Quick thinking

How a pandemic taught the world to value business agility

Jacqui Griffiths
16 November 2020

8 min read

COVID-19 has threatened lives, disrupted vital services and sparked massive fluctuations in supply and demand, challenging organizations of every kind to adapt with unprecedented speed. As their leaders look to the future, leveraging virtual experience to achieve the agility they need has become an imperative.

The COVID-19 pandemic has dramatically shifted the global business landscape. While airline travel, global tourism and mass gatherings that include concerts and sporting events suffered devastating losses, global analyst firm McKinsey & Company reports that telemedicine experienced a 10-fold increase in 15 days; online delivery volume saw a decade’s worth of growth in eight weeks; and e-commerce experienced 10 years’ of growth in just three months. Online education and remote working, too, saw massive spikes in usage.

What distinguished the winners from the losers? An ability to rapidly pivot and embrace a “new normal” with advanced digital technology – especially the ability to model, test and refine new scenarios, business models and offers as virtual experiences, which improve understanding and insight by transforming data into scientifically accurate 3D models. What’s more, although the next major disruption likely will take a far different form, the advantages of superior business agility enabled by these virtual and digital capabilities will remain.

“The crisis shows that the world is far more prone to disturbance by pandemics, cyberattacks or environmental tipping points than history indicates,” the World Economic Forum observed. “Our ‘new normal’ isn’t COVID-19 itself – it’s COVID-like incidents.”

As organizations across the spectrum tackle the challenge of accelerating their digital and virtual capabilities, the gap between companies that have already made the transition and those that lag behind is rapidly widening.

“The world is far more prone to disturbance by pandemics, cyberattacks or environmental tipping points than history indicates. Our ‘new normal’ isn’t COVID-19 itself – it’s COVID-like incidents.”

The World Economic Forum

“Even before the COVID-19 crisis erupted, many companies were struggling to keep pace with technological change,” Boston Consulting Group observed in its 2020 report, “The Digital Path to Business Resilience.” “The challenge has only accelerated since the pandemic began, bringing a growing realization into sharp focus: the future of work and life will be more digital than people previously imagined. With almost every organization having to depend on data, analytics, digital tools and automation, digital technologies will constitute an increasingly critical element of business resilience tomorrow.”

Strategy for a new reality

As organizations scramble to stay operational today and build resilience to future shocks, the need for the holistic views and operating models delivered by digitally enabled virtual-experience technologies has come into sharp focus.

“We’re going to see a mix of in-office and remote working, split shifts and teams working in ‘pods’ that can isolate if a member gets ill,” said Thomas A. Stewart, executive director of the National Center for the Middle Market at The Ohio State University’s Fisher College of Business. “That brings tremendous workforce management questions that can’t be handled by somebody with a clipboard and spreadsheet. How do we manage remote teams, for instance? How do we recognize the accommodations needed for people with disabilities or people who don’t have good home computing setups? And how does an organization make sure staff and customers feel physically safe?”

From cities to healthcare to manufacturing, organizations have realized that people equipped only with paper-based data- collection and analysis processes could not respond quickly enough to manage fast-changing scenarios – assuming they could even access their files. To build resilience to future crises – ones that, like a pandemic, cannot be predicted – advisory and research consultancy Gartner advises organizations to move now to align strategic and operating models around new business goals.

“There’s been a reset of the workforce and work itself, a reset of the employer/ employee relationship, and a reset of the business ecosystem,” said Chris Howard, chief of research at Gartner. “The pandemic has wiped away the strategy for some leaders, but they’ve also garnered invaluable experience. Now it’s time to bring together the executive team and use those lessons to reconfigure their business and operating models for a new reality.”

“Ultimately, the companies that win will be the ones that see two perspectives: how they need those [digital technology] investments as an operational necessity now, and how they can be used to unlock strategic opportunity both now and in the future.”

Thomas A. Stewart
Executive Director, Fisher College of Business, The Ohio State University

Supply chains, for example, which were severely disrupted during the pandemic, are likely to see a major increase in spending on digitally enabled resilience, McKinsey predicts. Since 2000, the firm observes, the value of intermediate goods traded globally has tripled to more than US$10 trillion, and the pandemic revealed “how fragile [these] lengthy, complex supply chains can be.”

In an August 2020 report, “Reimagining industrial supply chains,” McKinsey points out that while major indicators of efficiency improved for global supply chains in the years preceding the pandemic, the cost when a major disruption occurs can be staggering.

Image © Mongkol Chuewong - stock.adobe.com

“Just because a supply chain is efficient and cost-effective doesn’t mean it will be resilient, as shown by global disruptions ranging from Japan’s 2011 earthquake to this year’s pandemic,” the report states. “In each of the past several years, at least one company in 20 has suffered a supply chain disruption that cost at least US$100 million.”

Based on a survey of senior supply chain executives, McKinsey reports that weaknesses revealed by the pandemic are being addressed with a combination of dual-sourcing raw materials, increasing inventories of critical products, nearshoring or regionalizing supply chains, and investing in “big data and advanced analytics in every rung of the planning process.” The goal? To gain advanced warning of disruptions among the thousands of second- and third-tier suppliers who feed the small number of Tier One suppliers whose status OEMs can already track.

Gearing up for growth

As they look for new ways to work and live, organizations are already embracing new possibilities.

“People are seeing important strategic opportunities to rethink what they deliver, how they sell it, what their operating model is and what their balance sheet looks like,” Stewart said. “They’re having to reset their business in a lot of ways anyway, so now is a good time to implement the initiatives their IT team has been pushing and transform their production and marketing.”

In doing so, Stewart said, organizations are beginning to assemble the pieces of what, until now, has tended to be a disjointed dialog.

“The person in charge of IT doesn’t necessarily speak the language of governance and balance sheets, and strategic management often doesn’t fully understand what’s happening in IT,” he said. “These two groups of people are circling a box of opportunity and each has a key. But they haven’t always realized that to unlock the box, those keys must be used simultaneously. Now they’re on the verge of doing that.”

$100 million

In each of the past several years, at least one company in 20 has suffered a supply chain disruption costing at least [US]$100 million.

McKinsey & Company, "Reimagining Industry Supply Chains"

From sprawling cities, to healthcare providers and researchers, to a wide variety of manufacturers, organizations on a transformation journey are discovering the power to combine those keys.

For example, secure, digital, platform-based systems and cloud technologies are enabling organizations to scale up delivery of learning and support – crucial for both students and employees to move seamlessly between remote and office- or classroom-based work.

GSea Design, a French composite structure calculation specialist for marine and industrial projects, exemplifies how the combination of digital and virtual experience transformation enables ongoing growth, even in times of crisis.

“Despite the disruption of the COVID-19 containment, we have hardly been affected,” said Robin Lordon, one of the company’s designers. “We have ensured complete continuity with the projects we were working on and we continue to integrate new projects. Our technology platform – especially the cloud part – perfectly meets our needs for collaboration internally as well as externally with our customers. It’s the DNA of the way the platform works. We systematically work together on the same data.”

Like GSea Design, organizations on a digital transformation journey are discovering the power of digital platforms and dashboards to track social media for clues to fast-changing business conditions and consumer sentiments. These signals enable them to identify and monitor trends and understand the underlying attitudes of communities and markets.

“The closer an organization is to its customers, the more they can create an environment of trust where they share data, integrate their payments and have visibility into each other’s inventory,” Stewart said. “In that trusted, digital environment they can solve problems without worrying about guarding their intellectual property. There’s a real opportunity to create resilient systems where there is potential for everyone to profit.”

Major cities around the globe were particularly hard-hit by the pandemic. If implemented on a national scale, for example however, digital solutions such as 3D virtual twins could have helped officials track the pandemic’s spread and quickly recognize that transferring vital medical supplies from areas where the pandemic had not yet arrived could provide quick relief to areas that were already overwhelmed.

3D modeling also can help cities plan for a return to work, said Sankar Villupuram, who leads Digital Services & Products in East Asia for Arup, a global engineering architecture and engineering firm headquartered in London.

“We have modeled the numbers of people who could safely be present in an office at any one time, as well as how points of entry in a high-rise office building might be managed,” Villupuram said. “This includes monitoring congregation levels in a foyer using sensors, plus reduced elevator levels of service and how long this would stretch the time to reach the workplace, which was not insignificant. Extrapolate this information from a single building to a precinct or city and the value multiplies quickly.”

This scenario illustrates how 3D virtual twins of systems and processes are helping digitally transformed cities and businesses test ideas in the virtual world before implementing them in the real world, reducing the potential for costly errors. In turn, the virtual scenarios are enriched by data collected from the real world and analyzed in the virtual model, creating a continuous virtual cycle of learning.

“The future of work and life will be more digital than people previously imagined.…Digital technologies will constitute an increasingly critical element of business resilience tomorrow.”

Boston Consulting Group, "The Digital Path to Business Resilience"

This capability – coupled with the power to simulate virus contamination and diffusion in different environments – enabled China’s entral-South Architectural Design Institute (CSADI) to quickly optimize its design for the Leishenshan Hospital in Wuhan, China, built in response to the COVID-19 pandemic.

CSADI especially wanted to minimize the risk of cross-infection in the hospital, as well as any impacts on external communities, crowds and surroundings. It used advanced 3D simulation software to model and analyze indoor and outdoor fluids, airflow around the hospital and virus dispersal in ventilation systems to minimize the risk of air-borne contamination. Virtually pre-planning every aspect of the design and construction enabled the hospital – China’s biggest modular hospital for infectious diseases and COVID-19 patients – to be built in just 14 days.

As doctors in China and around the globe fought to treat the sick, a foundation of good communications and collaboration capability in the cloud helped French global pharmaceutical firm Sanofi continue developing treatments when COVID-19 hit.

With a strong crisis plan and digital investments over recent years to enable Software-as-a-Service (Saas) and cloud services, Sanofi was able to switch most of its globally, geographically dispersed employees to work from home in a short period of time, said Matteo di Tommaso, Sanofi’s Massachusetts-based vice president for Medical and R&D ITS.

On the research front, Sanofi’s remote patient interaction capabilities kept almost all of the company’s clinical trials on track – ensuring that the right expertise was available virtually when required. Di Tommaso credited strong governance and good communication with key technology partners for enabling Sanofi’s IT teams to adapt, stay transparent and proactively address issues as they arose. In a crisis that demanded fast innovation of new, life-saving treatments, Sanofi launched its new COVID-19 trials in record time, di Tommaso said.

Time for action

Ultimately, The Ohio State’s Stewart said, digital transformation is enabling organizations to rethink their fundamental offerings for a new reality.

“Organizations have an opportunity to think about digital transformation as a means to create and accelerate the growth of value-added services,” he said. “Manufacturers, for instance, are no longer just selling a product. Using technologies like digital twins and the internet of things, they’re selling a product plus predictive maintenance plus all kinds of other value-added services. And that can transform the business.”

Tellingly, amid all the changes and cutbacks the pandemic has forced on organizations, digital investments continue.

“Among middle market companies, digital projects are not being cut back – partly because they can pay for themselves, and partly because they are what businesses need to reorganize their customers, employees and suppliers to get to work,” Stewart said.

Indeed, in June 2020, McKinsey’s analysis of digitally transforming companies across seven sectors found that almost all of their agile business units responded better than their non-agile units to the shocks associated with the COVID-19 pandemic. Their investments in digital agility brought improvements across measures of customer satisfaction, employee engagement and operational performance.

“Technology investment is needed to operate in this environment,” Stewart said. “Ultimately, the companies that win will be the ones that see two perspectives: how they need those investments as an operational necessity now, and how they can be used to unlock strategic opportunity both now and in the future. Those guys are going to have a really exciting set of opportunities.”

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