rock Khanna, a senior partner at McKinsey, discussed the COVID-related opportunities, challenges, and trends reshaping the economic landscape.

Look for new value – Companies have historically relied on a long list of excuses to avoid difficult and expensive transformations. But many now realize that courage and bold moves are required to move with a fast-changing market to remain successful or even survive. Organizations need to invest the time and mental energy to develop a clear vision of how and where they need to evolve, plan for that change, and execute.

The race to digital – Businesses must quickly adapt to the massive change in digital and remote working and shopping patterns. The very nature of how consumers shop is changing, and because many of these new models have proven so effective and popular, they’re almost certainly here to stay. The best companies are particularly thoughtful about the omnichannel nature of digital, understanding how various channels play off each other, and what combination drives the best results.

Placing a premium on understanding the customer – More than 70 percent of consumers in 39 countries have changed buying patterns since the onset of the pandemic. They’re switching brands, platforms, and places where they shop. This sea change has renewed the focus on understanding customers at a far more granular level—and on building stronger relationships through better personalization and new offerings. The pandemic upended algorithms that relied on data and analytics to provide detailed pictures of customer behaviors, so companies need to create new ones to gain a competitive advantage. Organizations also need to think about understanding the drivers behind changing customer needs, or their customers will shop elsewhere.

Use technology to empower teams – Technology alone is not a silver bullet for success, and businesses need to avoid falling into the trap of investing in the latest, greatest new technologies that actually don’t match their needs. New processes and teams need to be developed to review and act on insights the data and technology can deliver. Teams also need greater autonomy to identify new opportunities and quickly make decisions. Good data and guidelines can help establish guardrails and provide useful tools to empower these teams, an important lesson often forgotten during transformations, dooming even the most promising initiatives.

Questions and answers from the webinar

With many companies in survival mode, what are some of innovations you’re seeing as companies attempt to navigate the pandemic?

You're seeing remarkable business-model innovation in terms of figuring out how to service customers, such as B2B sales, where 80–90% is now being done remotely. We've seen a dramatic acceleration, as well as a recognition that this is not a one-time event, as companies realize many of these new behaviors are actually better and will stick. We’re going to see many of these virtual ways of doing things persist, even as the as the recovery happens. Telemedicine, for example, didn’t really take off because people weren’t exposed to it. But now they recognize how much more convenient it is than going to visit doctors in person, who can now see more patients every day. So we’ll see a reordering factoring of health care plans now that telemedicine has proven itself.

Are smaller companies innovating differently than larger companies?

We're seeing benefits across multiple industries at both ends of the barbell. Larger companies can take advantage of technologies in ways others can’t, and have become much more aggressive, while smaller companies were already truly disruptive and innovative. But the broad set of companies in the middle are really challenged, because they've got these innovative attackers coming after them. If you have a certain scale, you can invest and attack and refactor. And smaller companies can draft off established platforms adjust to all the technology the providers are building. It’s a harder game for the midsize companies, with limited technology deployments. They need to view technology as a continuous investment, not a one-time build.

How are companies positioning themselves to retain the gains they’ve made in the past year and continue growing in a post-pandemic world?

Everyone’s trying to figure out which growth can be sustained, and which can be accelerated. Larger, more traditional companies are embracing technology in very different ways, transitioning their platforms from B2B to B2ALL and hiring technology executives. E-commerce has been at the heart of tech forever, but only now are many realizing that it’s a huge vehicle for growth. Companies need to understand that an IT strategy is not a technology strategy. If you're not looking at all the current technological changes—which are accelerating in part because of the pandemic—then you should. You need to ask yourself how these changing technology patterns affect your business, and how you’re positioning yourself for the future with a competitive differentiation in order to be successful.

What are the biggest pitfalls businesses should avoid when trying to capture pandemic-related opportunities?

Avoid the natural inclination to always say, “Hey, we'll build it ourselves." Technology innovation is an expensive core competency that can't be done on the side. Go out and leverage other technologies instead. Trying to do it all yourself is almost always an ineffective strategy, unless you want to be a pure tech company. Maintain a clear view of where you think you can succeed, what it's going to take to succeed, and invest behind that. Don’t waste money investing in areas where there's not a real return. This is a moment in time that demands a fundamental look within your portfolio to identify these opportunities. And that requires unprecedented levels of customer centricity, granularity, and understanding. There are great opportunities out there, once you understand where the demand lies.