Crisis Leadership: Developing a new Digital Vision for the age of Disruption

The number of academic papers written recently about COVID-19 has topped 22,000, which is a testament to the intellectual rigor required to deal with the mountain of disruption challenges—whether medical or business. Thriving in the age of pandemic calls for avoiding the pitfalls of wishful thinking, wishful blindness, and myopia. Indeed, in an uncertain environment, motivated reasoning—deciding what evidence to accept based on the conclusion one prefers—can be a dangerous gamble for a business leader.

As the COVID-19 pandemic continues to turn upside down the world economy without an end in sight, the shape of the economic recovery is being debated regarding—V-shaped, W-shaped (double deep), or even L-shaped recovery—which is profound and can last a decade or longer. The classic example that most people are familiar with is Japan’s so-called lost decade—when its economic bubble turned sour in the early 90s—and lasted over a decade before a recovery.

However, the shape of the economic recovery, important as it may seem in guiding business leaders in their business planning, the fundamental imperative of double downing on a new digital vision can’t be overstated—at organizations small and large. The disruptive impacts of the coronavirus pandemic on legacy business models worldwide have been like no other in recent memory, given the economic and business ramifications. Consider the retail, airline, and tourism sectors; they have been among the most upended sectors of the global economy. Also, with the world increasingly moving toward a social-distanced economy, being well-digitalized as an organization can be a game-changer concerning innovation, productivity, remote work, and digital platforms. In other words, becoming truly digital to dispel the forces of disruptions is the clarion call for the next generation of antifragile organizations.

Even those companies that had begun their digital journey through baby steps need to double down on the trifecta—digital vision, digital culture, and digital organization – which are the three-legged stool—for thriving rather than surviving the Black Swan disruptions of COVID-19. In other words, success today and in the future will depend to a great extent on how businesses truly transform themselves for the new challenges of the new normal—creating and delivering value digitally while becoming productive and digitally competitive even in times of adversity and disasters.

To be sure, the extent to which organizations will double down on their digital transformation will depend on the firm’s size, global footprint, the economic sectors where it operates, and the requirements of the sector for a true competitive advantage. However, today, it is increasingly becoming axiomatic that most, if not all, firms need to change their assumptions and become at least an average digital organization.

Complex as this endeavor may appear, at first, we believe that when business leaders follow the time-tested digital transformation framework, the digital journey can become easier than anticipated. Here is the practical digital transformation framework for developing a digital vision for improving business performance through the coronavirus crisis and beyond.

Establishing a digital vision for the age of disruptions—calls for an objective review of the company’s current situation regarding digital technologies and the level of awareness within the firm. Also, the organization needs to plan for its digital future and what that will mean in terms of competitiveness across the industry. Our fast-changing business landscape entails a digital strategy for meeting today’s needs and equally for the emerging needs for tomorrow’s value delivery requirements. Given the volatility, uncertainty, complexity, and ambiguity of the world’s economy coupled with the unprecedented changes over the last few weeks—for the sake of resilience—an organization needs to become ambidextrous regarding its communication planning. Planning for communication channels for normal and disruptive economic times regarding contacting suppliers, employees, customers, and other stakeholders is critical for the firm’s survival in times of chaos and disaster.

Determine the digital triggers—a company needs to have a firm grasp of the triggers during this COVID-19 disruption that made the pivot toward digital transformation imperative for its future viability. Then it can uncover which digital technologies to leverage for its benefit. This understanding can increase the company’s awareness of the skills, knowledge, expertise, and capabilities required to deliver digital transformation. Like other serious undertakings that can take years to bear fruit, digital transformation is no different. Our experience suggests that it may take over 2.6 years for organizations to start seeing tangible benefits overall. It will be salient to get the top leaders at the firm on board, given that their support and dedication will be paramount.

Build a digital culture for the age of disruptions—make no mistake, true digital transformation entails a digital culture. Without it, the quest will be akin to a fool’s errand. For this reason, there needs to be a crystal-clear understanding of the critical importance of digital transformation across the company. That means a genuine belief that disaster awaits without some transformation of the business model. For this belief to materialize and become contagious, there needs to be true leadership for championing digital needs.

It will be imperative to double down on data strategy and information architecture to enable the smooth adoption of artificial intelligence in the future. Yet, the firm needs a robust governance mechanism, such as what can be allowed with internal and external data, who can access them, and under what conditions. Also, the questions regarding how data can be managed, cleaned, and stored where within the systems will be crucial—for the data strategy to get tangible results. Moreover, digital customer experience needs to become one of the company’s top priorities. Likewise, upskilling and reskilling employees to build a digital-ready company must be part of the leaders’ digital calculus. This is imperative for designing a resilient firm capable of weathering disruptive storms and resilient teams within the firm. Indeed, resiliency calls for bouncing back to the pre-disaster level of performance whenever disaster strikes.

Establish a disruption-ready digital organization—this kind of establishment calls for creating a digital innovation function across an organization capable of implementing that strategy. A company’s ability to respond to shocks through agility calls for top-notch change readiness. This readiness needs to be assessed regularly for any potential warning of the gap between the leadership’s perception of business change readiness and reality. Failure to firmly grasp this gap may prove disastrous whenever a pivot becomes a necessity.

It takes a true believer to ignore the alarm bells of disruption ringing and stay the course when the economy is in tatters. For example, given the evaporating demand for many products, many firms have tried to pivot in another direction, but their lack of change readiness holds them back. The $20 billion fashion giant—Uniqlo of Japan Fast Retailing—easily pivoted regarding producing face masks given the rising demand. The bureaucratic organizational structure at many large organizations proves to be one of their greatest liabilities, as far as speed is concerned. Thus, building agility through a spring-like organizational structure –flattens whenever necessary to get things done and vice versa—will be a game-changer at most large companies.

Ascertaining transformation areas—The business will need to work out the digital transformation areas that can make the biggest differences in the future. It can start the digital transformation initiatives by answering the probing question: What will digital transformation look like? Above all, the business must ascertain the best approach to get there while strategically thinking about future mergers and acquisitions (M&A), business alliances, and becoming a digital platform, which can truly change the strategic game.

Evaluate the digital transformation impacts—businesses need to be sure about the outcome or impact they intend to have for their operating model and the digital customer experience they believe the transformation can deliver regarding value proposition, benefits, customer satisfaction, etc., enhanced customer loyalty. To get this right, an organization will need to design an effective measurement method or KPIs for insights. Then, the firm needs to use the insights from the feedback to make the necessary improvements. By doing so, the company will avoid the trap of throwing things on the wall, hoping that one of them will stick—gambling with its own future.

As the power of computing capabilities grows and the data in our economy keeps growing at an unbelievable rate, it is becoming crucial today to leverage the power of the data at the companies’ disposal for competitive advantage. To that aim, unlocking the power of algorithms can make a big difference in the strategic arsenal of business leaders. But what can algorithms do for businesses? In other words, what are the types of algorithms out there? 

Algorithms for a recommendation – they enhance our decision-making power in that they tend to provide feedback while making decisions given their architectural choice. This is akin to Amazon’s recommendation engine telling a customer, “You bought this; you may also like this,” or sending him a recommended list of products given your past purchases.

Algorithms for restriction – they restrict human behaviors and control them for compliance with the algorithms. They can also restrict data or information access to employees or customers regarding how they have been manipulated. This kind of algorithm is prevalent today in our freemium digital world. They restrict content access to a category of customers given the category of membership they belong to. For example, free, pro, business, and enterprise may be a different membership category with content, service, or data benefits, while each must pay to play. In other words, the level of services will depend on how much a customer pays. As such, the algorithms will discriminate based on the level of membership or category. Another classic example is LinkedIn membership. There is a big difference between a free LinkedIn member and a job seeker premium member regarding what can be done and access (profile view analytics) on the professional platform giant. These reductions of services (and service upgrades) became possible thanks to algorithmic restrictions littered across digital platform ecosystems.

Algorithms for recording—this type of algorithm records real-time feedback regarding what’s going on in an environment for control and other improvements within an organization or business setting. The classic example is when we train machines without being aware of our repetitive daily behavior, such as when we go to bed or how many emails we check daily on Gmail.  Over time, the machine begins to remind you that your bedtime has arrived. There are many cases of algorithms doing their jobs like a spy or mind-reading machine below the public radar. Indeed, these types of algorithms are the bedrock of basic machine learning today. This is basically how the machine learns and predicts behaviors. Thus, the more data available regarding behaviors, the more perfect the machine becomes in the long run through the new learning process.

Algorithms for rating—this is the kind of algorithm that many people are familiar with, given its usage in the digital world. It entails rating tasks, behaviors, interactions, or the performance of a product or service, which can be analyzed for improvements. For example, Facebook Messenger and WhatsApp often ask users to rate the VoIP calls they just had with a friend or a family member. Similarly, when people use Amazon or Quora Platform, they are urged to rate the products and comments respectively to enable these platform owners to make the necessary product improvements while standardizing better behaviors on their platforms, which is crucial for a digital platform.

The atmosphere creates a kind of peer behavior review of behavior quality. Similarly, Amazon establishes a product quality review through its platform by urging buyers to rate product quality—between one and five stars. Of course, these systems are imperfect and can be abused by unscrupulous people who game the systems. But they are better than nothing at all. People with good products and who add value can be easily identified regarding their cumulative good ratings on these platforms.

Algorithms for replacing—as of this writing, this kind of algorithm usage is two-fold. First, they are deployed for hiring, replacing, and sometimes firing employees while replacing them with more capable employees, given the insights they have gleaned from the data gathered. Second, in an automated fashion, they control human decision-making by taking control of task management while making the human need to do the tasks unnecessary. They belong to the category of automation that is raising serious concerns through robotic process automation. In other words, this is like a baby step in what artificial intelligence can do to the labor market. Significantly, the more the job process is fixed or with little variability, the quicker the machines can take over the routine. The banking, financial, and insurance industries are some of the leading industries that have adopted RPA.  This became possible today, given the advanced artificial intelligence capabilities, machine learning, and natural language processing capabilities in recent years.

Algorithms for rewarding—in this case of algorithm deployment, people’s pay and reward are determined by machines. In other cases, through a game-like (gamification), employees and teams receive a reward based on how the machine has been built for the tasks. Today, many organizations are deploying this kind of algorithm in their recruitment processes to help them make the right decision regarding how they hire people. They believe that the process reduces bias in the recruitment process. Indeed, in recent years, its importance is growing rapidly. In 2019, the worldwide market for robotic process automation was nearly $3 billion and was projected to increase by 37% to reach $4 billion. However, the coronavirus crisis will seriously affect the growth potential of robotic process automation in 2020. However, the most important thing is understanding its disruptive potential while knowing how to unlock value through the process. As the factories are shutting down given the danger of spreading the coronavirus, companies that have deployed robotics automation across their plants will gain a huge competitive advantage.

Thus, organizations need to get serious about their digital vision before another disaster strikes. In fact, given our understanding of the business landscape, failure to make the necessary digital efforts is the new badge of shame after all these coronavirus disruptions. For one thing, businesses must avoid being held captive by outdated management wisdom through the COVID-19 crisis and beyond.