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Tech & Innovation
MAY 15, 2020

COVID-19 Digital Business Transformations: What We Saw in Phase 1 and What’s Coming Next

By Dr. Giulio Toscani
iStock/metamorworks

There are two phases to a pandemic: first mitigation, when people are afraid of falling ill, and then the longer phase of evolution, when people (and countries) become financially and mentally stressed.

We know this pattern exists because we’ve seen it before—the epidemics and quarantines of 14th-century plague-stricken villages are all too similar to what we’re seeing now. At the sociological level, the confinement of COVID-19’s phase one brought us back to what Korean philosopher Han Byung-Chul described in The Burnout Society as an “obedience society.” Past societies, he says, were characterized by obedience, but also by scarcity and self-love—both stark contrasts to the growing narcissism, fueled by social media, of our modern society.

Now we find ourselves again contained, obeying government orders to lock ourselves down. And under new limitations, business and technology are innovating like never before.

Phase 1: The Age of Business Model Transformation

Phase one has sparked an unprecedented digital transformation, driving smart working like never before. These transformations have appeared in three particular business models, as reported by the MIT Sloan Management Review:

1. Different product, same infrastructure

When faced with a wide-open market and seemingly infinite demand, companies are shifting focus. Luxury brand LVHM, beverage maker Pernot Richard, and perfumer Puig have turned to making disinfectants. ByD Co, a Chinese conglomerate known for buses, batteries, and forklifts, has started producing face masks. Hotel chains such as Best Western, Hilton, and Melia have repurposed their facilities for COVID-19 patients.

2. Same product, different infrastructure

Other companies, confident in what they offer, are finding new ways to physically get their products or services to customers. Amazon has partnered with Lyft to change its infrastructure and conduct joint home deliveries, while Walmart has expanded its templates and strengthened deliveries. Flight personnel in Europe, with the support of their airlines, have moved from passenger care to patient care.

3. Same product, different channel

Finally, some companies must adapt their products to fit the new environment customers find themselves in: the home. Cosmetic companies such as Lin Qingxuan have succeeded through WeChat. Manufacturers of sportswear such as Nike have refocused their products for online exercise. The UK’s Bimber Distillery has replaced its face-to-face tastings with a home whiskey-tasting kit.

But all of these are COVID-19 business transformations from phase one.

Phase two will be different.

Phase Two: The Time of Technovate

The amount of data produced between February and April 2020 is unmatched, as most human interactions have occurred online. Technologies such as big data and artificial intelligence have finally had the opportunity to demonstrate their potential and gain user trust. The behavior patterns that are sure to emerge from all that data will shed light on various trends, from smart work to online shopping.

Initiatives developed to track the COVID-19 infected, such as Pan-European Privacy-Preserving Proximity Tracing (PEPP-PT) or the alliance of Google and Apple in the US, could change everything—and positively.

If a restaurant cannot be crowded, for example, perhaps operation hours will change. In Barcelona, restaurants are (normally) open from 1pm to 11pm, though most people don’t go between 5 and 8:30. AI could help identify those who do eat in that emptier time and distribute customers more evenly.

Neighborhood shopping, too, is enjoying a revival. To take advantage of this, shops could start allying to offer combined deals—open-air cooking courses from local restaurants while you wait in the line for a hair appointment, perhaps. Tesco Korea has already developed technology for virtual supermarket shelves in metro stations, allowing customers to shop via an app and find their groceries waiting when they arrive home.

This is not the first pandemic, and it will not be the last. Massive effects will be visible, but individual contributions can now be recorded for the first time in history. The COVID-19 digital business transformation is global and significant for all of humanity. From here, we’ll need government regulation on private companies to raise public confidence in new ways of doing things.