It is almost six months now since the world started battling the COVID-19 pandemic which started in China and forced countries across the world to announce lockdowns, and social distancing as measures to stop the spread of the virus. In the process, small businesses, accounting for more than half of the GDP of most countries, and are responsible for nearly seven in every 10 jobs around the world, have been hit extremely hard by the impact of the coronavirus, leading to the collapse of many SMEs.

According to another recent study by the United Nations Conference on Trade and Development (UNCTAD), the world has gone through an unprecedented digital revolution during the lockdown, as businesses have devised creative means to stay relevant to their customers. 

It is now very clear that the world after the COVID-19 pandemic is no longer going to be the same. We have seen sudden changes in customs and social mores. People are now more conscientious about health and hygiene, in all contexts – home, work, travel, etc.

In the business world, especially among SMEs, the virus has produced winners and losers, as many people have resorted to ordering provisions online, working from home, or relying on takeaway meals. Sports, entertainment, and other industries whose models depended upon large crowds have all been negatively impacted. In the tourism industry, airlines, cruise ships, trains, among others, have experienced massive usage decline. In effect, remote ways of working and transacting have become a major part of our normal life now, at least in part, and have, therefore, altered different business models.

Digital transformation has now become what Michael Porter of Harvard Business School referred to as unexpected game changers, as far back as 1980, in his book titled “Competitive Strategy”.

The digital disruption, without any warning, has irrevocably changed how businesses, all over the world, view and respond to opportunities and challenges. For businesses in almost all sectors of the global economy, active and capable participation in the digital space is now a key determinant for the survival or total demise in the current re-organized competitive economy. There is now the urgent need to accept the fact that traditional operating models have been completely disrupted and given way to a deeper discussion of digital strategy.

Several examples can be cited. A case in point is how the video rental giant Blockbuster became bankrupt when Netflix overtook them unawares. Traditional taxi companies are equally playing catch up with Uber. Similarly, Amazon’s online book business has overwhelmingly eroded the market share of giant book-retailing businesses like Borders and Barnes and Nobles.

Mention can also be made of the Lazada Group, a German incubator which was set up in Singapore in 2012 by a Rocket Internet to apply the Amazon business model in the South-East Asia region. In the process, a countless number of small brick and mortar bookstores have also collapsed. And how about the fierce competition going on now between the telecom giants and the traditional banks in the retail funds’ mobilization space?

There is no argument that digital disruption has extensive implications for SMEs, which require strong domain knowledge, and intellectually curious scenario planning processes to interrogate current assumptions, as well as identify, and prepare for hypothetical risks to keep ahead of the curve.

At Human capital International, we believe that the long road to recovery for most SMEs from the damning effects of the pandemic, amidst the sudden preference for online services by the majority of customers, is one that will be characterized by how fast a given business is willing to adapt and embrace digital options in its business model and supply chain channels. 

In this article, we discuss four key strategies, backed by SMEs’ surveys that you must consider before investing time and money in any digital strategy. Understanding these strategies is crucial because going digital is not just about going online or doing an e-commerce platform. It requires a sufficient level of digital expertise and eco-system to ensure a full transformation process to change your entire business model. For an SME, it is too costly to invest in a digital strategy that does not support your business model and long-term vision:

• Why do you want to go digital?

Digital transformation means different things to different people. However, the path you choose depends on your business model, the needs and opportunities the business is seeking to exploit. Thus, before you decide to implement a digital strategy, it is important to answer the question “why do I want to go digital?” One of the best ways to answer this question is to revisit the core mission of your business, the meaning behind what your business does, and seeking to achieve. 

Thus, is going digital aimed at improving the efficiency of my business operations, customer care satisfaction, or widening my market base? If you are looking for more customers, for example, your strategy may focus on implementing a new tech such as an online chatbot or a user-friendly app to improve the customer experience. Alternatively, you may also want to consider creating store listings on Google and Apple Maps. Knowing the reason for your urgent need to digitalize will save your company time and money in developing a digital strategy.

At the start of the pandemic in March, businessman Lucas, who operates in the pharmaceutical industry in Brazil, never imagined that he would one day serve his customers virtually.

 He depended on walk-in customers to stay afloat. But as the lockdown was announced and his clients could not conduct in-person transactions, he quickly created a digital presence; using social media and paid advertising on Facebook as well as creating a mobile app where people can sign up, order for supplies, and get them delivered to their homes. For Lucas, the purpose of going digital was to reach existing clients who have been immobilized by the lockdown.

If your business is located in Uganda, for example, and perhaps all you intend to achieve is to make it easy for your customers within the East Africa community to make payments for your services or product, there could be no need, for example, to invest heavily in a complex e-commerce platform. You can plug into the already available and simpler innovations such as Mobile Money transfer platforms, and other bank payment Apps which are convenient means of funds transfers. That way, you save money which you can redirect into digital advertising to enhance the online visibility of your business and possible conversion into sales. 

Bottom line, once you can identify the core “Why” of your business, crafting an effective digital strategy will be much easier. Don’t be alarmed by the “digital craze”, Rather, find out “why you need “digital transformation”.

• Develop implementation Roadmap.

“Strategy without process is little more than a wish list,” says consultant Robert Filek. To effectively implement a digital strategy, a clear, flexible, and concise roadmap that facilitates the attainment of your business’ vision and mission, must be developed. The roadmap isn’t a silver bullet to the attainment of the strategy per say, but it is a guide that provides actionable landmarks with clear timelines. It should clearly show how digitalization will affect the flow of your business processes, and stakeholders such as employees and customers in its implementation.

For instance, when Lucas, mentioned earlier, decided to digitalize his business, he realized that he didn’t have the internal capacity to manage this process. He thus hired a small team of four to work on a digital marketing strategy and delivery of medication to the doorsteps of his customers. 

However, he did not hire the new staff unilaterally, but communicated and solicited the buy-in from his existing team on the need to digitalize and how the entire process would require everyone’s support to succeed.  

As you digitize, ask yourself: “does our internal culture, for example, allow information flow from top-down or down up?” since communication is vital for strategy implementation.

Studies have shown that culture is one of the most important determinants of the success or failure in the execution of strategy.

An enabling internal culture will facilitate staff innovations, team collaborations, and ‘new normal’ acceptance. Unfortunately, many SMEs fail to develop their in-house values to support any transformation process; hence rushing to go digital could prove to be disastrous.

For an SME, internal digital culture can be developed through assessing, and asking the pertinent questions:

Do we have the tools (technology) needed to deliver on digital values? Does our culture allow staff retraining and upskilling? Does our culture support quick decision-making? If your processes are too linear and slow, then you must infuse some speed by breaking down walls of bureaucracy. 

• Digitalise in phases

It is a known fact that the majority of SMEs have limited budgets to finance their growth and emergency response plans. The problem of the limited budget for most businesses became more pronounced when COVID-19 broke out and took centre stage in the economic milieu like wildfire, leaving many businesses unprepared in its fury. With limited budgets, it is extremely essential to phase the digital transformation.

Technology has empowered SMEs to ease processes, ease access to customers, employees, or other stakeholders.  In Europe for example, digital SMEs are offering solutions to the crisis. These solutions range from smart working solutions that help you, and your team to stay connected and productive during social isolation, eHealth solutions that offer vital assistance to actors in the health sector, entertainment solutions that keep you motivated and mentally strong in this challenging time, 3D printing to produce life-saving parts for respiration machines, and many more digital solutions that help businesses, citizens, and public administrators to continue their work during social isolation.

As a business, it is always important to investigate the best digital options available and adopt the type that can accelerate the growth of your business. 

For some businesses, going digital entails leveraging cloud capabilities. For many, artificial intelligence and machine learning are more important. And yet for others, increased analytics capabilities and Internet of Things (IoT) implementations are more crucial. When you decide to digitalize, choose which section of the business that is essential to your core needs, and start from there if you don’t have the budget to go full scale.

• Assess short, medium and long-term benefits of the technology

Before you implement any digital transformation strategy for your business, find out about the short and long-term benefits of the different options. Investigate where threats and opportunities lie. To achieve this, it will be prudent to speak to other key industry players who have already gone ahead of you in digital transformation. 

The co-founder of the software company, Concepta, for instance, recommends that SMEs can take advantage of simple applications with high potential impacts, such as predictive analytics for ad spend. This is because it is not judicious for SMEs to sink money into suboptimal campaigns as the bigger companies do. With a predictive analytics tool that integrates with existing tech, you can leverage the dividend on your investments by being innovative about your advertising budgets.

For instance, if you intend to improve your customer experience offerings and grow your customer base using a digital application, you are much better off going for a CRM, which is less expensive but also comes with affordable cloud-based solutions for small businesses. Using big data and analytics which are accessible via CRM can help you make more informed decisions for your business and also helps you think of new ideas and strategies to improve the journey of your customers at each step.

Digital transformation is for everyone, as such, take steps to accelerate your online presence, bearing in mind that the rules of the competition have changed radically, and so should be the thinking of all SME operators. Thus, the winners are those taking digitalization higher, inch by inch, using analytics, data, and insight to make faster decisions that appeal to customers. 

In conclusion, the current COVID-19 crisis has swarmed us all with a wave of digitalization which can mean one of two things for all small businesses: to ensure a sustainable, integrated digital transformation of your business or the risk of turning your non-digital business into complete oblivion. Therefore, be that SME that will succeed in this New Normal by applying these strategies to not only go digital but remain relevant to your customers.