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Post Covid 19: What companies must do to survive and compete in the new circumstances of the so-called "Shut-in Economy"

The pandemic crisis has had a devastating effect on worldwide GDP and, from now on, there will be major changes in the way we do business ("shut-in-economy"). Most of these changes were already in progress but the pandemic event has forced the rate of this change to accelerate. A simple “evolution” will not be enough, a step change (a quantum leap, a breakthrough) will be necessary. As such, we cannot waste time trying to understand what has happened and will happen through the lenses of the previous business paradigms. Instead we must imagine ourselves already catapulted into this new competitive scenario and look at it through a new perspective.

 Article by Giorgio Merli

The first thing to do is anyway to identify how to manage better the problems encountered during the pandemic event, in case such an event should happen again. But, at the same time, since most of the new purchasing behaviors, forced by the pandemic event, will be consolidated from now on as normal, new ways of doing business must be activated as soon as possible in order to survive and better compete in the new reality.

As for problems already encountered, it is primarily a question of reviewing the Value Chain chains to limit the risk of breaking the Supply Chains and jointly of increasing its flexibility in volume and in mix (probably also by re-shoring some activities previously de-localized). But it is also necessary to re-organize all the activities that can be managed remotely with smart working. The current logistical and management configurations, even of the companies that have had the greatest demands from the market (such as pharmaceutical-healthcare companies) have not been able to maintain their business levels, or in some cases, they have not been able to increase it as needed by the whole community.

The pandemic period has certainly established e-commerce as a fundamental tool for doing business. Companies that were already using it reasonably well, have managed to continue to provide products and services much better than those that weren’t using it, and companies that were completely operating with e-commerce have even managed to increase their turnover dramatically.

E-commerce represents the entry point for the step change that companies must implement to compete in the near future. From now on, digitized transactions will be the norm, replacing previous methods with greater speed than expected. In fact, new segments of the population / customers / people, forced by the lockdown, have suddenly learned how to use digital channels and make electronic payments. This sudden development projects companies directly into the new scenario, where, in addition to e-commerce, companies will have to compete by leveraging other competitive advantages. Among them, the ability to offer "servitized" products (ie sold through a service that allows the client to use them without having to buy them) and/or the provision of a new "pro-sumership" logic (ie where the customer has the possibility to prepare for himself what he wants). In this regard, the way in which the customer can (digitally) self-deliver, self-personalize and possibly self-produce (via 3D), or even self-engineer and self-design products, are already known and used. In this case customers can self-manage the facilities of the supplier as a service to self-prepare what they want. Many examples already exist both in B2C and in B2B.

To cope with these new ways of working, companies must review their portfolio of products-services. In this they can have a large help from the use of Artificial Intelligence. This, in addition to being used to manage the risks of the Supply Chain in a more reactive and proactive way, will provide fundamental help to grasp the weak signals of upcoming changes in the market and be aware of the general context ecosystems (geo-political, social, economic , financial, environmental, and healthcare). On the subject of ecosystem risks, there is the possibility that the next "black swan" could be a different type of “virus”, i.e. a cyber virus, and this would generate a cyber pandemic. In the new digitized world Cyber security will be fundamental to reduce the risks..

It is, indeed, also necessary to keep in mind that the amount of data in circulation is increasing exponentially. Its management and "monetization" within the framework of GDPR regulation, with a parallel increase in the use of cryptocurrencies, will constitute a fundamental chance to seize new opportunities .. but there is also the possibility that it could become the source of other problems! In order to increase the business opportunities and to reduce the above mentioned risks, new digital and blockchains solutions should be developed (and they are currently ..under development!)

About the author:

Giorgio Merli, author of numerous books and articles on Management published in Europe and USA, consultant to Multinationals and Governments, teacher in several Universities in Italy and abroad. Formerly Country Leader of IBM Business Consulting Services and CEO of PWCC Italy, is currently Senior VP of EFESO Management Consultants .