Another Consequence of Covid: a World Without Cash
- Years-long digital transformation efforts accelerated to weeks and the low-touch economy emerged as a potential new normal as a result of Covid-19.
- But for business leaders the future remains unpredictable, traditional financial metrics less reliable, and the need to experiment and make big bets on innovation more important than ever.
Until recently, technology, behavior, and society changed relatively slowly. Though immediate circumstances shifted constantly, the underlying evolutions that have transformed human life at scale largely unfolded at a steady pace. In the age of Covid-19, however, that evolution is accelerating, and companies seeking to grow through this time need to accelerate their pace of innovation to stay ahead.
From a dramatic increase in remote work to new consumer behaviors, market volatility, and small business closures, the pandemic has upended the business community and made it hard to predict what the world may look like in the next 6-12 months. Even as vaccinations begin around the world, the rapid pace of disruption seems likely to continue well into 2021. In this environment, businesses must make innovation a key and immediate priority. With years-long transformation efforts accelerating to weeks and the low-touch economy emerging as a potential new normal, business leaders across all industries and regions must lay the groundwork now for an unpredictable future.
The question is, how? Amid such rapid and powerful shifts, how can leaders identify and act on the trends that will last in a world that may look quite different from today's? Here are a few ways that business leaders can prepare their organizations to operate on the edge of change.
Seek new metrics and signals
As the pandemic stretches on, it is harder to trust the traditional metrics of business success. With investors fleeing to safety and consumers at least temporarily adopting Covid-safe behaviors such as online shopping and digital banking at scale, generally reliable indicators including sales revenue and user adoption may mask a company's longer-term vulnerabilities.
With so many rapidly shifting externalities at play, business leaders should not take current returns as indications of future success — on the contrary, they should anticipate renewed competition post-pandemic and invest in innovation now to prepare. Companies experiencing Covid-related growth in particular should capitalize on their strong market positions to start exploring new "jet streams" for future growth, and should look beyond 2020 earnings for signals that they are on firm and sustainable footing.
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Until those signals become clear, we advise business leaders to consider multiple possibilities at once.
Manage for multiple futures
As long as the pandemic and its side effects persist, business leaders need to prepare for as many potential outcomes as possible. This goes beyond scenario analyses and financial planning to adapting their business models and exploring new opportunities.
For a small business, that may mean seeking to expand your client base or range of products and services. By tapping into new markets and offering variants of traditional products and services, small businesses can position themselves to embrace whichever future arises. For example, Bionic has broken our top-to-bottom enterprise Growth Operating System into smaller components that we can offer to clients in ways that fit their pandemic-restricted budgets and timelines. Even if these efforts do not make short-term economic sense, they present viable long-term growth strategies through customer engagement and retention.
Meanwhile, large brands may be able to go a step further by expanding their portfolio of bets and standing up new businesses within their enterprise. These businesses can be tailored to one potential future or another, with a mandate to develop new products and services for that future as if it were guaranteed to manifest. If it does, the company can divert more resources to that business and capture the market in its early stages—if it doesn't, they can unwind the business and shift focus to those that show greater potential.
In certain cases, managing for multiple futures may require companies to change or even abandon their core business if it no longer serves their customers. The tradition in business has long been to "stick to the core in a storm," shedding innovation programs and consolidating around central functions. However, that plan will backfire if the core no longer fits the world around it, so businesses at the edge of change may need to be ready to jettison their core well before they're comfortable doing so.
Experiment and validate
With the stakes so high and so many conflicting signals flying around, how then can businesses find and capitalize on the signals of lasting change as they emerge?
The answer lies in the twin pillars of innovation: experimentation and validation.
As we have noted, now is a good time for businesses to experiment with as many new initiatives, teams, and solutions as they can. Honing in on one or two ideas is a risky proposition — only by "blanketing the forest" with experiments can leaders see the full range of potential signals start to emerge. These experiments do not need to be to be revolutionary — in fact, it is best to start small and build on those that show promise — but they need to be distinct enough that they can help identify signals leaders may otherwise miss.
Once the experiments have begun to distinguish the range of signals, companies can begin validating each signal for substance and sustainability. Through interviews, market research, and other methods, companies should strive to understand both what their customers need now and what they will want in the future — then work in parallel to simultaneously meet current needs and prepare for next steps.
In addition, it is unwise nowadays to validate a signal once and assume it will persist. Instead, companies should continuously validate (or invalidate) each signal to determine if its strength is increasing or diminishing, and should remain flexible enough to pivot if one signal disappears and another emerges. The signals that burn brightest will light your company's path forward, if you have put the pieces in place to follow them.
At the edge of change, whoever spots the North Star and finds their way out of the forest first wins.
—By Vanessa Colella, chief innovation officer, Citi, Head of Citi Ventures & Citi Productivity, and David Kidder, co-founder and CEO, Bionic, a frequent Citi collaborator on digital transformation and product development projects. Colella is a member of CNBC's Technology Executive Council.
