Digital transformation in the new normal: respond, recover and thrive

Nicolas Windpassinger, Global Channel Program & Digital Platforms VP at Schneider Electric and Internet of Things expert, on COVID-19 and the acceleration of digital transformation in the next or new normal.

In an interview last year, I mentioned how digital transformation is an evolution and matter of incremental growth rather than a revolution for most of our business partners. Since then, an unexpected crisis has catapulted us into a more digital world than ever before.

Nicolas Windpassinger, Global Channel Program & Digital Platforms VP at Schneider Electric
Nicolas Windpassinger, Global Channel Program & Digital Platforms VP at Schneider Electric

Schneider Electric CEO, Jean-Pascal Tricoire has discussed how, “in a mere few months, COVID-19 has brought a whole new reality”. Virtually every organization has been scrambling to adapt to this – evolving – new reality on multiple levels at the same time and an unseen pace.

Can we still afford to transform our businesses gradually in this context? Or do we need to speed up our efforts and move faster for a far more digital economy in the new normal?

Is the COVID-19 pandemic the most significant digital transformation catalyst we’ve seen in decades? And, if so, what can you do right now to survive, recover, thrive, and be ready for the ‘new normal’?

These are the questions I try to answer in this blog. In the first part, I zoom in on what’s happening around us and what will have a lasting impact. Next, I look at what businesses like yours can do. And, finally, we take a step back to see the bigger picture by way of conclusion.

We understand that things are not set forever and that the status quo is not a blueprint for the future (Jean-Pascal Tricoire, Chairman & CEO, Schneider Electric)

Facing the disruptions ahead – transforming to make the difference collectively

Several of the best practices to create value and gain a competitive edge by transforming in a way that makes the most sense for your business today come from a book I wrote two years ago, entitled ‘Digitize or Die.’

It helps organizations understand why digital transformation is essential for their future and how to transform successfully amidst ample disruptions coming our way.

No one could have predicted that a significant disruption of another kind would affect us all in the way that the COVID-19 pandemic does today. The impact on our individual lives and on the survival of our companies, groups of people who are connected through a common purpose, is enormous.

Yet, realizing that the human toll is high and we all face similar challenges, there are opportunities to start making the difference right now. And to do so, we need to start with the mentioned overview of what happens around us.

A few things to point out first:

  1. Many of your colleagues have already been overhauling their businesses for the increasingly digital and connected reality of our information age, aware of the inflection point that is ahead of us with changing customer demands, evolving consumer attitudes, and impactful technologies such as 5G, next-generation IoT, edge computing, distributed ledger technology, and more around the corner.
  2. You know your business, region, and customers better than anyone else. The impact of the pandemic is not precisely the same for all of us. It is 1) dynamic, in the sense that the actions to take evolve and 2) contextual, in the sense that there are differences across the globe. Yet, some consequences are universal, and now, more than ever, we have an opportunity to learn from each other.
  3. Our built environment will change dramatically. The ways we design resilient and smart buildings, cities, and spaces are already affected today. End customers who are reopening take measures they never had to before, and some new requirements impact our business as you can read in ample blog posts from our experts.

‘Digital’ consequences of COVID-19: what is happening around us?

So, what is happening around us? And what is here to stay and requiring us to adapt, transform and achieve in the new normal?

The lasting impact of the digital peak

As the epicenter of the new Coronavirus outbreak shifted from one part of the world to another, in each country we saw more or less similar actions being taken to try to contain and mitigate the virus and deal with its consequences.

“COVID-19 has been a massive accelerator of digital, reinforced by the core needs of remote everything, resiliency, efficiency, and sustainability” (Jean-Pascal Tricoire)

And each time, measures were taken to let people stay – and if possible, work – at home, we noticed the same uptake of digital tools and platforms. Internet traffic peaked as people started working, collaborating, shopping, learning, and seeking ways to relax at home. Alas, so did cybersecurity challenges with a major increase in data breaches and security incidents, ransomware and phishing attacks, challenges regarding third-party risk management and more as our digital footprint and the attack surface exploded.

The increasing usage of digital technologies – and of cyber risks – in times of crisis isn’t new. Still, the scale at which it happened was unprecedented. The efforts taken by businesses, schools, healthcare professionals, and citizens to make that shift happen were sometimes close to heroic.

For organizations that were already further on a path of transformation, it was more natural to do. Working from home, for instance, is simply easier to organize if you already have a habit of doing it. With the future in mind, it’s clear that in those areas where the risks and challenges are highest, organizations are building the capabilities to be more resilient and learn from the issues they encountered.

In some countries where e-commerce or remote work, to mention two, weren’t heavily adopted before, it seemed as if attitudes entirely changed overnight. To understand what will be the lasting impact, we must realize that some activities will remain highly digital while others will be a mix of digital and physical.

The most important thing, however, is that many people across the globe, for the first time, started using digital services and platforms for so many activities. When people have tried something and see both the benefits and challenges, they keep what they find valuable and improve what could go better, but rarely go back to how it was before they started using it. Unfortunately, we don’t know what the future will bring regarding the disease yet. So, the usage of tools (and the need to be more resilient and adaptable) will remain significant. As I’ll tackle later, adaptability is critical for your business as well, as is cyber resilience.

McKinsey released fascinating data on the number of first-time users of digital services across various activities in the US. They show how many people, for the first time, experienced the many digital possibilities available.

The accelerating adoption of digital channels in the US - source and courtesy McKinsey
The accelerating adoption of digital channels in the US – source and courtesy McKinsey

As the graphic above shows, US consumers accelerated the adoption of digital channels (following a similar trend seen in other regions) in areas such as retail banking, entertainment, (buying) groceries, and more. The proportion of first-time users shows how even in a digitally typically advanced country such as the US, quite large populations shifted their behavior to digital channels, increasing the need for digital business solutions.

From distance working to a hybrid work reality in the new normal

You might have noticed that the graphic doesn’t mention working. McKinsey tackled the shift to remote work separately in the report (see graph below) as it became the most important business-related action as the disease spread. Companies across the globe were among the first to have as many people as possible work at/from home to protect them and ensure business continuity.

It’s not a coincidence that technology companies were somewhat ahead because they typically already have the experience and capabilities acquired through HR transformation initiatives and the required capacities.

We are witnessing what will surely be remembered as a historic deployment of remote work and digital access to services across every domain (CEO, quoted by McKinsey)

As our CEO Jean-Pascal Tricoire said, at Schneider Electric, the whole workforce dispersed and was operational in two days. Moreover, many jobs in the industry and others, such as banking, can be performed from home. Yet, we also shouldn’t forget the millions of people that continued to work outside or in facilities, ensuring essential services, and keeping the critical infrastructure running in several areas.

Despite the challenges and issues that people encountered, once social distancing became the norm and remote work mandatory in many countries (especially for people with children and with some platforms that weren’t up to the task), the impact of remote work is lasting.

This doesn’t mean that people will always work from home, of course. Still, it’s clear that even with our need for human contact and the fact that we will move to a very hybrid working model, many workers don’t want to stop working from home entirely, as ample studies showed.

Remote work isn’t new. Yet, the working environment and how we organize work will be forever changed due to COVID-19. It will impact the physical workspace, smart office buildings (and real estate), and people’s demands to be able to work from home securely and comfortably, giving a boost to smart technologies across all the ‘spaces’ we work from.

As an example of how significant the shift to remote work has been: the adoption of distance working by small businesses in Italy, which previously was lower than in most other EU countries, almost wholly changed overnight due to the pandemic.

Levels of remote working during lockdowns - source and courtesy McKinsey
Levels of remote working during lockdowns – source and courtesy McKinsey

Moreover, ample organizations have already announced they will continue with remote working. A Gartner HR survey showed that over 40 percent of employees are likely to work at least some of the time remotely, after the pandemic, up from 30 percent prior.

The data below from McKinsey shows in which industries the levels of remote working during lockdowns skyrocketed most, emphasizing that levels will remain higher for some time. In my view, they will remain higher in several areas for a longer time in several functions.

After all, let’s not forget the evolutions that already started with the advent of a new generation of workers impacting the face of work, one of the reasons we’re at an inflection point, as I mentioned before.

Digital technologies will play a massive role in the workplace and, with the desire of organizations to increase resiliency in the new reality, this will be even more the case.

While 30% of employees surveyed worked remotely at least part of the time before the pandemic, Gartner analysis reveals that post-pandemic, 41% of employees are likely to work remotely at least some of the time.

E-learning: from a ‘forced’ shift to online education and training to a fast way to acquire skills to thrive

In the same way as the measures to contain and mitigate the spread of the disease drove working adults to digital platforms and tools, enabling businesses and employees to continue activities where possible, digital and online proved essential for another group of people: children and teachers.

In an attempt to keep education going as much as possible, e-learning initiatives were organized by schools and universities across the globe, with incredible efforts by educators and help from organizations and volunteers.

The crisis will have a lasting impact on educational institutions, teachers, children, and young adults who don’t work yet. Several universities already announced they would continue to offer more remote classes in the future, and governments invest in providing a better mix of digital and in-class education. Online education for children and young students is a complicated matter for many reasons that go beyond the scope of this blog, though, and is not our focus.

We realize in a massive proof of concept, that the powerful transformation catalyzed by digital is in everything we do (Jean-Pascal Tricoire, Chairman & CEO, Schneider Electric)

E-learning in the context of businesses, industries, partner ecosystems, and the economy picked up fast among adults as well. With a high need for additional skills in this day and age, many people already followed online learning programs. And there was a move to digitalize training programs for professionals. Yet, new groups of people have discovered and come to value them.

Obviously, during the pandemic, there was no other choice, children had to stay at home because of school closures and workers because of decisions by employers and governments. So, we didn’t just work in remote ways; we also studied more online. Moreover, with events such as conferences being organized online instead of physically, an increase in webinars, initiatives from ample institutions and organizations to open up existing training programs, there was certainly not a lack of material.

More importantly, the shift to e-learning enabled us to create the training and educational resources businesses needed to guide their operations and develop revenues. It’s precisely what we did by putting out digital lessons and information for our partners regarding the services and platforms customers needed most in these tough times.

Examples include remote maintenance and management systems, for instance, to help retailers recover and optimize – including new smart retail solutions – as they are challenged to realize significant operating cost savings, and approaches to reduce energy consumption and costs in unoccupied buildings, from hotels to offices and retail facilities. Our EcoXpert™ Partner Program team has remotely trained more than 10,000 people during the pandemic.

The shift to a new normal of digital sales and marketing models in B2B

Whereas we already engage with our partners via digital means, in several industries which we serve together, digital sales and marketing weren’t as adopted as they are in B2C markets. The reason: end customers preferred physical meetings and the in-person selling model.

Similar to what we’ve seen in the B2C environment, the importance of digital channels for B2B companies has grown significantly in the past few years and has radically increased since the COVID-19 crisis began (McKinsey)

While the shift to digital marketing, virtual sales and inside sales was already happening in more and more sectors as gradually digital-savvy generations stepped in, the classic in-person sales model was still very much alive in, for instance, the construction industry.

Now we see an increasing acceptance by end customers to make appointments online and go for digital channels to engage instead. While there was no alternative to remote selling and buying during the pandemic, it clearly has accelerated the adoption of digital and remote by sales leaders. precisely because buyers accept and want it.

According to research from McKinsey, sales model changes in B2B are poised to stay, with 32 percent very likely to sustain the shifts caused by COVID-19 for more than twelve months after the pandemic and 48 percent are somewhat likely to do so.

Changes in the sales model include remote selling, digital rather than traditional sales interactions, and buyer preferences that will impact the need for a more established online presence and the usage of marketing and sales techniques as they are, among others, known in B2C environments. It’s one of the things to do for your organization, as I’ll cover below.

The McKinsey research contains graphics and data on topics such as the increased importance of digital interactions, the role of self-service channels as buyers want to inform themselves, and the move to remote selling.

In the context of the latter, it’s interesting to see how, with some differences per country, field sales transitioned to working via videoconferencing/phone and how the face-to-face sales force is working in tandem with web sales.

Sales leaders should use the crisis to develop, and hone, digital sales playbooks, which will guide teams in engaging with customers virtually (Boston Consulting Group)

In its ‘Four Rs of the B2B Sales Response’, BCG (Boston Consulting Group) points to ways to realize immediate value and to have a sustained, longer-term impact in four stages. The shift to digital/remote is mentioned as a must in the initial ‘Response’ stage (shortest term). Personalizing account engagement with joint marketing and sales tactics is one of the advised actions in the longest-term ‘Rebound’ step, along with digital and inside sales. In other words: a further decline of in-person sales.

It is clear that, once these changes in buyer behavior and the organization of sales and marketing with evolving tactics are in place, businesses won’t go back to the way it was but continue to refine their strategies/investments and learn how to do even better. On the other hand, it’s equally clear that in several industries, face-to-face interactions will remain essential in the buying process.

Four Rs of the B2B Sales Response - source and courtesy Boston Consulting Group
Four Rs of the B2B Sales Response – source and courtesy Boston Consulting Group

The opportunities ahead: the importance of adaptability

Obviously, these aren’t the only areas where COVID-19 has impacted our businesses. It’s important to continue tracking what has changed and is changing around us whereby the vertical markets you serve today and those you might want to reach tomorrow are essential.

Listing the priorities of these vertical markets which are affected in different ways is equally important since you can invest in less affected industries but also help customers and markets who perhaps need to focus more than others on, for instance, saving costs.

The pandemic impacts close to every aspect of business and entire industries, from healthcare to the very ways we live. However, different elements keep coming back: an increasing adoption/usage of technologies, a need to be more resilient and agile in terms of adaptability, remote capabilities, the list is long.

Some of today’s analog players might be tomorrow’s unicorns if they succeed with their digital transformation (Digitize or Die)

Moreover, the COVID-19 pandemic showed how much we need a stable and secure digital infrastructure, integrated systems, data, and a more connected environment to deal with the unexpected and help end-customers overcome the challenges they face. For businesses like yours, this means that there are opportunities to create value and revenues by offering smart services that generate recurring business.

This brings us to the question of what you can do. Being hyper-aware of what is happening in our markets, regions, and the business of the customers of our customers is an essential capability for digital transformation. We can do this together. However, knowledge alone isn’t enough.

We also need to adapt. And to do so, we need to move towards digital and the wants of our connected services customers and organize ourselves around our – increasingly digital customers – who long for integrated solutions, while gradually expanding our horizon.

I’ve mentioned the inflection point ahead of us before. To give you a better idea of what it means, you might want to read the story of one of our Master BMS EcoXperts who reorganized around the customer with that inflection point in mind. Like many of you, he started breaking down the silos and climbed higher up the value and profit chain of his clients, by offering them more than what he previously could and more than what they were asking for. The real change? Building a culture and organization that revolves around the business of the end customer.

This will become increasingly important for all of us: the willingness and capability to adapt to a more digital and connected environment in reaching and engaging customers via digital means with concerns and needs of end customers in mind, while looking at ways to transform. In my conclusion, I will dive a bit deeper into adaptability, transformation, and how to get there. But first, let me share some concrete actions you can and, in some cases, will have to take in this new reality, based upon what we see and research.

What you can do now: weather the storm and create value for your business and customers

So, what can you do? Again: you know your business best. However, we know the challenges and solutions to address them. Additionally, by continuing to work with partners and end customers during the pandemic and finding solutions for new problems together, the power of community and our ecosystem led to collaborative innovations.

Across all areas which our certifications and specializations for channel partners at Schneider Electric cover, both our teams and partners shared their expertise and insights, through our Schneider Electric Exchange community, virtual trainings, developing the tools clients (will) need, and even via blogs.

Finally, now, more than ever, the needs of end clients to be more efficient, save energy, future-proof themselves, and meet the demands of ‘digital’ workers and prosumers is paramount.

COVID-19 has changed customers’ values and behaviors, their experiences and their expectations of brands. How companies respond will determine their success in recovery (EY)

Customers say it, analysts prove it, and the call to couple measures to help organizations weather the crisis with digital transformation and investing in a better, greener and more people-centric future, is loud in many countries. Time to take action.

Make your sales team digital-ready and leverage digital marketing and sales tools

No one can predict at this time how precisely the world and our businesses will look in a few years from now. Yet, we do know that end customers have becoming more accepting of digital means to engage, virtual selling, video conferencing, etc.

We also know that regardless of the scenario, the crisis will have a long-term economic impact, increasing the likeliness that digital sales interactions will stay, even if it’s just to save costs.

Physical interactions might also be impossible at times, requiring you to have a back-up option. The crisis has forced everyone to leverage sales and marketing technologies. The lessons learned enable you to lay the foundation of a more digital sales strategy. You can leverage the tools that have proven to work, enhance the digital skills of your sales team, and use the channels your customers will use with content that focuses on solutions that help them.

Since various tools and channels used by sales and marketing overlap, you also have an opportunity to improve collaboration between both with end-customer needs and preferences as a critical focus. Digital and virtual sales are not just about conferencing, email, social media, and social selling, but most of all, about a culture that complements in-person selling with a strategic plan of action, clear priorities, and a different sales enablement approach. It also requires sales management to develop the capabilities to manage a sales team digitally/remotely.

Build remote and virtual sales/service models to keep customers engaged, and design and implement ways of working that support this approach (EY)

Ample research shows how COVID-19 impacted end-user behavior and customer behavior overall. It led EY to write a piece questioning if organizations are agile enough to move with the changing customer. One of the tips: Build remote and virtual sales/service models to keep customers engaged, and design and implement ways of working that support this approach.

Building a digital brand for the new normal of your customers

Depending on your activities and industry (and to what degree your clients want in-person interactions), you might find it harder or easier to make this switch to digital sales and marketing as, at the very least, a complement to in-person experiences. Yet, it doesn’t need to be.

Digital transformation happens in a staged way, also in sales and marketing. Since people are more online now, and your clients have switched to virtual interactions and digitally available resources, you will have to build a digital brand.

Making your brand – and thus website and other ‘owned media’ such as your blog or social media presence – found via digital channels is the first step in that exercise. Take a look at your website and ask yourself the right question, depending on the different needs of people you (want to) do business with. Do they offer what potential clients want to know, do they enable existing clients to engage and find support, do they support the digital sales efforts of your teams with the right information, do they list the solutions you offer, the list goes on.

Having a website with the information people seek isn’t enough. Although inbound marketing is essential (marketing approaches such as search engine optimization, your website, blogging,…), you need to promote your digital brand and proactively reach out.

To do so, it’s essential to know the preferred channels and content of your different target audiences. Since people nowadays use several devices and channels, you will typically end up with an omnichannel approach that includes channels such as email, perhaps mobile, social, and so forth. Digital channels are ideal for consistently building your brand but are especially useful to measure the impact of what you do and better understand your customers and prospects.

Your sales team can work together with the Web team and/or marketing. Make sure that you don’t just help them using all the tools that make sense but also that they have the necessary battle cards, content, and best practices to engage clients in a way that creates value and using the right propositions which now more than ever are about solutions. Map the key goals and needs of your customers and prospects (e.g., realizing cost savings, energy-efficiency, healthier spaces) and focus your efforts on how to communicate the solutions to address them. Of course, we did this exercise for many markets, so make sure that you also look at what we offer and how we can help you show and sell it online.

Help your customers save costs and future-proof themselves with efficient solutions

As you could see in the Boston Consulting Group graphic on the B2B sales response (check which steps you can take), there are different stages to take action. The same goes for your business and that of your clients. Typically analysts identify three phases: respond, recover, and grow your business for the future.

In a report from Deloitte and Salesforce, entitled ‘The world remade by COVID-19, scenarios for resilient leaders‘, this staged approach is used for different possible future scenarios. As you can see below, Deloitte’s Resilient Leadership frameworks defines three time frames of the crisis:

  1. Respond is mainly about managing continuity.
  2. Recover concerns learning and emerging stronger.
  3. Thrive is about taking the measures to grow sustainable industry and business for various potential scenarios.
Deloittes Resilient Leadership framework defines three time frames of the crisis - source and courtesy
Deloitte’s Resilient Leadership framework defines three time frames of the crisis – source and courtesy

This framework can be used as a starting point for your strategy. While it’s essential to innovate, create new revenue streams, and detect solutions that help your customers today, we see that many customers, depending on the industry, are mainly looking at cost reductions for the moment. By way of an example: there is an estimate that retailers will have to save around 30 percent on operational costs in some parts of the globe.

While a focus on cost savings will be vital, try to design offerings that don’t just help your clients be more efficient (and recover or even respond) today but also enable them to thrive tomorrow. Make sure that you stay tuned about the use cases companies like us have identified in industries such as retail to allow you to do precisely that. It’s clear that the Internet of Things and scalable systems, as we offer them with open standards is instrumental here.

Systems that allow to reduce costs and solve urgent needs can serve as the starting point for future use cases.

They can also help create revenue streams in later stages, help in making your business and that of your clients resilient, and prepare customers for the transformation of the built environment, which is all about integration, connectivity, and data.
Following this approach finally enables you to create a lasting relationship with your customers and recurrent revenues.

Digital transformation has been happening for more than twenty years, and the Internet of Things is one of many milestones of digitization in our society and economy, but it is unique in that it will release an amount of data and information, previously inaccessible (Digitize or Die)

Finally, do note that efficiency isn’t the same as cost savings. Customers also seek energy efficiency (saving costs and meeting requirements that could be tied to financial and other measures to help businesses survive and thrive). Efficiency also concerns productivity (and safety) of workers in facilities and other areas where again, new challenges and opportunities arise.

Connect, think services and software – intelligence, automation and people in the new normal

With the Internet of Things and connected and integrated systems, we’re at the essence of the ways you can move higher up in the value and profit chain of your customers since everything is converging, and we move to a platform economy where software and services are vital.

As a consequence of the COVID-19 pandemic, there is an increasing demand for automation, dashboards, and intelligence, enabling customers to act fast and ideally prevent instead of reacting, create safer and more engaging spaces, and put people first in all senses.

Moreover, people want to be able to control and monitor everything remotely, whereby cloud applications, IoT technologies, smart sensors, and smart devices are inevitable. It will become increasingly important to learn new skills and get to understand how the connectedness of everything and the possibility to turn data into outcomes and purpose can be realized by leveraging and even developing new applications to connect various applications.

When you develop such tools, you can also monetize them, for instance, offering them to EcoXperts in our Exchange marketplace. Yet, even more important than the hardware, software, and connectivity are the services that you can build upon it all. They enable you to increase margins, help customers work/operate more remotely and efficiently, and create more resilient businesses and profitable business models.

As I write in my book, ‘Digitize or Die,’ the business model in IoT is moving from one-off sales to recurrent revenue. The difference between just selling hardware or using the data and connecting the customer’s assets is the difference between making a single sale and receiving a recurrent, predictable flow of money. Wouldn’t your business be better off making a regular income from services than just making a one-shot sale?

It is vital to connect devices to the cloud to ensure you have a recurrent flow of raw data that will then enable you to serve customers with asset management, predictive maintenance, advanced analytics, etc.

Adaptability with purpose in the new normal: COVID as the major digital transformation catalyst

So, is COVID-19 the major digital transformation catalyst? In many areas, it certainly is. Developing digital capabilities to serve your clients and monetizing digital products and services is the way forward.

The greatest danger in times of turbulence is not the turbulence itself, but to act with yesterday’s logic (Peter F. Drucker, via Deloitte)

It requires you to protect your core business and that of your clients while gradually transforming from the edge as I call it in my book and building the skills to focus on those markets you want to serve as digitalization accelerates. It will happen in the home, all buildings, heavy industries, and our environment. And it will undoubtedly require a mindset of adaptability, which isn’t just essential for digital transformation but also for resilience.

In my book, I write that digital transformation has been happening for more than twenty years, and the Internet of Things is one of many milestones of digitization in our society and economy, but it is unique in that it will release an amount of data and information, previously inaccessible. (…) In the coming years, some businesses will be able to adjust, change, and thrive in this new era. Others will battle to survive but will come out better from it in the end.

The realization that the world is less predictable than we might have believed only adds to the need to transform and look at the scenarios for which we might need to prepare.

Change and adaptability are the keywords here. Yet, always with a purpose to do better and be more resilient. And here I refer to the blog by Jean-Pascal Tricoire again:

“We understand that things are not set forever and that the status quo is not a blueprint for the future. We must redefine our priorities and where we focus our thinking and investments….for a world that cares more for the essentials than the accessory, and that includes everybody with more resilience”.

Disclosure: i-SCOOP has a commercial collaboration with Schneider Electric. This guest blog contains links to the partner program and blogs of Schneider Electric. EcoStruxure is a registered trademark of Schneider Electric. All images are property and courtesy of their respective mentioned owners.