Digital Reality podcast episode #10 examines how savvy companies leveraged technology to redesign their processes to continue to serve clients, streamline operations, and even thrive during the crisis. We examine lessons from three diverse B2C sectors – restaurants, apparel stores, and liquor stores – that ensured some semblance of “normal” during these uncertain times.
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Jimit Arora (JA): Welcome to the tenth episode of Digital Reality, Everest Group’s monthly podcast that moves beyond theory and beyond technology to discuss the realities of doing business in a digital-first world. I’m Jimit Arora and…
Cecilia Edwards (CE): I’m Cecilia Edwards. Each month we bring you a discussion that digs into the details of what it means, fundamentally, to execute a digital transformation that creates real business results.
This month, we are talking about how technology impacts an organization’s ability not only to continue to operate, but to streamline operations and thrive during times of crisis. As the pandemic wreaked havoc on the economy, many businesses shuttered or lost a tremendous amount of value amidst the shelter-at-home orders. However, today we want to look at two examples of companies that leveraged technology to meet the shifting demands of the “new normal” we find ourselves in.
Jimit, do you want to kick us off?
JA: Let’s start with B2C examples because most of us can relate to whether or not we can still eat from our favorite restaurants or purchase the goods we desire. I’ll briefly touch on restaurants. The shift restaurants have made during this time period was clearly a technology plan supported by some operational shifts. In a previous podcast, we talked about how Domino’s transformed itself over a 10-year period into an e-commerce company that sells pizza. Every restaurant that wanted to survive the pandemic has had to do the same. They have had to beef up their online capabilities to make it easier for customers to order. And they had to create changes in their operating processes to support curbside pick-up without the convenience of the drive-through windows that are used by fast food stores. While they are still cooking food, their survival depends on a technology play.
Now let’s talk a bit about brick and mortar apparel stores. This pandemic caused nearly all of them, as non-essential businesses, to shut down. Their only option to not be completely decimated by the crisis was to turn to e-commerce. However, it became clear quickly that merely having an e-commerce website, which by now, most retailers have, was not sufficient. Order fulfillment and inventory management became an issue. Most businesses handle their e-commerce sales from centralized warehouses. With no new shipments and lots of inventory at retail locations, Lululemon’s technology choices allowed them to thrive.
Having invested in RFID technology to track every piece of clothing in every store or warehouse worldwide, it was able to effectively use its retail locations, and staff, as fulfillment centers to support their online business.
This strategy worked for Lululemon; its stock is up 37% so far this year. The company has pulled back on its plans to build experiential bricks and mortar stores and will invested in digital, omnichannel, and e-commerce tools. While not able to completely offset the loss of in-store sales, the company is planning for double-digit growth in online revenue over the next three years.
Question to you Cecilia: What do you see as some of the lessons companies can take away from both the restaurant and Lululemon stories as companies contemplate their technology strategies?
CE: B2C success in a social distanced world requires more than an e-commerce site – there are implications for the entire operation’s ability to support the digital strategy. There needs to be a plan for how people will be deployed differently to support the e-commerce strategy. These new practices are likely, in some form or another, to become part of our future business norms.
Let’s shift our focus now to a B2B example and talk about how Johnson & Johnson has been doing. As one of the world’s largest healthcare companies, supplying consumers and businesses with medical devices, pharmaceuticals, and consumer packaged goods, J&J was obviously deemed an essential business during the shutdown. But that doesn’t mean its business wasn’t impacted.
In addition to the same work-from-home challenges most businesses had to adjust to, J&J has been supporting front-line workers with medical devices and products, continuing to supply consumer hygiene and health products, and is one of the companies working on a coronavirus vaccine. It’s a bit of an understatement to say J&J has a complex business, with over 200 business units in different parts of the essential business spectrum.
Its IT capabilities have played a critical role in keeping J&J going. Data and analytics has been a big focus. The company has needed to ensure that the data required to scale up its supply chain was available to both internal and external partners and that real-time insights were uncovered to provide patients with the right care at the right time. For example, J&J consistently overcame operational challenges by using data analytics to assess alternative logistics and supply chain routes.
J&J has updated its mission statement to reflect the importance of IT. It now reads, “We shape the future of healthcare by unlocking the power of people, technology, and insights.” This mission has translated into investments in digital robotic surgeries, cloud computing, AI, and blockchain. J&J has obviously also had to take security into consideration. Its digital infrastructure allows its cybersecurity to scan the entire system every 15 minutes. And lastly, the company has a clear focus on business outcomes – it can routinely provide performance against key business metrics to the entire firm, not just IT.
While it’s unclear whether it is causal, J&J has announced that human trials of its coronavirus vaccine will begin in July versus its previously planned September timeline.
Question to you Jimit: As other companies are unsure about investing in technology during times of crisis, like now, what are some of the people considerations they should take into account?
JA: Three things:
- Aligning everyone against a clear set of business objectives and investing against those
- Ensuring transparency and collaboration across business silos and external business partners
- Fully leveraging data – having the right data, updating it, making it broadly available
Digital Reality Checkpoints
CE: While technology is not the silver bullet to address all of the challenges companies currently face – and will continue to face – as we navigate through and eventually come out of this COVID-19 crisis, it has been shown to be a key enabler in the success of both B2C and B2B businesses. As usual, there are some lessons, or Digital Reality Checkpoints, that can be broadly applied:
- Invest beyond the technology basics, but at a level to support your business objectives
- Plan for how people will be deployed differently after the technology investments are in place
- Ensure you have the data and analytics capabilities required to power your digital investments and make sound business decisions
Please check us out at www.everestgrp.com, or follow us on LinkedIn at jimitarora and ceciliaedwards. If you’d like to share your company’s story or have a digital topic you would like us to explore, reach out to us at [email protected].
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