At True, we’ve recently taken inspiration from a popular meme asking the question: who led your digital transformation, your CTO, CEO or Covid-19? There is no doubt that Covid has short-circuited barriers to adoption and experimentation, a proof point of corporate flexibility through necessity. While in the past, we’ve talked about Red Bull (Start-ups) and Red Wine (Corporates) making for a challenging or even unpalatable cocktail – Covid may have just proven otherwise.
The need for innovation
Before Covid, 92% of companies thought their business models would need to change given the acceleration in digitisation. Twenty years ago, Chief Innovation Officers were virtually unheard of, but now over a third of Fortune 500 companies have one, and new titles have since emerged – all alluding to over a decade’s worth of desire to accelerate innovation agendas within large organisations. There has, however, often been a lack of board-level engagement in the innovation process, leading to it being a major blind spot: innovation was voted as a top-5 major strategic challenge by board members, yet almost half rated their innovation capabilities as ‘average’, or worse. Alongside our investment activities, much of what we do at True is aimed at improving that rating for a range of multinational retail partners. This comes in the form of helping to create and define innovation strategies, and executing upon them through the sourcing and implementation of best-in-class technology solutions. Our experience with Partners over the past 6 years, and particularly over the past 6 months, has shown leadership and innovation teams increasingly converge due to the strategic imperative of finding solutions for a digital world, for Covid, and the resultant seismic changes in consumer behaviour.
Covid-19 – the accelerator for digital disruption?
The SARS pandemic of 2002 – where similar restrictions as today were in place – led to a rapid acceleration of e-commerce penetration across Asia, providing a launchpad for companies like Alibaba and JD.com. It’s highly likely that the current pandemic will trigger a wave of rapid disruption and innovation similar in scale to the societal alternations seen previously, and indeed this is already evident through the rapid ascension of the likes of Zoom, Pinduoduo and Zomato. The difference in 2020 is that the world is now online – 75% of the world’s adult population have a smartphone. As is well documented, online penetration was previously on course to capture 30% of total UK retail sales in 2028. This was just achieved in April 2020.
The kind of fuel and level of urgency required to move quickly – as exemplified by startups – has rarely been seen inside large organisations. When the layers of corporate decision-making can be flattened, and manoeuvring becomes easier, there is opportunity to innovate successfully and quickly through the accumulated knowledge and human capital inside corporations. Innovation is often viewed from a technological perspective, but importantly also represents a mindset and culture change within organisations. It is this specifically that Covid has impacted – it has placed a laser-like emphasis on adapting for the customer (and their new constraints) and has also proven that the fuel required to adapt quickly does exist in large corporations. A culture and mindset shift has been triggered.
What we have seen is a fundamental transformation across both the consumer and the employee experience, compressed into a period of weeks. It has been a period of forced experimentation for consumers at immense scale – 39% of Chinese consumers have used grocery delivery for the first time. Over the past 3 months we have seen our retail partners engage across multiple fronts, such as: employee onboarding tools; the overhauling of supply chains; remote working tools; accelerating the implementation of online conversion tools; rapid grocery delivery; property companies re-thinking their business models to cater for data-driven methodologies; employees moving department with a day’s notice; CPG companies launching global startup scouting initiatives; convenience stores trialling geo-fenced, contactless payments; apparel curb-side pick-up and returns; video-based store visits and more. Much of this has been through working in tandem with early stage, technology-backed businesses. It won’t stop here; we expect to see an increased demand for innovation in the fields of logistics; staffing and operational efficiencies; ecommerce infrastructure; robotic process automation; contactless payments; forecasting tools and more.
Building the muscle memory
The retail industry is now facing into the question of what the industry will look like on the other side of the current health crisis. Many consumer behaviours are, it seems likely, changing on a permanent basis and business models and processes across the retail value chain will need to reflect this new reality. Consumers are reconsidering not only what they buy, but also how they buy. It is therefore imperative for the continuing evolution of large retail and consumer corporations that they retain this new, and effective culture of innovation, catalysed not by a CEO or CTO, but by a global pandemic.
- McKinsey: digital led recovery from Covid 19; how to move fast at speed and scale
- Ben Evans: Covid and forced experiments
- Forbes: is Covid 19 forcing your digital transformation
- Harvard Business Review: what kind of innovation officer does your company need
To read more on how True believe Covid-19 is not only accelerating innovation, but key trends in consumer behaviour, click here