International Institute on Innovation, IT Management and Entrepreneurship. Services on business models, ecosystems, digital transformation efforts.

23 April 2020 | Posted by Innova Institute

Digital adaptation or digital transformation? What will be the organizations' response to COVID-19

Innova Institute de La Salle-URL analyses how PostCOVID-19 will force companies to seek solutions to the uncertainties generated by the pandemic

Less than a year ago, the Harvard Business Review reported on the difficulties companies had encountered in implementing digital transformation initiatives. In a 2018 survey, companies CEOs said that of the $1.3 trillion spent on digital transformation, some $900 billion was wasted as these projects failed to achieve their goals. However, the COVID-19 pandemic has accelerated the processes of virtualization of economic and social relations as a response to forced quarantines, seeking to avoid productive slowdown and possible total system disruption. According to the Economic Commission for Latin America and the Caribbean (ECLAC), the most advanced companies in digital transformation have a greater capacity to respond to the challenges generated by COVID-19 and, therefore, have an advantage over those that have not initiated their transformation process.

 

As a starting point, it should be borne in mind that a true digital transformation initiative is one that provides clear value for the external customer. In other words, the first beneficiary of the digital transformation should be the customer through the perception of value received. To this end, all the company's units must participate in an aligned manner. In the end, the digital transformation must create a mindset of value for the external customer. Secondly, digital transformation initiatives cannot be opportunistic. In other words, they cannot result from a momentary response to a unique situation but must have a vision of remaining in the future. To this end, it is essential that companies develop the skills that will enable them to consolidate their digital transformation actions in order to offer sustainable value to their external customers.

 

Options such as telework, virtual education, online government, telehealth, and digital culture, among others, have emerged as alternatives for society's response to the crisis. However, the fact that they integrate technology can lead to confusion about their nature, but an analysis of them shows that the actions do not generate a true digital transformation. From the Innova Institute de La Salle-URL a study has been made to try to clarify which of these technological initiatives will remain as part of a process of digital transformation, and which, on the other hand, are only processes of temporary digital adaptation and will return to their offline models in the PostCOVID-19.

 

1. Education

The digital transformation in education responds to a process of media literacy by adapting to the ways of learning and accessing knowledge of the new generations. In particular of the digital natives, achieving developments at a personal, professional, academic, and social level, taking advantage of the multiple technological and digital resources and orienting their curriculum with the inclusion of technologies in the classroom. It also requires teachers to adjust their methodological strategies, including ICT and the development of e-competences, collaborative work, skills in the search and selection of quality information, the ability to adapt to technological developments, and to use them in a playful, cooperative and networked way through interactive media. Detractors of the transformation argue the need for accompaniment and the importance of presence in the teaching model, and that online processes tend to be of lower quality. Moreover, on the other hand, the digital transformation in education faces the limitation of connectivity in some regions, where both students and teachers do not have access to equipment and the quality of the network is low.

The challenge presented by COVID-19 has obviated this discussion and has forced educational institutions to close operations or adapt to models that eliminate presence, leading to the use of virtual communication tools and complementing it with traditional strategies such as television, radio, and guides to autonomous work for the student. However, as UNESCO has explained, teaching practices carried out in these circumstances cannot be considered as a digital transformation, since they are more oriented towards remote emergency education. In this scenario, face-to-face meetings are replaced by virtual meetings, thus making the process more flexible, but the responsibility and pace of learning are still in the head of the teacher, who has had to learn digital skills on the fly, in many cases without the development of complementary support tools and the necessary instructional for learning, which makes it difficult to preserve the models once the crisis has been overcome.

 

2. Financial services

Financial services as they are known today certainly are going to change, adapting towards digital models. Traditionally, banks have been the main players in this segment. However, this is changing with the advent of technology and the famous fintech companies. As in other areas, the financial sector will gradually migrate towards ecosystem and platform models, where banks will be one more actor among other types of organizations, such as payment services, data, and identity management, blockchain, and cryptocurrency, among others. All of them will coexist in ecosystems and technological platforms. Thanks to the digital transformation, users will be able, through mobile devices, to access different forms of financing, types of payments and also decide where and how to invest their capital, within a wide diversity of alternatives for generating and using money.

Recent years have seen an increase in users' technological adoption. Using cash to make most transactions seems to be a thing of the past; debit and credit cards or ebanking are payment solutions that have become widespread. In the same vein, going to a bank to withdraw, deposit, or send money is increasingly unusual, as many of the transactions are made through ATMs and, above all, the Internet. In turn, external factors such as the crisis generated by the COVID-19 have increased the use of digital financial services, such as making payments and transfers online or opening bank accounts without having to go to a branch in person. Therefore, the crisis has generated an increase in the digitalization of certain financial processes and, therefore, a greater technological adoption in the sector. Once the COVID-19 and its effects have passed, there will be greater adoption of technology in this sector, reflected in a growing number of users and operations through electronic banking and related services. However, this is only one step in the process of digital transformation, which implies a fundamental change in the model, which will migrate towards new ecosystems and platforms in the still distant future.

 

3. Telework for companies and workers

There is a clear difference between what teleworking actually means and what thousands of companies around the world are doing as an emergency to continue to practice their professions during the COVID-19 period. Due to the circumstances, many workers had to convert, from one day to another, their residence in their physical workplace, often having to use their own resources and putting at risk the confidential contents of the companies due to a lack of cybersecurity strategy. In addition, it can be assumed that not all people have spaces in their homes suitable for teleworking and, on the other hand, the connection to the home network, so far sufficient, has proven to be of poor quality due to the use of platforms that consume a lot of data band or to share the network with other users.

In addition, there are people who refused or resisted technological changes because of their own personality, or even older people who had to learn to use technology platforms that they had never used and without adequate prior preparation. For their part, companies, for fear that workers would lose motivation or not do their tasks properly, have imposed many more meetings and controls, making work less productive. In short, telework has in many cases been an adaptation to the new reality so that those who were at risk from an ERTE could keep their jobs.

But professional teleworking is not an adaptation. The company that wants its employees to work outside its offices has this activity considered in its strategic plan, which starts from the hiring of the professional, goes through offering adequate equipment and platforms, previous training, and control points, many times also technological. On the other hand, the professional who is going to be hired has to have specific personality and competences for this, such as discipline, organization, a facility for technologies, initiative, and leadership, among others. In addition to demonstrating that they have adequate infrastructure for their performance, either at home or anywhere, depending on the activity to be developed.

 

4. Ergonomics in teleworking

It is not yet known when the COVID-19 alarm condition will end. For this reason, companies should propose to their workers to adapt their temporary work offices at home, in order to work in an ergonomic way in search of business results.

 

The objectives of ergonomics are:

a) To select the most appropriate technology for the available personnel.

b) To control the environment of the workplace.

c) To detect the risks of physical and mental fatigued

d) Analyse the work stations to define the training objectives.

e) Optimize the interrelationship of the available people and the technology used.

 

In summary, ergonomics is: adaptation + facilitation + efficiency + health. For example, 3M has a flexible office program. The company offers two options: Flex Office, which are desktops available with points of connection to the Internet, the corporate network and telephone, where you can work at different times; and Home Office, whose requirement is to use a notebook, to be agreement personnel, not to work in the manufacturing sector and that the type of task being performed can be developed under the remote scheme. This way of working is attractive for recruiting young people, as it gives them freedom, showing the capacity and confidence to delegate the administration of their work to the workers. In this sense, 3M has developed three lines of ergonomic products to adapt to different types of users: the total prevention line for those who work more than four hours a day in front of a computer, the portable line for those who demand a certain amount of mobility and the comfort line for those who even use the computer occasionally do not want to give up greater comfort. Another example is MIfisionline, a company created to think about the welfare of workers. It offers each user personalized exercises adapted to their profile, which are distributed throughout the working day. The personalization is based on the data collected from each user: age, sex, weight, circulatory problems, working hours, etc. With this information, the exercise plan is organized into three phases: warm-up, relaxation, and stretching. Until April 30th it has free access.

 

 

5. Government on line

As the ultimate aim of a government is to ensure the general welfare of all its people, it is difficult to imagine this task without real contact between its protagonists. For this reason, politicians and members of the administration have been forced to resort to technology, using it as a temporary palliative in the face of the crisis caused by the pandemic. But on some issues, this digital transformation is merely transitory in nature.

The justice system, for example, has ceased to operate in its main departments. However, in some countries, such as the United States and the United Kingdom, hearings are being held remotely through video conferences and hearings to deal with cases considered urgent, a situation that will be dissolved once the crisis is over. On the other hand, virtual meetings, such as the one held on 26 March by the G20, undermine the opportunity for interaction between stakeholders and thus their productivity, so it can only be a sustainable transformation if tools are developed to compensate for these shortcomings.

A special section in this regard deserves the digital control of confinement, applied by some states to monitor that citizens comply with the provisions established to prevent the spread of the disease. This controversial measure is highly questioned, and its temporary condition is the only mitigating factor since it may violate data protection and the right to privacy of individuals. Despite all this, the incorporation of a digital co-governance, driven by the Internet, which actively involves the partners, making them active parties in improving the efficiency and quality of municipal services, is a model for which we will have to wait a little longer to define whether it is a real transformation or a simple digital adaptation.

 

 

6. Culture and tourism

The tourism industry was one of the first to digitize its marketing and sales processes. In fact, hotels have been marketing their proposals through the Internet for more than twenty years. In the cultural sector, however, this is still a pending issue. Nowadays it is inconceivable not to be able to buy tickets to a museum from its website, or not to be able to visit an emblematic building by booking tickets in advance, but in many cases, it still happens. These institutions must quickly analyze whether they are not losing marketing opportunities by offering only box office sales.

If something has caused the COVID-19 is the need to maintain a relationship with potential customers through the Internet, both before and after making the purchase. In this sense, both tourism and culture have taken advantage of the COVID-19 to maintain contact with users through the networks. Many institutions have understood that their value proposition at this time should be to entertain people in confinement, especially children, and a large part have offered online services aimed at fun and entertainment.

Also, the experience of the visit itself as a proposal of the tourist and cultural companies has been transformed. Most destinations, museums, and unique buildings offer virtual tours that are not intended to substitute the face-to-face experience but to generate interest in having the physical experience when possible. The question, in the PostCOVID-19 era, will be whether a user will pay for a virtual visit to a museum. Or, posed from another angle, does a virtual visit really have value for the user? If the virtualization of the visits is understood as a marketing tool, they can be considered an investment, and therefore it is not necessary to seek an immediate monetary return. If, on the other hand, virtualization is a substitute for the physical experience, then it is necessary to look for ways to generate sufficient value for the user so that he accepts to pay for the experience. This is a challenge for both tourist destinations and cultural resources.

 

7. Sport and health

The digital transformation has added value to the traditional way of doing business. In the sports sector, it has impacted the processes of hiring sportsmen and women, the expansion of image, the sponsorship of companies and sportsmen and women, and the introduction of technology in sports equipment (wearable technology). In some sports stadiums, wifi has revolutionized the interaction of internet users. This is the case of the stadium built by the Minnesota Vikings for the 2008 Super Bowl, where the connection allows a spectator to order food, buy jerseys of his favorite team from his seat or know the distance to the bathroom. This transformation also allows us to know the preferences of the fans when offering marketing campaigns and experiences to the users.

Due to the temporary closure of sports facilities and the ban on outdoor sports, sports complexes and personal trainers have started a program of targeted activities online, and even streaming through Instagram or Facebook, provided that amateur and professional sportsmen and women can continue to practice a sport regularly.

With the technology industries leading research in the health sector, the trend is to evolve towards virtual consultations, artificial intelligence in diagnostic and, among others, nanoscale biotechnology, aware that the human body is a vast database. Despite the fact that entrepreneurship in the health sector is one of the highest in the market, this transformation is felt to be threatening by professionals and public administrations.

 

 

8. Crowdsourcing and crowdfunding

Crowdfunding platforms were expected to take a major role in the course of the pandemic. The need to donate and raise money for medical causes was felt from the beginning of the confinement. This has caused platforms such as crowdfunder.com, where there are initiatives with more than a million pounds, to forgo their management percentages for any fund aimed at the battle against COVID-19.

Similarly, current circumstances require, in addition to money, the generation and gathering of ideas. That's why the phenomenon of crowdsourcing around the knowledge fight against the pandemic is also impressive. In different parts of the world, scientists, researchers, and professionals from all disciplines are dedicated to finding solutions to the problems arising from the coronavirus. Hackathons, forums, and collaborative events to find ideas have shot up significantly. NASA has launched a call through its crowdsourcing platform, NASA@WORK, to all its employees to find ideas on how the space agency can contribute to efforts against the pandemic. Currently, they are involved in providing their computer muscle in the service of treatment research, as well as developing AI solutions to help with the scientific search.

Another initiative is Folding@home, a software that offers another way to contribute. In the search for a cure, scientists need to "bend" a protein multiple times until they find the right way for it to react to disease, but solving this problem requires many computational calculations. This is where anyone, using this software installed on their computer, can collaborate by donating unused computer space to the scientific effort. The response so far has been positive; the Bowman Lab at Washington University in St. Louis reports that they have increased the number of participants in the project at least tenfold. The data that anyone helps generate will be quickly and openly disseminated among multiple laboratories around the world, helping researchers in their effort to discover a cure.

Has the increase in the use of crowdsourcing and crowdfunding come to stay? Innova Institute de La Salle-URL believes so. With crowdsourcing, the most widely used means of collaborating with others is online, such platforms allow people to help and be present at what seems important and interesting. Because of this, in the PostCOVID-19 era these channels, once opened and strengthened, will continue to be used and recognized in a positive way for human digital communication and connection for the purpose of unity and collaboration.

 

9. SMEs - Trade

Business development sees digital transformation as a way to improve their results by optimizing their processes and facilitating their management, which is reflected in profits, growth, and advantages over those who do not make these investments.  Systems such as ERP, applications such as CAD, CAM, and FMS, artificial intelligence, cloud computing, blockchain, Big Data and IoT development and platforms such as EDI, open innovation and e-commerce improve the capabilities to respond to market challenges.  

However, SMEs face a number of challenges in achieving this transformation: low digital skills of their employees and owners, lack of awareness of the benefits of digitization for companies, resistance to change, lack of resources to invest, and the degree of sophistication of the business. This creates barriers to business development and, as a result, less than half of all SMEs have started their digital transformation process, especially in developing countries.

In the face of the crisis generated by COVID-19, the companies that had begun their process adapted quickly. This is the case of Hytera Communications (a manufacturer of computers and communication equipment in China), which has invested in its transformation since 2013 and now has more than ten intelligent production lines that allow it to offer its products to the Chinese government even now. Companies in the agricultural sector, such as Comproagro in Colombia, which unifies the offer of traditional farmers and facilitates their contact with users and large surfaces, has claimed to be an efficient food alternative in the health situation. On the other hand, companies in the clothing, food, and commerce sector have managed to respond thanks to the rapid linking in applications such as Rappy, Glovo, and Delivery, but it is an adaptation of the commercial model that does not mean a real transformation, but a survival exercise that will allow companies to have a new commercialization channel, but not a real digital operation.

 

 

The COVID-19 has undoubtedly forced the business sector to react, and it has done so. Most companies and organizations have been able to reduce the impact of the pandemic through the digitalization of their daily activities. With teleworking, remote learning, online government, fintech, digitization of operations, use of technology for sports and health, and crowdsourcing options, the effect of the coronavirus has been reduced in the business economy. Without this adaptation effort, it would not have been possible. ICTs have been, in many cases, the platform of salvation.

But what will benefit from all this? In other words, how much of this "adaptation" will remain to make companies more competitive? Will companies be able to transform themselves to be more competitive? In this line, will current customers and those who appear in the PostCOVID-19 perceive a better and greater value of products and services? Will the organizational and management capacities of companies take advantage of what they learned during the pandemic to be more effective and efficient in the coming years?

And finally, in the next Harvard Business Review report, which group will each company be in? Among the 30% that benefit from ICT investments? Or in the group of 70% that do not reach their goals?

 

This article was written collaboratively by:

Francesc Miralles, Fàtima Canseco, Montserrat Peñarroya, Alessandra Giglio Hirtenkauf, Juan Nihoul, John Sanabria, Carina Rapetti, Liliana López, Sergio Cuervo and Katalina Soto.

 

Share

Add new comment

CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.
8 + 2 =
Solve this simple math problem and enter the result. E.g. for 1+3, enter 4.