The COVID 19 pandemic is a purveyor of change. An accelerant so to speak. The World has been forced to embrace the long despised and postponed change. Much of the world has been stuck in Industrial (Europe) mode for much of the 20th and part of the 21st Century. Businesses and Government have been so engrossed and blinded by their Size, Power and Influence, perched in their comfort zones and traditional spaces of operation, they have forgotten one crucial fact in this Universal equation. The X. The knowable unknown. Commonly identified as change. Nothing remains the same forever. In the Universal Equation X is also K. K is that which is constant. In the Universe of things change is constant and certain yet it is unknown. Yes it is certain that things will change but the magnitude or coloration of such change can never be known in absolute terms. ( I am trying hard not to sample Catastrophe theory (fold, cusp, swallowtail, butterfly, hyperbolic umbilic, elliptic umbilic and parabolic umbilic – Catastrophe) or Singularity theory. Sounding smarter than one appears often gets misinterpreted as posturing. You are right I know nothing. I am just a guy sharing his thoughts
Now let’s get back to the Essay, if you please …) As humans, businesses or business entrepreneurs we must be prepared for change. Crazy but exciting on an existential level.
Prior to 2020 less than a quarter of companies and businesses had undergone digital transformation; Less than half were on a transformative journey; and about a third spent time talking about the idea/trend of digital transformation. The 25 % that under went digital transformation started with digitization (automation of processes, optimization through digitization of data and paper minimization. The business discards the old way of doing things. The company must unlearn old tricks and reinvent itself in preparation for the new era. The new market. The new space within which it is going to operate.) then digitalization (embracing technology to optimize business processes; conversion of supply chain to digital supply chain, learning new tricks, becoming a digital business) This is the mutability stage. Next was the adaptability stage (digital transformation through change in behavior of people and culture. The business learns to manage and implement new change).
2020 was the Clinical Trial for the change to come. Companies and Individuals who had positioned themselves were able to thrive and participate in this global experiment. They rode the wave of massive dislocations and disruptions witnessed across industries and sectors (healthcare, aviation, Travel and tourism, Brick and Mortar Retail, Traditional Education & Academia). The companies that recorded exponentially growth and profits during this period leveraged on two strengths mutability and adaptability. Quite similar but quite different. The former being the ability to change and the later is the ability to manage change. The former involves unlearning and the latter involves relearning.
In 2020 the pandemic revealed what most futurists and innovative thinkers have known for decades. Possibly a century. The world is constantly in a state of Flux and Redesign. Most times the process progresses with minimal disruptions or detection. Equilibria remain virtually the same. But sometimes there comes a shock. These are watershed moments. Punctuations and Periods in history. Preparatory for the birthing of new paragraphs and chapters in the grand narrative of Everything that ever was, is, and will be.
What did Amazon, Air BnB, Zoom, Tesla, Microsoft, Google, Netflix … and a host of companies that recorded record profits during this pandemic know or do to not only survive but stand out while other companies and Individuals were recording losses, filing for bankruptcy, seeking government stimulus packages, being furloughed or laid-off ? Please read on. All will be revealed shortly.
Businesses are built round demand and supply. There is a need. Then a product or service is provided to satisfy that need. However, profitability is tied to marginal cost and scalability. The Business owner must find a way to reduce his marginal cost to zero or next to nothing. Transaction cost and distribution cost dictate marginal cost. What is your cost of engaging in this business transaction? What is your cost of distributing this product (i.e. good or service) to your customers or end users?
The answer to the above questions is automation and digitalization. The afore mentioned companies were able to reduce their transaction cost and distribution cost through automation of their processes and business model. It cost next to nothing to create or service an additional customer. Thus scalability was fast and cheap. Which in turn impacted positively on service delivery and customer satisfaction. It costs Amazon or Facebook nothing to create a new user. They figured out how to deploy their products through bits and bytes. The internet solved the problem of distance, inventory, office and client/customer base & numbers. Scalability. Remember that word – Scalability.
Which brings us to mutability and adaptability. The coys realized that they had to expand their markets. To expand their markets they had to change their classification as a traditional Brick and Mortar business to a digital business. Similarly they had to operate in the digital market. E-commerce if you like. Transaction and distribution had to be initiated and consumated in cyberspace. Over the internet via platforms built by the companies or hosted by internet companies.
A socio-economic winter is coming ladies and gentlemen and our traditional fur coats and fire places won’t be enough. Mutability and Adaptability are probably our best weapons. The ability to change and the ability to manage change.
DrAlexanderGrey 