Doing business post COVID - How to play when the rules have changed

Like many industries, Covid-19 has been a game-changer in consumer products. For years, CPGs feared that direct-to-consumer (D2C) sales would hurt critical retailer relationships, which prevented investment in these channels. But as stores closed, changing not only the market environment but the entire ecosystem, they were finally given the opportunity – and the push – to take the leap and sell direct. 

The effect, however, rippled beyond CPG. The majority of companies had to suddenly digitize their business. And while some have already reaped the benefits, it’s not too late for others to act. But with customer preferences for online solutions here to stay long-term, digital value propositions are no longer optional, but a necessity.  

No going back 

Our latest purchasing behavior study shows that Covid-19 has driven a surge in online shopping, with 53% of consumers doing this more or for the first time since the pandemic began. More importantly, 36% of them say it has become a new habit, revealing how quickly purchasing behavior has adapted. And while B2B companies might feel that this doesn’t concern them, they should think again, as the same person buying furniture and other goods for their home via e-commerce will demand the same experience and usability when they’re at work. New rules are in place across the board, driving every company to find its new place.  

Putting digital transformation into action 

Going digital can be difficult – and intimidating. But that doesn’t mean it’s impossible, and we have a five-step plan for putting your transformation into action.  

1. Know your starting point 

The most important thing to grasp upfront is that digital takes work, ambition and strategic prioritization. That means aligning your corporate strategy and level of digital maturity – it can’t just be a copy-paste job from someone who’s gone there before you. To do this, it’s critical to understand your digital starting point. What are your existing challenges and triggers? For example, since the 2000s, the increasing trend towards health and wellbeing has led to a rapid decline in the tobacco industry, accelerating demand for new capabilities and products. As a result, Risk-Reduced Products (RRP) like vapors and heated tobacco have come to the fore, with online channels playing a key role in the consumer journey, while a dynamic regulatory environment has made agile ways of working indispensable, especially in legal departments.  

Knowing when to take action and make digital transformation a key strategic goal is just as important as doing the actual legwork inside the organization. 

2. Build a strong foundation 

One common misconception is that introducing new tools and technologies will be enough to digitize the business or even create a new digital business model. However, digital goes way beyond technology, and this must be reflected in a holistic strategy that sets a clear vision and encompasses both organizational and technological enablers. Needless to say, it’s crucial to align this with your overall business objectives – creating one common goal and allowing digital efforts across the organization to be prioritized for resources and investment. 

It’s also crucial for your new strategy to be centered around what customers want. As we’ve seen, Covid-19 has changed this in many respects. One major shift is the desire to see real products before making a purchase. Whereas last March, only 24% of customers said they didn’t need to see a product in store before buying it, by November 60% were comfortable to do this.  

To succeed, a strong digital foundation must be built and aligned to your organizational context and objectives.  

3. Focus your priorities 

To execute your digital transformation in an efficient and agile way, it’s recommended that you incubate the new functions and capabilities required by spinning off some existing teams into a discrete digital unit. This way, you can enable rapid experimentation and accelerate progress. Many companies adopted this approach when first embarking on their digital journey. Nike for example has a “digital center of excellence”, where new digital capabilities for marketing & sales, supply chain, product management and other functions are first developed centrally, before being rolled out into the markets.  

To prioritize activity and initiatives, first assess the current and desired capability levels within the digital unit, in line with your overall strategic direction. Then use these to build a detailed roadmap that takes you towards your goal in a controlled way. 

Setting discrete priorities by building a digital unit allows to accelerate the digital transformation journey. 

  4. Uplift the organization 

To fully establish your new, digital-first business, the entire organization needs be brought along: Both from a people and an infrastructure perspective. The tech stack needs to reflect your changing, dynamic business needs. Here, a modern and flexible application architecture is an essential success factor. Further, there needs to be extensive upskilling to enable employees to understand their changing objectives, be able to use new technologies and adopt agile ways of working. Dedicated learning families, curricula and upskilling programs are best use to do the job. For a global pharma company, we developed a comprehensive learning academy that trained 750 key employees across five distinct learning families in the first 12 months. 

Once digital skills, technologies and ways-of-working are established in the digital unit, they must be diffused across the organization to enable digital transformation. 

5. Make it business as usual 

Now it’s time to bring everything together and make the digital mindset and agile ways of working a normality throughout the entire organization. Prioritizing digital initiatives, being familiar with digital tools and working towards digitalizing all processes should become the norm, thereby turning your company into a fully digital one. Many companies, once accomplishing their first step-change in business model, focus on gaining full operational efficiency across all their functions. Philip Morris, the company behind both Marlboro and IQOS, after deciding to exit the cigarette business and turn to smoke-free, reduced-risk products in 2016, focused on building up digital marketing, sales and technology capabilities for the first 4 years of their digital journey. Now, they work on diffusing digital across all corporate functions (e.g. supply chain, finance, HR) to gain efficiencies. 

Integrating a digital mindset and ways-of-working across all members of the organization and assuring application during business as usual is critical for a full digital transformation.  

The need to go digital is more important than ever before. But it’s also a huge opportunity to transform, and put your business on a better footing for the future.

Want to get started on your own path to digital success? Let’s talk. 

Contact us for further information:  

Sebastian Schoemann, Partner, Munich 

Sabine Spittler, Principal, Berlin 

Roberta Roeller, Manager, Berlin 

Aviella Schaechter, Consultant, Vienna 

Seraina Mueller, Student Consultant, Zurich