Transformation

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Webinar Replay: Common Mistakes in Acquiring a Healthcare Startup

M&A offers healthcare companies an ideal way into disruptive tech. Here’s how to make sure deals go well.

58 min

Watch the webinar replay to hear from a panel of CEOs from leading startup incubators, where they discuss common mistakes large healthcare companies make in acquiring startups.

Webinar panelists include:

  • Jamey Bradley Edwards, Co-Founder & Chief Executive Officer, Cloudbreak Health
  • Lakshmi Shenoy, Chief Executive Officer, Embarc Collective
  • Taylor McPartland, Chief Executive Officer, ScaleHealth

Interested in speaking to someone from our healthcare team? Get in touch today.

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The Acceleration of Digital Transformation in Europe

Our research shows that employee collaboration and a new kind of agility are fueling regional gains.

Every January, the Prophet team sets out our predictions for what the year ahead might bring. This year one of the predictions we made was that 2020 would be the year when failed digital transformation initiatives would face a reckoning.

And then 2020 happened.

Since COVID-19 first emerged in Asia at the start of the year and then took hold in Europe in March, we have lived through a period of dramatic change – the pace of which nobody could have predicted.

This is especially true when it comes to the adoption of digital technologies in our professional and personal lives. In the UK, the e-commerce share of total retail jumped from 20 percent to 30 percent in just two months, and even as lockdown eased, online grocery purchases continued to rise, almost doubling from mid-May to mid-June. In France, in just one week, there were almost half a million online telemedicine consultations, compared to 40 thousand the month before. And, following a surge in-home streaming in March, Netflix agreed to reduce the bitrate for its streams across the EU to lessen the demand on networks.

In the 2020 State of Digital Transformation report, my colleagues at Altimeter, a Prophet company, have surveyed leaders across the globe to understand how their organizations are responding to the shifts and trends that are shaping how they transform. For those of us in Europe, it provides a fascinating snapshot of the way coronavirus has dramatically shaped the role technology plays in transforming businesses.

Agile Becomes More Than a Buzzword

One of the most significant shifts in this year’s study is the key drivers of transformation efforts. In 2019, the top driver for digital transformation was growth opportunities in new markets. But in 2020, in reaction to the global pandemic and the associated economic pressures, leaders have shifted their focus to operations.

It is in this area we see one of the key differences between the leaders of transformation efforts in Europe and their North American peers. In North America, the top transformation driver is increasing productivity and streamlining operations (41%), but in Europe, the need to work with greater agility is more likely to drive transformation efforts (35%).

“It has become vital for organizations to become more digitally mature.”

The need for agile business practices is particularly pressing in Europe, which experienced a faster and deeper lockdown than North America. This lockdown has required leadership to adapt its transformation efforts to address rapidly shifting customer demands.

Europe Leads the Way in Employee Collaboration

COVID-19 has accelerated the need to shift to virtual ways of working, which has been mirrored by a boom in virtual collaboration tools. The 2020 State of Digital Transformation report shows that Europe is leading the way in this area, with 58% of respondents reporting that platforms to enable employee collaboration was either a top strategic objective for digital investment, or that employees frequently connect over digital platforms. This is particularly pronounced in Germany, with 65% of respondents in the top two levels of employee collaboration and engagement.

Seamless Experiences Command a Price Premium

The rapid adoption of digital technologies throughout the pandemic has shone a light on the points at which experiences break, with issues around technology being the most commonly received complaint.

The 2020 State of Digital Transformation report reflects this, with 52% of respondents reporting that they were yet to achieve a seamless sales and service experience.

But the benefit of doing so is also clear, and it’s an area where Europe leads the way, reflecting a relatively higher adoption of digital tools for sales teams.

29% of European respondents reported that they were able to charge a higher price premium as a result of offering a seamless sales and service experience online, compared with only 15% in North America and 9% in China.

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FINAL THOUGHTS

The global pandemic has undoubtedly changed our relationship with technology, and many organizations cite it as a key driver of their own digital transformation.

As we begin to think about the “new normal” shaped by the global pandemic, it has become vital for organizations to become more digitally mature. The 2020 State of Digital Transformation report provides organizations with the opportunity to measure and benchmark their stage of digital maturity.

The report also offers encouragement for European organizations planning for what comes next. EMEA-based organizations are twice as likely as ones in North America to be at the highest stage of digital maturity. Because they have built a strong digital foundation, their focus is now on leveraging data and AI to create great customer experiences.

Helping organizations advance their digital maturity is one of our primary focuses at Prophet, from marketing to brand, experience to culture. As you look to the months and years ahead, we’d love to hear where you are focusing your transformation efforts. Comment below or reach out to us directly.

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The 2020 State of Digital Transformation

Operations support, agility and revenue are priorities, as firms race to smooth out work-from-home challenges.

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Benchmarking Digital Maturity in the COVID-19 Era

The COVID-19 crisis caused a major upheaval in the first half of 2020. Within weeks, organizations made drastic changes that were expected to take years, like shifting employees to remote work and digitizing customer offerings. The digitization of organizations that was previously anticipated to take years happened in a matter of days.

There is now more pressure than ever for digital to perform in ways that can power meaningful business transformations.

This year’s annual State of Digital Transformation report:

  • Examines how organizations pursue digital transformation, analyzing differences based on digital maturity stage, industry, geography, and organization size.
  • Examines the impact of COVID-19 on digital transformation efforts.
  • Offers a comprehensive benchmark of digital maturity across five areas that define customer-focused digital transformation: Leadership and culture, customer experience, marketing and sales, technology and innovation, and data and artificial intelligence.

The report has four major takeaways:

  • Operations support, agility, and revenue are top priorities given COVID-19. The lead use cases are working from home (82%); digital marketing (78% investing to improve); digital selling (76% trying to close compatability gaps); virtual product/ service delivery (52%); and growth initiatives (37%).
  • The more digitally mature the company, the more they are focused on responding to and taking advantage of the COVID-19 crisis. The less digitally mature the company, the more they are working on implementing digital basics.
  • Digitally mature companies are maintaining their strategic focus despite the pandemic; they focus on digitally-driven innovation, incorporating a new wave of technologies with an intensity that is outpacing the market.
  • Leadership from CEOs and CIO/CTOs — supplemented by CDOs, Innovation Officers, and Boards — helps ensure firms chart and follow their digital transformation ambitions.

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Customer-Centricity: Closing the Gap Between Digital and Human

As bots get better, brands are challenging their assumptions about effective machine communication.

The past few months have made it more apparent than ever that shifting to more virtual offerings and seamless interfaces are now the main way for businesses to survive and thrive in our online post-COVID world. These changes – accelerated but not triggered by the pandemic – have fundamentally validated one of Prophet’s core convictions: customer-centricity shouldn’t be determined by what companies think is technically feasible. It has to start with us human beings, putting the real needs of people at the center of every decision. It is clearly digitally driven, but at the core, customer-centricity is always a deeply human endeavor.

For too many companies for too long, the strategy has followed what is technically feasible instead of the other way around. But for the few that have been focused on a people-first approach, having their strategy informed from what humans need first before shifting to what is possible on the back end, the success is apparent.

“It is clearly digitally driven, but at the core, customer-centricity is always a deeply human endeavor.”

Companies like Amazon or Netflix – two highly relevant brands and businesses everyone would agree – are heralded as paragons of the digital age but these brands have become the powerhouses they are because they are human-focused. While there are billions of dollars of tech investments behind each, their unwavering focus on their customer and delivering an experience for them that is fast, simple and incredibly gratifying drives what they do and their bottom line.

Of course, for companies in manufacturing, life sciences or financial services, reinventing themselves as digital entities is more complicated than for say a company with a digitally native business model and their failures often show a similar pattern – namely that their strategies demonstrate a lack of clear thinking from the customer’s standpoint. They’re preoccupied with their products, their sales and their success. But now it’s time to look at everything through the lens of the customer, this is where it should start. Success starts with knowing the buyer. What is then required is a holistic view of the digital landscape with technical feasibilities assessed early on. That is how you bridge the often missed gap between a customer-centric digital strategy and a human-focused one.

Faux humans: The rise of bots

The reason we have opened our doors in such large numbers to tools like Siri and Alexa comes down to convenience, ease of use and the fact you speak to them as you would a human. They are customizable, often adapt to your preferences and deliver an experience you can consistently count on. And companies are eager to take advantage.

One of our favorite examples of the successful use of artificial-intelligence-driven empathy comes from the global insurance company, AXA. To help it successfully grow its business in Asia, AXA had the desire to develop a new digital customer engagement proposition, one that humanized the experience and provided a consistent customer journey and brand experience across the region. Emma was born – AXA’s first humanized user interface, which has become the core of the brand’s new digital customer experience, handling everything from claims to servicing, health content to symptom checks and helping individuals find the solutions and content most relevant to their needs. She’s not just efficient and accurate. She’s a friendly embodiment of a brand committed to assisting people as they strive for financial wellness, whilst successfully bridging the gap between digital engagement and financial advisor partners.

And recognizing the massive gap in helping people deal with the mental-health challenges posed by the pandemic, AXA expanded Emma’s skills to deftly field calls about mental-health questions. That’s a high-risk undertaking, but initial tests show customers don’t just appreciate the effort, they’re using the service extensively.

Challenge definitions: What does it mean to be human?

It’s easy to make assumptions, and companies often mistakenly believe they know everything there is to know about their customers. That’s seldom true, especially in a period of such massive upheaval. It’s critical that companies take this time to go deep as they gather insights, with an entirely rededicated sense of empathy and rigorous analytics. For us, that typically means finding out which drivers are the most essential, right now, for customers and prospects. What makes one brand relevant to them and another forgettable? Are they looking for inspiration or efficiency? Do they feel the brand is available to them when and where they need it? Do they sense it meshes with their own values?

With each new wave of technological development, the digital age shifts shapes and speeds up. And it’s vital that leaders focus on the potential of emerging technology. It’s critical that companies do not let themselves fall behind in efforts to continue to be as connected, nimble and data-driven as can be. They need to continually ask: What tools do we have? How digital is our go-to-market approach? How automated is our production?

But too often, we have seen companies spend tens of millions – and sometimes hundreds of millions – in tech investments before understanding how these initiatives might help customers and eventually drive growth. The critical decisions must always balance both: What do your customers need most right now and what is your company capable of providing?

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FINAL THOUGHTS

Digital investments, like any other use of capital, should only be made when companies are clear on how they will serve the largest purpose. Addressing just the digital possibilities in a siloed view is a surefire way for a business to fall short in today’s reality. It is the combination of instilling a human-focused process with digital capabilities and prowess that sets up a business for customer-centric success.

If you’d like to learn more about how a customer-centric strategy can improve the growth of your business then reach out today. 

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2021 Growth Acceleration Playbook

To achieve uncommon growth, double down on cultural changes to equip your teams for the future.

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For most business leaders, this is a pivotal time. The decisions being made are dictating whether you survive or thrive in these uncertain times and there is enormous pressure on leaders to step up and provide the structure, guidance and clear communication that people are looking for.

This playbook brings together some of the latest thinking from our experts to help with those decisions, from how to double down on your company culture and equip your teams for the future way of working, to understanding the new needs of your customer and making the digital go-to-market shift. It provides some actionable ideas to get your business back on track now as we move out of this crisis and for the growth opportunities beyond.

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Why a Transformation Management Office is the Secret to Accelerating Enterprise Transformation

Without a designated team to manage transformation, true change is close to impossible.

“Thanks for the tasty breakfast.”

– Your culture

The recent COVID-19 crisis has accelerated the need for companies to transform themselves. But the fundamental challenge remains: it’s hard to become something different than what you are today.

The reason transformation is hard – whether digital transformation or some other kind – is that companies inevitably run into significant cultural barriers where old mindsets, behaviors and a lack of skill eventually bring things to a halt. Hence, the famous adage attributed to Peter Drucker: “culture eats strategy for breakfast.”

So how can today’s organizations address the complex and amorphous barriers to the transformation that we call “culture” while keeping their breakfast? The answer is to establish an effective Transformation Management Office (TMO).

The Missing Piece of Your Transformation Puzzle

At Prophet, we believe the core failure of most approaches to transformation is that they are not holistic enough to ensure either speed or success. We developed our Human-Centered Transformation Model to help see the range of efforts and the necessary interconnections across the DNA, Body, Mind and Soul of the organization. For instance, failed transformations frequently overemphasize technological changes (Body) without buy-in from business stakeholders around how new technologies will enable the strategy (DNA). Or they focus on training up new skills (Mind), without considering the mindsets and cultural behaviors (Soul) that match will with skill, ensuring new capabilities are actually applied in the real world.

Even with a holistic approach, aligning new behaviors, new skills, and new processes also require new ways of making decisions. And this is – to put it plainly – extremely hard without a team devoted to addressing that challenge head-on. We believe a team must actively manage and align those efforts, otherwise, there will be no change and no true transformation. And in our experience, this team cannot live within the rules of the existing organizational structure.

Where Does That Piece Fit Best?

We believe there are two models for this kind of structure for transformation management – federated or centralized. Many companies have (by default) adopted a form of federated management, which assumes that individual business units or functions can be accountable for managing their own transformation as a subset of the whole (see Figure 1). The challenge with this assumption and the federated approach is that you end up with lots of disconnected local work. Most frequently, these local efforts set themselves achievable goals with lengthy timelines and result in very little transformation. Occasionally, companies also set up Program Management Offices, to coordinate communications and track progress. But adding a PMO frequently adds centralized bureaucracy that is divorced from business value – you might get more done, but with less business impact (see Figure 2). The challenge is that these companies are working backward: the federated model is a destination, but it’s not at all the place where you need to start.

Figure 1: Centralized vs. Federated Approaches to Transformation Management

Figure 2: PMO vs. TMO

Prophet’s experience managing transformations of all stripes leads us to believe that you must start with a centralized model. And our research over the last two years has validated that those companies who set up a TMO with a clear roadmap and rituals around decision-making can overcome cultural roadblocks as they emerge. In fact, in our estimation, too few respondents in our recent Catalysts in Action research have stood up a TMO yet. However, 100 percent of those who have reported that it has had a positive impact on their transformation. And a whopping 83 percent reported its impact as “very positive.”

The DNA, Body, Mind and Soul of an Ideal TMO

To be successful, a TMO needs to address cultural challenges holistically across the DNA, Body, Mind and Soul of the organization. A critical first step is strong DNA:

  1. A clear vision about how the DNA of the organization is changing. Who do you want or need to become?
  2. A specific timeframe for achieving that ambition. When do we want to achieve our goals?
  3. Real metrics to serve as signposts. How will we know we’re making appropriate progress?

A TMO must also have a strong Body – an operating model for its core processes and functions that covers five key domains:

  1. Goals & Investments – Defining the transformation, setting goals, and overseeing ongoing investments.
  2. Portfolio & Governance – Overseeing work intake, classification, prioritization and resourcing.
  3. Education & Mobilization – Supporting in-flight projects by enabling teams to improve how they deliver on their goals and assisting with roadblocks.
  4. Reporting & Forecasting – Reporting and actively providing visibility and accountability for the value being delivered.
  5. Change Management & Communications – Providing an organization-wide point of view and air traffic control for change impacts across portfolios.

An operating model for the TMO outlines clear processes for each of these five areas, as well as interaction models defining how key stakeholder groups work together. Done well, TMO processes are not an added layer of bureaucracy; they help streamline effort across a wide range of leaders, teams, and individuals, giving them the clarity they need to take unambiguous action each and every day.

As part of standing up a new TMO for a major US insurer, our team worked together with key leaders to develop a “TMO Handbook.” The Handbook codified specifically how and where the new TMO would integrate with existing business planning processes, but also helped leaders across the business understand how and where to plug in and contribute to decisions about the company’s transformation.

The skills and competencies – the Mind – of a great TMO core team include strong EQ and communication skills to provide visual, verbal and written demonstrations of empathy to stakeholders struggling with rapid change; strong process facilitation skills to apply an Appreciative Inquiry-driven approach to collective problem solving; and strong analytical skills to be able to manage and measure progress. In building its TMO, a US financial institution was intentional about selecting resources with strong EQ and communication skills to staff it, given the level of executive interaction the small TMO team would need to support its charter.

Finally, in their Soul the TMO team must adopt a product ownership mindset, viewing the enterprise as a whole, demonstrating the behaviors and rituals common with the best product managers, including creativity, design, an agile methodology, and data-driven decision making. In this context, their product is the organization. As one of the first steps in managing its transformation, a leading quick-serve restaurant-trained key leaders of transformational initiatives in Agile ways of working, defining the responsibilities, decision-making and behaviors for portfolio and project leadership roles.

The TMO Lifecycle

Ultimately, a TMO is not something that should last forever. Like the transformations they empower, TMOs have a natural end date. The TMO team should know they have a role to play for a period of time, but that all the new capabilities they create should ultimately migrate into other parts of the business. Over the course of its lifecycle, a TMO should eventually move from a centralized to a federated model so that business leaders can go back to managing their individual parts of the business with a shared enterprise mindset and a new set of global and local capabilities. And as with many things in transformation, “timing is everything.”

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FINAL THOUGHTS

Thinking about your own organization, consider where it stands in its own transformation journey – are you just getting started? Have you already made good progress? Or perhaps you’re well down the path to a transformed organization? If your organization is one of the 45 percent of companies who have already established a TMO, try to identify where it might be more effective across its DNA, Mind, Body and Soul. If not, consider where a TMO might be able to help accelerate progress with a more centralized approach.

If you’d like to establish an effective Transformation Management Office to propel your company forward at a new speed and instill a new culture of delivery then contact our expert team today. 

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The Four Pathways to Cultural Change and Business Transformation in China

Our research illuminates the change mechanisms with the most impact, both within China and beyond.

As organizations build resilience amid world-altering shifts, transformation is increasingly relevant. Yet change is challenging, and leaders are often unsure where to start–or where to go next.

For transformations to succeed, the importance of an organization’s culture is beyond question. That said, cultural transformation is often the most significant challenge to take on. Prophet’s 2020 global research based on nearly 500 global transformation leaders, “Catalysts in Action: Applying the Cultural Levers of Transformation,” identifies four pathways of cultural change intended to help companies focus.

“For transformations to succeed, the importance of an organization’s culture is beyond question.”

In this article, we discuss some of the main differences we see between companies in China and the rest of the world, with observations that can help spark uncommon growth.

In many ways, businesses in China approach transformation differently. Compared to other regions, they are more willing to embrace change, and this by a high margin. The Alibaba Group epitomizes this attitude, making “Change is the only constant” one of its core values.

Q: Which of the following best characterize the most recent significant transformation project that you have been involved with in the last two years?

More companies in China are embarking on cultural transformation to keep up with changes internally and to maintain a competitive edge externally. Ping An has started an enterprise-wide digital transformation over the last few years by embracing a culture of innovation and by encouraging to fail often and fast. ByteDance has implemented a bottom-up approach to objectives and results that encourages more transparency and an entrepreneurial spirit. Haier has made employee management and culture central to Haier’s strategy, with hundreds of internal micro companies yielding far better and faster innovations and deeper understanding of local consumers needs around the world. So, we want to understand how business leaders can accelerate growth through cultural transformation.

Proven pathways of change indicate where to start–or where to go next–in transformation. Prophet’s research identifies four pathways of cultural change: Defining, Directing, Enabling and Motivating. All paths are relevant at varying points in time. But it is important to determine which is most relevant to your company right now.

1. Defining the transformation: Don’t overlook middle management.

Consider this the “control tower” for all other pathways. It is where the company solidifies its business and brand strategy, purpose and values. The C-suite is seen as most critical to–and most responsible for–driving the transformation. But this cannot be at the expense of empowering managers, who must serve as key change agents.

This is a regional weakness in China, with only 17 percent of business-unit leaders and middle management given adequate responsibility. While companies in China are more willing to communicate the change widely across the entire organization (46 percent of Chinese companies actively engage most employees, versus 19 percent in rest of the world), decision-making is still led by C-level leaders. And managers are less empowered to drive change.

Q: What level of leadership is most responsible for driving transformation in your organization?

One of the few companies in China that realizes the importance of driving transformation from the bottom up is footwear manufacturer Belle International. A key component of its success has been decentralizing data and using digital as a tool to empower retail managers, giving them more freedom to lead their teams. “I’ve always believed that the vitality of the end market comes from the energy of each store manager and staff,” says Liang Li, executive director, in an interview with Harvard Business Review.

How to accelerate transformation: Find ways to involve BU leaders and middle managers more, creating meaningful roles. They are the connective tissue between the overarching transformation objectives, the marketplace and the day-to-day work of employees.

2. Directing the Transformation: Empowered TMOs yield impact.

This pathway requires taking a holistic view of all the governance, processes, roles, systems and tools needed to enable an operating model that makes transformation real. One way companies do this is by creating transformation management offices (TMOs). Those that have done this have a clear advantage. And those that have given these TMOs the most oversight and influence over decisions are the most successful.

This is an area where companies in China are leading in the way, both in setting up these TMOs and in giving them more oversight. With clear results: 76 percent of companies in China that have established empowered TMOs, are reporting very positive impact.

Q: Which of these best describe the impact that your organization’s transformation management office (TMO) has had?

How to accelerate transformation: A first step toward changing this is establishing a TMO. And if one already exists, make sure its scope is more than just project management. TMOs should be allowed to shape strategy, break down functional silos and coordinate vital initiatives on the transformation roadmap.

3. Enabling the Transformation: Build the capabilities and leadership needed.

This pathway is where organizations identify, source and build capabilities required for employees to thrive. And it is essential if organizations want to succeed in the Digital Age. The current talent landscape demands a compelling employee value proposition (EVP), but this is no longer enough. Companies must take a strategic approach, reimagining where and how they will find the talent needed to power their ambitions.

Although 90 percent of companies in China say that they have aligned talent systems in service of the transformation, there are still some gaps. While China does well-developing employees’ technical skills, it lags when it comes to nurturing the leadership expertise required for transformation. Globally, this leadership upskilling is prioritized by 48 percent of companies and just 35 percent of those in China.

Q: What training topics have been of the greatest need to enable your organization’s transformation?

How to accelerate transformation: Continually assess enhanced capabilities and develop ways to both re-skill existing talent across seniority levels, as well as source new hires through a more strategic approach to workforce planning.

4. Motivating the Transformation: The only failure is failure to learn.

To bring organizational change to life, leaders must behave differently. They must embody the transformation, creating trust among employees as they adopt new ways of working. Stories, rituals and symbols help build belief among employees and connect their day-to-day work to the organization’s new direction. Most organizations rightly celebrate success stories, while failures are less likely to be shared and understood. Focus on levers that create safe spaces and mechanisms for employees to talk about what is working and what isn’t.

This is yet another area where companies in China excel. Despite a directive leadership style, China has embraced a “fail fast and learn” approach that promotes experimentation, with 58 percent of Chinese leaders saying their corporate culture tolerates failure, compared to just 32 percent in the rest of the world.

Q: Which of the following best characterizes the way your organization responds to failure during your recent transformation?

And leaders in China are far more likely, at 79 percent, to encourage experimentation in executing alternative initiatives relative to plan compared to the rest of the world, at 44 percent.

“Risk-taking is strongly encouraged, and failure isn’t stigmatized,” says Jessica Tan, deputy CEO of Ping An in an interview with McKinsey. “What I’ve found is that with each new success, you become more confident in your abilities and your instincts to try the next big thing.”

How to accelerate transformation: Bring teams and divisions together by encouraging the “fail fast and learn” mindset to develop a systematic approach to test-and-learn thinking. The more employees can see these efforts, the better they will understand the transformation process.

Many businesses in China have already made a good start on cultural transformation and recognize its importance in driving growth. Companies in China should continue to pursue those initiatives while shoring up their efforts to teach invaluable leadership skills. But they can’t neglect to take a holistic view to make sure they are setting all aspects of the enterprise up for future success. That means making sure they know how to….

  1. Define transformation: Set a powerful ambition and align with leadership, at all levels, on their role in achieving it
  2. Direct transformation: Establish and empower transformation management offices to optimize operating models
  3. Enable transformation: Match talent strategy to transformation goals, and elevate employees through future-state capability planning
  4. Motivate transformation: Develop culture programs and training to reinforce employee behaviors

—

References:

  1. Ngai, Joe. Building a tech-enabled ecosystem: An interview with Ping An’s Jessica Tan. McKinsey Quarterly, December 2018
  2. Yuhao, Liu. 别跟字节跳动讲管理 [Don’t Talk Management with ByteDance]. https://www.huxiu.com/article/344321.html. March 13, 2020
  3. Zhen, Wang. 海尔裂变：2000亿公司创业的样本 [Haier’s Fission: A Case Study of How a 200 Billion Company Creates Startups]. https://www.yicai.com/news/5284427.html. May 14, 2017
  4. 百丽国际：让数字化赋能离客户最近的人 [Belle International: Let Digital Empower Those Who Are Closest to the Customers]. Harvard Business Review, January 25, 2019

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The Way Forward – Key Tips to Reimagine Your Business in Southeast Asia

The future lies in an agile operating model, diversified delivery models and reimagined stores.

his is the second article of our two-part series “Digital Transformation in Times of Turbulence” originally published on Brandberries.

“What’s next? The future of shopping will continue to be conducted largely from the home, while remote learning, gaming, cashless and proximity payments will all ramp up and become the norm.”

Thriving in the post-COVID-19 future will ultimately require changes in how companies think about staying relevant to consumers while managing increased operational complexity, as well as potential delays in the rebound of demand and customer traffic. Combined with sales migration toward online channels and the renewed focus on value, these changes could contribute to margin compression. Moreover, there are certain behaviors that are likely to shift fundamentally, requiring reconsideration of the consumer proposition and companies’ go-to-market strategy and operating model.

What’s the “New Possible”? Four Tips to Reimagine Your Business

New attitudes toward physical distance, health and remote working will create opportunities related to therapeutic properties and mental wellbeing. Companies will work to diversify supply chains while continuing to invest in digital tech and virtual experiences to maintain engagement. Based on our research, there are four tips to prepare for the Next Possible:

  1. Rethink Role of Physical Store
  2. Rethink and Diversify Delivery Model
  3. Double Down on Digital
  4. Embrace an Agile Operating Model

1. Rethink Role of Physical Store

Although digital shopping has accelerated, physical stores retain appeal. Consumers in SEA expressed the desire to return to physical stores, particularly to shop for apparel, mobile phones and domestic appliances. Clobbered by the crushing effects of the pandemic, thousands of retailers from Bangkok to Singapore have rushed to set up online shops on big e-commerce platforms to stay afloat this year. Now shopping malls across the region are going virtual for the first time. The pandemic has pushed retailers to move beyond the traditional view that physical locations are primarily for in-store customer engagement. Promising new models have begun to take hold.

New Replica Virtual Mall

In Singapore, Marina Square Shopping Mall — nestled among luxury hotels and popular tourist attractions — is taking more than 30 of its tenants online with Lazada, the Southeast Asian arm of Alibaba Group. It’s the first shopping center in the city-state to create a mini virtual replica of its physical mall. This follows similar moves by Siam Center, a landmark shopping mall in Bangkok built in the 1970s, which teamed up with Lazada to set up its virtual mall with about 40 tenants. In Indonesia, more than 100 tenants of three malls by developer Pakuwon Group are going live on Lazada. Lazada, which operates in six countries in Southeast Asia, launched its virtual mall called Lazmall in 2018, allowing brands to set up their own online stores.

Bring an In-Store Feel to the Digital Experience

The inability to engage customers in a physical environment has pushed some retailers to bring more of the in-store experience online. First, leading retailers have substituted in-store personalized interactions with offerings such as virtual appointments, where sales associates use videoconferencing platforms to offer personalized attention to customers. Similarly, retailers are using live streaming to engage with customers and increase revenue and loyalty by sharing experiential content. Second, retailers have been developing alternative engagement models to take the risk out of digital-purchasing decisions. In apparel and fashion, for example, one of the main impediments to online purchasing has historically been the inability for customers to see how items would look on them. Jewelry brand Kendra Scott is tackling that problem by launching a new platform, Virtual Try-On, which uses augmented reality (AR), machine-learning and computer-vision techniques. Shopify, which allows its merchants to add 3-D models to their product pages, found that conversion rates increased by 250 percent when consumers viewed 3-D products in AR.

2. Rethink and Diversify Delivery Model

COVID-19 has heightened the importance of safe delivery modes, including curbside pick-up and aggregator delivery. Retailers have scrambled to launch services to meet this demand. Retailers are also reassessing store formats to support third-party delivery services. Some groceries are creating “speed zones” near the front of the store and stocking them with the most popular items to enable delivery companies to accelerate pick, pack and delivery of orders.

New Partnership to Enhance Convenience

Many retailers have explored strategic partnerships to enhance convenience for customers and boost sales. These new ecosystems allow retailers to gain access to new capabilities and extend their brand reach to new customers. There will be higher expectations for offline experiences to create even higher value beyond what can now (mostly) be done online. Customers can order from food halls or PD Pasar Jaya (Wet market) through Whatsapp in Indonesia, and goods will be delivered via Gojek. The Singapore government also helps food and beverage owners go digital through the Food Delivery Booster Package. Aprindo, which groups about 150 local and national retail companies with a total of around 45,000 outlets across Indonesia, launched a novelty “Park & Pickup” feature. It allows customers to order their groceries via WhatsApp or the Hypermart online store and pick up their orders at the parking lot. There’s no need to get out of the car because staff will deliver the goods to the car.

3. Double down on Digital

As consumers use more digital channels, it is important for companies to ensure that their experiences at each touchpoint are consistent, generate delight and further enhance companies’ understanding of consumers. This requires brands and companies to not only be open to shifting their marketing messages but also invest in analytics capabilities and reallocate financial and talent resources as needed.

Dial up the Acquisition and Drive Traffic to Digital Assets

Retailers can partially offset diminished foot traffic in physical stores by boosting investments in online acquisition. With more investment in online marketing, winners are adapting their strategies to account for shifts in consumer behavior.

Extend Digital-Channel Presence and Engagement

Shelter-in-place orders have led companies to test new methods of customer engagement. Many retailers with established mobile apps have cited record downloads, while others sought to make up ground quickly. In addition, while building and nurturing online communities are not new ideas, they have gained significant momentum. Retailers are augmenting direct customer interactions with engagement in apps and other relevant channels. Nike, for example, activated its digital community by offering virtual workouts and saw an 80 percent increase in weekly active users of its app.

Ensure That the Digital Experience Is Truly ‘Zero Friction’

Customer expectations are rising for digital channels in terms of site loading speed, stability and delivery times. To keep pace, retailers should start by designing web pages that are optimized for digital shopping. For example, making the highest-selling (and ideally highest-margin) products easy to find helps to make the customer journey more seamless. The first page of Lazada listings receives nearly two-thirds of all product clicks. With more customers now engaging through mobile devices, retailers must ensure that all digital channels are integrated and offer consistent services (such as payment options) and experiences (such as shopping carts updated in real-time across devices).

4. Embrace an Agile Operating Model

The pace of change in the post-pandemic environment will force retailers to continually reassess their strategies. This approach requires more real-time insights on customers as well as a new agile operating model to harness these insights and put them into action. The next normal is still taking shape, and customer expectations will continue to shift in response. Retailers that focus on customer experience and respond with agility and innovation in their omnichannel experiences will fare better and strengthen their ties to customers.

Real-Time Behavioral Tracking

Before the pandemic, digital leaders were using data to optimize customer experience, gauge satisfaction, identify foot traffic trends and generate purchase recommendations. Winning retailers are moving beyond surveys as a mechanism for customer input and toward near-real-time tracking of consumer trends and behavior With the rise of digital in recent months, companies will have even more dynamic data at their fingertips, and they can use these data to extract immediate insights. For example, many retailers have seen an influx of new customers to physical stores (for essential retail) or digital channels. Winners will generate insights from these new customers and construct targeted retention plans, messages and offers to maintain the customer relationship in this era of brand switching and cost-consciousness. Social media is another channel that offers insights on rapidly changing consumer behaviors.

Agile Innovation and Test & Launch

By adopting agile practices alongside the generation of real-time consumer insights, retailers can more quickly re-calibrate their business model and offerings to meet consumer expectations. Retailers need to raise their metabolic rate—that is, the speed at which they process information and develop new offerings. The speed at which some retailers have been able to stand up new omnichannel models (for example, launching a new delivery business in three weeks) shows what a truly agile operating model can unleash. A rapid approach to tests and trials can enable retailers to launch offerings at scale more quickly and avoid losing share in the face of shifting consumer behavior.

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This is the second article of our two-part series “Digital Transformation in Times of Turbulence”. Read the first part of our series here to learn more about the emerging consumer trends in the new normal in Southeast Asia.

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FINAL THOUGHTS

As the saying goes, “disrupt or be disrupted.”

For those who think and hope things will basically go back to the way they were: Stop. They won’t. All businesses, especially retailers, that do not start embracing digital as part of their business strategy may see themselves left behind as their businesses falter.

Finally, shoppers still appreciate the “touch and feel experience” of physical stores. As such stores need to reimagine end-to-end consumer engagement on digital channels and seamlessly link online and offline experiences to radically accelerate in-store omnichannel integration. Companies that are both digital and offline, rather than one or the other, will be better positioned in the days ahead—especially if they can use both to create a mutually reinforcing customer ecosystem.

Contact us to learn more about what levers you can pull to reimagine your business for uncommon growth in the post-COVID-19 era.

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Four Consumer Trends Defining the New Normal in Southeast Asia

Companies are responding to regional demand for better experiences, more tech and a new look at wellness.

This is the first article of our two-part series “Digital Transformation in Times of Turbulence” originally published on Brandberries.

“With COVID-19, the pace towards digital adoption is now urgently accelerated and will reshape not only the future landscape of business but also transform lives of many consumers in Southeast Asia.”

Without a doubt, COVID-19 has caused unprecedented disruption with profound impacts on economies, businesses and consumers, changing the way we live, work and shop. While no one can predict what the new possible will be, it is clear that economies will not emerge unscathed. Not to mention, the daily routines and lifestyles of consumers, redefined by social distancing and a new contactless economy, will change consumer behaviors—some permanently.

As consumers continue to struggle with the spread of the virus, lockdowns and new daily regimes, they are also affected by rising unemployment and deteriorating earnings. In Southeast Asia, where more households fall into lower-income segments, there is growing anxiety that undermines consumer sentiment. Many are planning to delay or forego bigger-ticket purchases and seek better value. We also saw a shift in brand loyalty.

SEA’s underbanked & unbanked’s challenge:

One major phenomenon that has emerged from the COVID-19 pandemic is the higher demand for e-commerce and digital payments. This however poses a major challenge because of the 400 million adults in Southeast Asia, only 104 million are fully “banked” and enjoy full access to financial services. Another 98 million are “Underbanked”, while 198 million remain “Unbanked” and do not own a bank account. Nearly 70 percent of all businesses in Southeast Asia are driven by small and medium enterprises with millions of mom and pop shops scattered everywhere within cities and rural areas. These segments of the market are most adversely affected by the digital challenges of the contactless economy.

Despite years of rapid urbanization and industrialization with a huge growing young and tech-savvy population, the state of digital transformation in most of Southeast Asia has been rather slow. The pandemic has compelled companies to embrace the idea of telecommuting, pushing brands and retailers to go digital. Yet the massive change brought about by the pandemic also makes consumers re-evaluate their life priorities, giving rise to new values and spending criteria. Many of the behavior shifts, including a focus on family or community, health and digital solutions, are expected to last a long time, even in the aftermath of the crisis –particularly if the crisis itself endures.

For retailers, the starting point matters in a crisis. Organizations that can quickly reimagine their omnichannel approach to create a distinctive customer experience will recover faster from the pandemic. Analysis of the financial crisis of 2008 shows that customer experience leaders rebounded more rapidly, saw a shallower downturn, and ultimately achieved three times the total shareholder returns compared with the market average.

Emerging “New Normal” in Southeast Asia

Although the pandemic’s impact varies across Southeast Asia, we see Four Emerging Trends as consumer behaviors are settling into a new normal:

  1. New Meaning of Value and Loyalty
  2. Flight to Digital and a New O2O
  3. Wealth and Health Redefined
  4. Hometainment and the New Experiential Consumer

1. New Meaning of Value and Loyalty

As consumers hunker down for a prolonged period of financial uncertainty, they intend to continue shifting their spending largely to essentials, such as grocery and household supplies— cutting back on most discretionary categories. While purchase intent is increasing on a large set of categories for more developed markets like Singapore, the region will remain weak in discretionary categories such as apparel, footwear and travel.

New Value Economy

As with the previous financial crisis, SEA consumers are thinking about price and quality, with increased price sensitivity and more careful consideration of non-essential spending as countries re-open. However, based on surveys by McKinsey and Nielsen, shoppers in SEA intend to spend more on skincare and apparel in the future than they did before the outbreak, almost akin to “revenge shopping” due to the prolonged lockdown at home.

Emerging Value Polarization

We also see a trend of more consumers in the region making a distinction between price and value. While many will shift preference toward a low-priced value proposition in order to be prudent, they still expect superiority in quality and performance. Sustainability (reusable and recyclable) will continue to grow as would hygiene demands.

Shift in Loyalty

For certain products and brands, COVID-19 caused supply chain disruptions. And when consumers couldn’t find their preferred product at their preferred retailer, they changed their shopping behavior. Many consumers have tried different brands, shopped at different retailers, or even explored new shopping methods (with many trying online for the first time) during the crisis. Value, availability and quality (or organic products) were the main drivers for consumers trying a different brand. We expect these changes will shape consumers’ habits, even beyond the effects of COVID-19. Many consumers who tried a new behavior plan have already expressed a desire to stick with it post-crisis.

 2. Flight to Digital and a New O2O

The pandemic has spurned a new “contactless economy,” accelerating digital, such as the rise of online click & collect, frictionless retail, direct-to-consumer (DTC) and a new delivery partnership model. Across SEA, many categories are seeing huge growth in their online customer base. Many consumers plan to shop online even when brick-and-mortar stores re-open. Social distancing measures, which will stay in place for the foreseeable future after the market re-opens, will likely mean (in-store) shopper traffic in the new normal will be lower than pre-COVID. More people will choose to shop in the comfort of their own homes.

A New O2O is Born

In SEA where the majority of micro-businesses (mom & pop shops) operate primarily with cash and almost zero online presence, the pandemic proved to be a tough period. To help these micro-businesses, a new initiative by the Singapore government’s Infocomm Media Development Authority (IMDA) is helping stalls in wet markets go online. The initiative is currently being trialed by Tekka Market in Serangoon. Stalls in the market will use Facebook Live to sell their products and interact with their customers. The theme of the project is ‘Why jalan jalan (a colloquial term for going out) for your kailan (Chinese broccoli)?’ Customers can order products from the stalls during the Facebook Live video, confirm their details through Facebook messenger and make payment via PayNow, a local instant funds transfer service. Those who spend over S$20 will also be eligible for free island-wide delivery and produce will be delivered to them within the day. We see live “sales” streaming playing a bigger role in SEA, both engaging with consumers as well as selling products.

Legacy + Digital = Next Gen Partnership Model

Retail restrictions in place during the pandemic have fast-tracked the shift to digital distribution. Local delivery operators in SEA have adapted their services to better meet customer demand. During the Islamic holy month of Ramadan, GrabFood launched a contactless campaign that gives customers the flexibility to schedule contactless delivery in advance. Grab is also growing its partnership with traditional brick-and-mortar retailers and restaurants, with an uplift in delivery businesses such as GrabFood, GrabExpress and GrabFresh powered by HappyFresh/GrabMart. Online delivery services, contactless shopping and cashless transactions will be a major theme for the future retail landscape, with major chain stores already seeing customers opt for those services.

Rise of eWallet and Digital Payment

Digital payments are fast gaining currency in the SEA as consumers ditch cash to avoid physical contact. The COVID-19 pandemic, coupled with the implementation of cashless payments for public services, prompted non-cash transactions to grow rapidly during the first four months of 2020. In the Philippines, Mynt’s GCash and PLDT’s PayMaya expanded to contactless payments in taxis. In Thailand, AIS and Kasikornbank partner to launch VIA that helped micro-businesses vastly during the pandemic. In Vietnam, the number of transactions through mobile payments was up by almost 200 percent and the number of transactions by 22 percent respectively during the lock-down period. Tencent-backed ZaloPay, Warburg Pincus backed-Momo and Grab-backed Moca also saw huge adoption during this period. Grabpay (by Grab) and GoPay (by Gojek) who are already one of the largest adopted e-wallets by underbanked segments, further strengthened their super app businesses into delivery, health and retail during the same period.

3. Wellness & Health Redefined

Across SEA, consumers who are fearful of the virus have become more careful when deciding where to shop. They now look for retailers with visible safety measures, such as enhanced cleaning and physical barriers. In addition, they buy more from companies and brands that have healthy and hygienic packaging and demonstrate care and concern for employees.

Mental and Emotional Wellness Takes Center Stage

The notion of happiness has become a more tangible commercial prospect during the pandemic. Digital and tech-enabled self-care solutions have gained further importance in preventative health, alongside immune-boosting, de-stressing and soothing product credentials. Home as a health hub is re-emphasized; at-home gym; at-home therapy, home hygiene and healthy cooking practices now grow in precedence.

Growth of Telemedicine

Although telemedicine has been growing worldwide, it has always been less popular in SEA. During the pandemic, we saw a demand spike in the region. Patients who suspected they’ve caught COVID-19 could get a preliminary diagnosis and next-step advice. Patients with other medical needs could consult with physicians digitally when physical care facilities were unavailable. Two startups meeting medical needs in Indonesia during the pandemic: Alodokter and Halodoc (both names mimic “Hello, doctor” in a regional accent) link patients at home with physicians for online consultations. These startups have shown robust growth for two reasons. One, Indonesia has many citizens in remote rural areas, far from quality health care. And two, the nation’s government has put the firms on an official list of care sources that even big-city residents should use.

 4. Hometainment and the New Experiential Consumer

Groceries and food, together with indoor exercise equipment and gaming tools, have emerged as the most popular categories for online shopping. And the uptrend in online shopping is set to continue even after countries relax restrictions, with experts predicting that e-commerce will play an even larger role in the “new normal” than ever before.

Home is the New Hangout

COVID-19 forced consumers to adjust to home life being where we work, learn, shop, exercise, socialize, entertain and more. As stores re-open, they should not try to “compete” with the home, but rather complement it to enable desired behaviors at home. This new trend led Gojek, founded in Indonesia as a ride-hailing company, to accelerate the launch of GoPlay, a streaming entertainment because of the pandemic. A key part of the GoPlay play is to offer locally customized content such as the release of Gossip Girl Indonesia, licensed from Gossip Girl Similarly, many gyms started online sessions, with strong sign-up rates, and will likely continue even after the markets reopen.

Reinventing Home Digital Experience

The expanded cohort of experiential customers creates strategic opportunities across products and services, from personalized luxury to wellness routines, gourmet experiences, that further digitize education and entertainment.

Hometainment Is Here to Stay

Even though many countries have lifted stay-at-home restrictions, most consumers still believe they will stay home more. Most consumers across countries still feel they are not ready to be back to “regular” out-of-home activities. With the surge in e-commerce, raising brand awareness and customer acquisition via a variety of platforms, from e-commerce presence to sales via their own shopping sites and subscription models. SEA consumers are unlikely to go back to their old habits of frequently dining out and will instead prefer takeaways and eating at home after the COVID-19 pandemic, according to a study by Nielsen. The study also revealed that consumer has signaled their eating habits may change permanently.

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FINAL THOUGHTS

Once customers get used to doing things digitally, it’s going to be hard to go back.

It is better to accept the reality that the future isn’t what it used to be and start to think about how to make it work. To accelerate the road to recovery, leaders need to instill a spirit both of purpose and of optimism and to make the case that even an uncertain future can, with effort, be a better one.

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This is the first article of our two-part series “Digital Transformation in Times of Turbulence”. Stay tuned for the second and final part of our series to learn more about accelerating digital transformation in Southeast Asia.

Contact us to learn more about what levers you can pull to reimagine your business for uncommon growth in the post-COVID-19 era.

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Rethink Luxury – 7 Actions for Luxury Brands to Accelerate Growth Post-COVID-19

Today’s success stories are using direct-to-consumer thinking, surprising partnerships and new data strategies.

How digital transformation and COVID-19 are forcing the luxury industry to accelerate its transformation efforts and shift toward a new set of values and behaviors.

Building Resilience in Luxury is Both a Marathon and a Sprint

Luxury brands have long been masterful in building strong customer loyalty – many have even built a legacy through loyalty – offering more than just products, the values they embody differentiate them from their competitors and help customers to identify more closely with them while also establishing that elusive emotional bond.

And with COVID-19 putting an abrupt halt on many non-essential sales, the luxury industry should prepare itself by anticipating the societal and economic shifts that may well affect consumer sentiment and behavior. Particularly, if customers start to favor more sustainable and responsible consumption.

Now, more than ever, a luxury icon – like any other brand – needs to adapt, stay curious and constantly be looking for ways to exceed the expectations of its customers. In order to steer that effort, we put together seven actions luxury brands should take now to protect and accelerate their growth:

1. Revisit the Core

How relevant is your core DNA? Does it still evoke the same desire it once did? Have you stayed true to it and ensured your purpose – your reason for being – still resonates and holds strong in the modern age? Think of the stories you are telling, the themes that you associate yourself with. After a longer period of success, a unique heritage often gets cluttered by opportunistic moves and messages. Focus on what makes you strong and let go of the unnecessary noise. And it is not about a new logo, go deeper, find your guiding star, the differentiating quality that guided your previous success.

2. Define and Listen to Your Audience

This should actually be pretty easy because it is by definition a very limited amount of people, right? Unfortunately, the importance of product and service design still sits higher than market insights for luxury brands, lagging behind the approach taken by the FMCG industry with leading brands like P&G and Unilever placing higher importance on qualitative and quantitative customer insights.

Remember, what you offer is exclusive yet attainable and attractive to your target audiences – a group of individuals with unique and specific needs and expectations. Imagine their dreams, think in their context. What is driving those individuals or cohorts? You might apply your very own micro-segmentation, leaving standard sociodemographic or maturity segmentations behind. Take regional specifics into account and make sure that it’s not just a gut feel, but rooted in evidence. When have you last discussed and agreed on two to three core personas to inform your actions? Be sure to install the right antenna for market developments. Do not only try to envision future needs, look left and right to learn from the best. In the end, it is the combination of creative potential and insights that leads to the new edge.

3. Think Direct to Consumer (DTC) First

Luxury brands cater to a select number of clients, so why leave the relationship to intermediaries? Even if those third parties are meticulously curated, you will never be able to collect the entire customer feedback if you are not dealing directly with those individuals. Only that direct response assures you have your finger on the pulse of the market, both to adapt the products but also the service that complements the overall experience. Of course, you want to increase reach, but new business models allow for direct interaction even from afar. Imagine what you can do with the increased intelligence. E-commerce still has a way to go in luxury having been discussed for years and implemented rather hesitantly because of concerns in translating the authentic luxury experience in the digital realm. But concepts and technologies are developing fast and the traditional role of partners and channels are blurring. Accept that going DTC is a joint endeavor and will not be perfect from the start.

The fastest-growing brands like Chrono24, Chronext (watch platforms) or Tesla and Polestar in the electric mobility space are eliminating the middle man. Richemont was pioneering e-commerce with NET-A-PORTER and MR PORTER and they learned their way through, now also partnering with Alibaba’s Luxury Pavilion –  further pushing its Asian exposure. In the midst of the COVID-19 crisis, even Patek Philippe has allowed their authorized dealers to offer their watches online. Watches & Wonders, the Geneva watch fair with a strong Richemont backing, swapped to a virtual-only conference in just a few weeks. Everybody accepted it wasn’t perfect, yet still, it was a blast.

4. Curate the Experience

To provide luxury at scale, you need to tell memorable stories and be able to duplicate experience standards. Selecting and developing the right context and platforms has become as important as curating the living ecosystem. Doing all that without clearly defined experience principles? Impossible. Navigating through the ever-increasing stack of platforms? Necessary! For example, the meticulously curated Las Vegas resort The Cosmopolitan seamlessly integrates stories, guests, platforms and social media to continuously learn and adapt to changing needs and trends. Also, the auction houses like Phillips and Sotheby’s are masters in curation. The sale of the Rolex Paul Newman Daytona was a benchmark example of curation, storytelling, partnership and as a result, was also a game-changer for the whole auction industry.

Pick your core relationship platform – this might very likely be your website – impart your DNA and focus on your audience by constantly refining the platform. Again, make sure you understand every single move of your audience. There are plenty of tools out there to help you understand and optimize. And remember, the most successful luxury brands are not necessarily the most advanced in digital technologies, but they learned to curate an exceptional experience across platforms and channels. They tell the best stories and those stories can live in all formats.

5. Combine Intuition with Hard Data

For centuries, those in the know were able to better serve the needs of the demanding. That has not changed. Nowadays, each and every individual is expecting nothing less than a perfect personalized experience. Data collection has gone way beyond retailers with transaction and credit card data. Loyalty programs and search behaviors are now used to complement the data set and social media is increasingly used to contextualize this data. Despite a reluctance or even allergic reaction, to giving away more intimate data, luxury clients expect you to understand and anticipate what they want, tailoring offers and solutions that will seduce them and lock them into your own proprietary ecosystem. Having the right data strategy in place to combine demographic, transactional and behavioral data has become as necessary as having a content strategy. Leveraging your expertise and intuition with a new set of quality data allows you to anticipate the upcoming moves and outmaneuver the competition.

“Having the right data strategy in place to combine demographic, transactional and behavioral data has become as necessary as having a content strategy.”

The hospitality and travel industry has a longstanding experience with their loyalty programs like Bonvoy by Marriott or Miles & More by Lufthansa. They combine guest insights with agile processes to come up with unique propositions that increase loyalty way beyond awards. Similar to the FMCG brands on customer insights, the luxury industry can learn a lot from the Amazons in the West and the Alibabas in the East when it comes to collecting and using data. Imagine where Rolex, Patek Philippe or Audemars Piguet could go if they leveraged their already rich data set that they collected with their product and client register by enhancing the data quality and using the insights to have a deeper, more direct interaction with their loyal following.

6. Grow with the Right Partners

Partnering along the brand experience has become another high-performance discipline. Originally something that goes back to the Fifties and Sixties, when luxury distributors like Asprey, Cairelli, Tiffany or Beyer were double signing with Rolex, Patek and the likes, new technologies and new consumer generations are supercharging partnerships. Dealers, ambassadors, authorities, celebrities, influencers, brand partners and many more specialized partners are involved to deliver that high-end curated experience. And it’s not just about the next transaction, it’s about creating stories and experiences that you would simply not be able to deliver on your own. It is now widely accepted to collaborate along any step of the experience chain, from comms to product to after-sales and, of course, also in the wider ecosystem of any brand experience. Your customers don’t care whether you do everything by yourself, they just expect the perfect experience from your brand. Lately, fueled by social media, the trend of co-branding has again proved to be a successful way to expand into new segments or reposition your core, like Louis Vuitton with Supreme, Caran d’Ache with Paul Smith or Rimowa with OFF-WHITE. Collaborate with the best.

7. Be bold, stay focused and stick to your plan

Your marketing budget is limited, so be focused. Stick to who you are and whom you are catering for. What is the content that inspires your demanding clientele? Where do they indulge, how do they escape and feel good? Where do you touch them, what are the right messages? Besides extreme value creation, it is also about the right voice and tone at the right time – always like ‘a first date’. Have a clear plan, stick to it, be creative, surprise! And remember, you got rid of a lot of clutter in the first place, do not add any unnecessary noise now. You cannot and you do not want to please everybody. Stay focused.

It was a brave decision by the Swiss watch brand Breitling to reposition and also to step out of the traditional watches & jewelry fairs. Investing more in its own innovative global experience platforms. Launching a new collection via webcasts was obviously also a lucky decision, now that everybody struggles to go virtual at high speed.

The car industry is struggling a bit here. New electric vehicle concepts for example are only very slowly getting traction. BMW, a bold inventor with the presentation of the i3 series concept at IAA in 2011 was not really able to sustain the momentum and stay ahead of the competition, Tesla was.

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FINAL THOUGHTS

Get serious about taking a stand and nurture the new luxury. Conspicuous consumption goes out of favor and we’re witnessing a call for a new, silent, meaningful and humble approach to luxury. We saw that trend growing long before COVID, but the crisis has definitely served as an accelerator. Purpose and experience rather than prestige and status are set to take precedent. Removing consumer guilt, living ethically and leaving a positive mark instead of excessive consumption.

But again, always link your activities to your customers’ needs and expectations. Your targets are shifting too, increasingly from emerging markets, female and younger audiences. What will the increasing dominance of Chinese consumers mean for your value proposition?

Now is the right time to pause, re-adjust, focus and then accelerate with a refined proposition. In the end, it is about creating something that we have not imagined before. Something luxuriously new.

Our experts are happy to share more insights on how the current situation impacts the luxury sector and what businesses need to do next. Reach out today!

This article was co-authored by Roland Ott, an expert in Luxury Brand Management. He was part of the successful growth teams at the Richemont Maisons IWC Schaffhausen and Roger Dubuis and the relaunch of Carl F. Bucherer in Brand, Marketing & Communications Management. He is an Alumni of the University of St. Gallen and the Stanford Graduate School of Business.

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Reimagine Your Business for Uncommon Growth in the Post-COVID-19 Era (Part 2)

Learn about the underlying consumer trends, social and technological enablers leading to new opportunities.

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The COVID-19 pandemic will have a long-lasting impact on businesses and their customers. Some industries have been disrupted, while others thrive despite the crisis. Leading through disruptive times requires businesses to consider new consumer perspectives, rethink their value propositions and further accelerate their digital transformations.

At Prophet, we have identified two imperatives that will help businesses achieve uncommon growth in the post-COVID-19 world: adapting to the new normal consumers and accelerating digital transformation. In this report, we delve into the underlying consumer trends, social and technological enablers, as well as emerging patterns of digital transformation that all work to point out new opportunities.

In this report, you will learn:

  • Key consumer trends that will impact future business growth in the new normal
  • Major enablers that will accelerate digital transformation post COVID-19
  • Emerging patterns across industries that reveal the state of digital transformation in Asia
  • What business leaders can do next to seize the transformation opportunity

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Five Enablers Accelerating Digital Transformation Today

Partnerships, 5G and contactless delivery can speed the pace of change.

The post-COVID-19 era provides a unique opportunity for companies to reimagine their businesses and accelerate digital transformation. In Asia in particular, companies were already prioritizing digital transformation companies – COVID-19 has sparked an acceleration and scaling of digital efforts as consumer behaviors evolve. According to a recent Prophet survey, acceleration of overall digital transformation is the second most impacted area for companies by COVID-19, following business continuity and employee safety.

In this article, we have identified five major enablers of digital transformation that businesses should consider and capture.

1. Accelerating 5G: Fueling Innovations & Greater Connectivity

The new normal has catalyzed the need for smarter and more integrated solutions, all of which demand greater connectivity enabled by 5G. The effects on businesses are far-reaching, changing the way we approach manufacturing, logistics, public security, healthcare, entertainment and more. We have seen many industries tapping into 5G to accelerate automation. For example, mining companies across Asia have deployed intelligent unmanned mining trucks to maintain productivity and safety during COVID-19.

5G also unlocks the potential for a seamless and immersive shopping experience, making the shopper’s journey more efficient and entertaining. Chinese e-commerce player JD (京东) accelerated the implementation of its automated logistics and delivery system during the pandemic. Packages were automatically sorted in their smart warehouses and delivered to shoppers via robots and drones 24 hours a day. Alibaba’s Tmall (天猫) launched a 3D virtual shopping experience at the 618 Shopping Festival. Over 100 brands have participated in the initiative, among which, IKEA has created a 1:1 virtual showroom, bringing its 3,000 sq m Shanghai store to consumers’ mobile phones.

As 5G is being more widely deployed in China and across Asia, companies have an opportunity to reimagine their businesses from both an operational and a customer experience standpoint.

2. Virtual Business: Digitally Enabled Selling and Customer Servicing

Consumers have become comfortable with going online to fulfill needs that are traditionally served in person. Seizing this opportunity, companies have to re-design their end-to-end customer experience to enable digital engagement from discovery and purchase to after-sales service to capture and retain these new ‘digital natives.’

Retail companies have to upskill their sales employees as they adapt and migrate their sales force online. Cosmo Lady (都市丽人), one of China’s largest underwear and lingerie companies, transformed its employees into a WeChat salesforce with the aim of achieving closer proximity to consumers.

Financial institutions are also evolving their traditional way of interacting with customers through digital tools. In May 2020, Citibank HK introduced its industry-first remote video insurance application service, where financial advisors can recommend and sell insurance products through virtual meetings.

Coming out of the COVID-19 crisis, many companies have an opportunity to rethink their selling and customer service processes to be far more digital and in tune with customers’ new expectations.

3. Unexpected Partnerships: Creating New Value for Consumers

Companies across industries have shown tremendous resourcefulness during the pandemic in creating new solutions through partnerships. To create new and integrated customer experiences, they looked beyond ancillary partnerships to combine capabilities, resources and technologies in innovative ways.

Global FMCG giants are exploring partnerships across industries to create new offerings, especially when traditional channels are faltering. In India, P&G partnered with Swiggy, a food delivery app, to deliver essential household products to consumers, in the absence of a delivery supply chain.

Companies are also sharing their consumer ecosystem as a new media platform to amplify their reach to a broader audience. Back in March this year, H&M granted the Red Cross access to its official Instagram account to spread health and safety messages to the brand’s 120 million followers, compared to the health organization’s 300,000 followers.

Companies that are constantly seeking out new ways to create value through various resources and capabilities will be the leaders of tomorrow.

4. Data Exchange Unlocked: Mainstream Acceptance

Big data has been an invaluable tool for companies to identify and respond to consumer needs in creative and agile ways. While privacy concerns have always been a sensitive issue, the pandemic has made consumers become more comfortable with sharing data and having it tracked across platforms, in exchange for safety, health, transparency and efficiency. The many success stories of government-led, data-driven contact-tracing programs implemented in South Korea, Singapore and China, have shifted consumers’ perceptions and opened up their minds to what is acceptable.

But there is a caveat. Consumers now hold even higher expectations for the value they get in return from the data they share. Therefore, companies must find ways to deliver greater value in exchange for more data. For example, gaming hardware company Razer is giving out free surgical face masks to every adult Singaporean. In exchange, consumers are required to download the Razer Pay app and register their personal info for verification.

In the world of finance, global financial institutions are creating new, appealing offers in exchange for customers’ personal data. DBS Bank in Singapore launched a 30-day free COVID-19 relief insurance for its customers. To enjoy the free coverage, customers needed to provide information about their demographics, finance and health. DBS saw 52,000 sign-ups within a day, showing that customers are willing to share data in exchange for the desired value.

Thinking of the post-COVID-19 era, companies need to reconsider how they access and collect data and whether value they provide in exchange makes it worthwhile and acceptable to customers.

5. Contactless Economy: A New Mindset Towards Customer Experience

For years, advances in digital technology have been raising the expectations for convenience. But in a post-COVID-19 world, convenience is no longer simply about speed or being frictionless, it is also about being contactless – eliminating the need for any human contact or interaction.

Prominent service providers in Southeast Asia like Gojek and Grab, have become a critical node for the e-commerce business during COVID-19 as consumers opt for contactless delivery due to health and safety concerns. Hotels and restaurants that were previously shielded away from a direct-to-consumer delivery service are now partnering with Gojek and Grab to sustain their business.

The new normal consumers have embraced the contactless experience and are expecting more value beyond safety and hygiene. To respond to these needs, global retailers are investing in technology to deliver superior experiences. To address the frequent issue of buying the wrong shoe size online, Nike introduced the app Nike Fit for customers to find the right size by scanning their feet, eliminating the need to go to a physical store.

There is a new mandate for businesses to adopt a ‘contactless mindset’ and to rethink their operations and customer experiences, even after the pandemic is over.

“The post-COVID-19 era provides a unique opportunity for companies to reimagine their businesses and accelerate digital transformation.”

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FINAL THOUGHTS

There is no doubt that businesses will have to stay digitally agile in this new normal. By understanding these important enablers that have come to shape digital transformation, business leaders can identify new opportunities and map out their next growth moves.

What to do next to spark uncommon growth in the new normal? Stay tuned for the final part of our series, in which we will discuss the distinct patterns emerging across industries and the unique opportunities for businesses to accelerate their digital transformation agenda.

Download the full PDF report here, or read the first part of the series, where we explored the new consumer perspectives and habits to have emerged in the post-COVID-19 era.

Connect to learn more about what levers you can pull to reimagine your business for uncommon growth in the post-COVID-19 era.

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