The COVID-19 pandemic created a number of challenges for businesses, requiring them to quickly adapt and, in some cases, launch entirely new ventures to stay connected and competitive. Changing customer and business demands also presented new opportunities for corporations willing to take advantage and launch their own digital product ideas.
According to a McKinsey Global Survey, corporations have accelerated the digitization of their customer engagement, supply-chain interactions, and internal operations by three to four years. Even more impressively, the share of digital or digitally enabled products in those company’s portfolios accelerated by seven years due to the disruptions of COVID-19 to the global supply chain and more.
It may seem as though startups and online businesses have an advantage over established corporations when it comes to adapting quickly and taking advantage of new market opportunities. In fact, 2020 saw established companies use their existing resources to launch new ventures and adapt to changing market conditions, using digital technology to draw in new potential customers.
The past year saw changes in both the long and short term.
Lockdowns and social distancing drastically changed consumer buying behaviors and severely impacted businesses that rely on person-to-person gatherings. While some of the adaptations and innovations companies made were short-term measures, many are expected to create lasting advantages to customer experience.
The increase in digital communication and engagement is expected to permanently change how corporations do business. The average share of customer interactions that are digital went from 36% in 2019 to 58% in 2020. This growth rate is three years ahead of the average rate of adoption seen over the past several years. The number of initiatives to use advanced technologies also increased 37% in operations and 21% in business decision-making.
Corporations had the opportunity in 2020 to surpass startups in terms of innovation and digital ventures. Most startups were more vulnerable than more established companies to the disruptions and business losses brought on by the pandemic. The lack of access to traditional funding and weaker relationships with suppliers and customers made it more difficult for startups to navigate supply chain delays, event cancellations, and other business losses, even with all their products or services in digital form.
These challenges were a major reason why fewer businesses were formed during the height of COVID-19 disruptions. The creation of new startups in the US declined 22% in April 2020 and some countries saw business formation decline as much as 70% - with similar declines seen in venture capital.
By comparison, corporations still struggled with lost revenue and business disruptions but they were much better equipped to rapidly respond to changes. While it may seem as though major digital ventures would take months or years to implement, the COVID-19 pandemic really demonstrated what corporations can do when they are motivated and willing to put resources behind a project.
Unlike startups, corporations are able to invest in bringing in a firm that can completely manage their digital venture to greatly increase their expertise and speed development time, improving both customer support and customer interaction management.
For example, before the pandemic, executives thought increasing the use of technology in operations would take an average of 672 days. In fact, these initiatives took only 26.5 days to implement and most executives believe the change will remain after the pandemic.
Corporations that prioritized technology improvements in 2020 were able to capture a new share of the market, launch new digital products and services to meet changing supply chain management demands, and gain a significant competitive advantage.
Of the organizations who reported very effective responses to COVID-19, 72% were the first in their industries to experiment with new technologies during the crisis and 67% invested more than industry peers in digital-related capital expenditures.
As a digital venture firm, 923 Digital experienced many of these innovations firsthand both in service to our loyal customers and in ventures we independently financed. Here are several examples to draw lessons from for your next venture:
Before COVID-19, The Backyard Brain Trust developed an efficient model for bringing together technology community members and domain experts to deliver solutions and solve specific business challenges. However, the pandemic made it difficult to bring teams together in person and eliminated their ability to host live chat events.
Using their existing expertise and connections, they worked with 923 Digital to create Manifest. This digital platform creates an orchestrator to serve as the ideal consultant for making connections, expanding business opportunities, and forming teams.
Rather than folding due to a drastically changing business landscape, The Backyard Brain Trust used its resources to take an opportunity to bring its main value proposition into the digital realm.
With in-person gatherings significantly limited in 2020, there was a sudden demand for church and faith communities to move online. 923 Digital saw church leaders struggle to transfer the community experience to a digital medium, leaving a big impact on how their customers feel.
As part of our internally funded ventures, we built streaming and video conferencing technology specifically designed for hybrid ministry and community engagement.
Putting together the team for this new digital venture, we found a leader with a background in Christian higher education and entrepreneurship as well as all the raw materials needed to be successful. While others may have seen the need for a platform that facilitated personal discussions around church events, none had the resources and team in place to move quickly on this venture or to launch an online course shortly thereafter.
The past year has shown that established corporations have the opportunity to usher in the next wave of innovation. With access to resources startups don’t have and the ability to partner with digital venture firms, corporations can be the true disruptive forces in their industries, especially in the uncertain times we find ourselves in.
