With technological advancements on a swift rise, digital transformation has been the golden ticket to gaining strong competitive advantage for many companies striving for success, growth, and scaling.
But even though digital transformation on a global scale was already under way, the global pandemic forced the process to accelerate at an unbelievably fast pace.
With COVID-19 completely changing the world, from people’s daily lives to business operations, has forced humanity to seek a sense of normalcy in the virtual reality — when the true reality out there is far from recognizable.
More than ever, people have begun connecting across distances and time zones in the online space, whether it’s through social networks, regular Zoom or FaceTime calls, or as simple as emailing.
Companies have begun establishing more meaningful connections with their loyal customers on a more personal level through social networks and constant online communication.
And finally, many companies have begun thinking of new ways to ensure they can stay afloat in a time of crisis while also taking care of their employees — and this implies a swift transition to remote work and online engagement around the clock, as well as company-wide digitization for data-driven optimization of internal operations.
It’s true that these global changes leave a lot of room and uncertainty, making it harder for many companies to navigate the crisis and make decisions in such a volatile climate. Many companies oscillate between making significant cuts and taking decisive actions today in efforts to stay afloat and come out on the other side of the pandemic more or less stable, if not stronger and more resilient. And while exercising precaution and considering ways to “ride out the storm” and lay low is a safer approach to surviving this crisis, there is one thing that’s undeniable about COVID-19: it’s a change catalyst that humanity hasn’t faced in a long time, and the change is most certainly towards a more digitally-driven world.
And this means that embracing such an inevitable and accelerated change towards digitization might be the key to survival through — and success after — the pandemic.
Even before the pandemic hit the world, 92% of companies surveyed by McKinsey believed they would need to update their business models according to the digital transformation changes.
With the pandemic’s onset, consumers’ behaviors have changed, too — and across generations, people have been engaging online at an increased rate. McKinsey’s consumer-sentiment analysis has shown how whole new consumer groups have been trying out digital products and services for the first time. According to the research, in the United States alone, some 35% of Gen Zers have used video chat for the first time, while 54% of households with incomes greater than $100,000 and 35% of households earning less than $50,000 have tried online streaming for the first time.
The pandemic has also uncovered the sharp contrast between the vulnerability of less digitized versus highly tech-driven companies and their ability to properly function in times of economic difficulties and massive shifts in consumer behaviors. On one side, we have witnessed a large amount of local businesses take a strong hit and suffer from the crisis: local businesses such as barbershops, bars or restaurants stand at a risk of never reopening their doors to loyal customers ever again.
But amidst an overwhelming amount of temporary and even permanent closures, there are also success stories that have an underlying theme in common: they are all tech-driven as a rule.
For instance, Nintendo, a popular video game provider and a tech-driven enterprise, recently announced that its annual profit surged 41%, its highest in nine years; the company’s profit in the first three months of 2020 more than tripled compared with the previous quarter.
Another company whose mission is to transform the traditional fitness experience people are used to is Peloton — a company that makes in-home workout products, including bikes and treadmills. With its tech-driven approach to fitness, Peloton’s revenue grew 66% and membership for its app increased by 30%. The company, which has nurtured and developed a loyal following from its solid customer base, also managed to raise its full-year forecast, since the shift in consumer behavior and preference for digital solutions isn’t likely to see a drop in demand in the near future.
The shift in consumer preferences and behaviors has affected their use of streaming platforms, too. Spotify, the global leader in audio streaming, has experienced these consumption trends first hand: according to Variety, the company reached 6 million new Premium subscribers globally during the first quarter of 2020 to reach a total of 130 million paid users worldwide at the end, with the growth predominantly accounted for by by family-plan signups. Total monthly active users also increased by 31% to reach 286 million, following the company’s projections, continuing Spotify’s uninterrupted year-over-year growth of over 30% each quarter. The company also conducted an in-depth analysis of how the users interact with the platform, uncovering a number of interesting trends that rose over the time of the pandemic. For instance, with more children staying at home, parents have begun playing podcasts for their kids, increasing consumption for overall Kids & Family content. Furthermore, artists who regularly stream performances have seen a spike in consumption on the platform, further exemplifying how the shift to the virtual space marks a global transition to a more digitized world.
Another platform that has seen a significant surge is Netflix, the global leader in video streaming. According to the Guardian, Netflix has more than doubled the number of new subscribers it expected as of April, since more people signed up for the video streaming services amid the global pandemic. The video entertainment giant added 15.77 million new paid subscribers from all over the world, surpassing its projection of 7 million, as people have increasingly been looking for new ways to fill their time and stay entertained during the “shelter at home” orders. This surge was especially pivotal for the company due to the increased consumption of Netflix’s proprietary content: the company saw an increase in consumption of its own hit shows.
Finally, with the rise of remote work, the biggest success stories of the epidemic have been the two work and engagement platforms: Zoom and Slack. For people who have transitioned to working remotely, Slack and Zoom have become irreplaceable and vital communication tools. According to CNN, Slack Technologies added 9,000 new paid customers, an increase 80% compared to the previous quarter, between February 1 and March 25. It has also become clear that the users have become chattier and more engaged on the collaboration platform: according to Slack, the number of messages sent per user per day increased by an average of 20% globally.
Zoom, the video conferencing tool that has quickly become almost a necessity and an inseparable companion to a lot of people across the globe, has certainly been the ultimate breakthrough among many digital tools. As of today, the company hosts over 300 million meeting participants per day, according to CEO Eric Yuan. With its stock up 120% for the year of 2020, Zoom successfully reached — and surpassed — a milestone of 200 million daily meeting participants earlier in March.
The new focus on the value of digitization also involves data and advanced analytics as well. With communication — and overall existence — moving to the virtual world, there is an increased need for accurate and real-time data available. One of the best examples for data efficiency is South Korea’s government’s collaboration with private companies to create a platform that takes only 10 minutes to trace people who were potentially exposed to the coronavirus — an improvement from 24 hours back in February. To this end, they developed a digital surveillance system that consolidates information from 27 public and private organizations in efforts to expedite contact tracing and analyze major virus clusters to identify likely sources.
The current pandemic, unprecedented in its reach and effect on each and everyone across the globe, has brought about disruptions that emphasize more than ever the vital role that technology plays today, from becoming the backbone of efficient remote work to connecting people across time and distance barriers. And despite such success stories as Zoom, Peloton, or Slack with their efficient technology response to the global emergency, overall, the current economic crisis has only further underscored the weaknesses and vulnerabilities of many companies that are yet to embrace digitization and technological advancements. In fact, according to McKinsey, a lot more companies have a longer way to go till they reach the sweet spot of establishing a strong digital presence and tech-driven infrastructure: of the organizations that have set on the path towards digitization, 79 percent are still in very early stages of their digital transformation.
What the pandemic has proven is a point that has been often overlooked but cannot be pushed aside anymore: technology is not available to perform a mere supporting function; in fact, and especially in times of a global pandemic, it represents a core value to any company, organization or individual.