What if going digital was the antidote to avoid the Covid-19 bankruptcies?
With one million deaths, thirty-eight million infected, hundreds of millions lost jobs and small and mid-size businesses (SMEs), the pandemic has created one of the worst crises of confidence since the Great Depression.
Hit by an unprecedented gloomy mood, entrepreneurs are looking for recipes to survive the recession and grow.
It’s ironic, famous author Napoleon Hill’s belief that, “ Your biggest opportunity may be right where you are now,” has never been more true than today.
Digital business is the way SMEs should go!
The problem is, digital is now a confusing word narrowed to social media and digital technology issues.
Fact of the matter is, digital business is part of a larger, yet, poorly understood domain known as Digital Economy. I interchangeably use Platform Business.
This article is written for entrepreneurs and SMEs, it debunks the many myths surrounding digital business to provide the insights you need to understand the Covid-19 recession’s impacts on your business, and how your business can take advantage of the platform business to prosper.
Unprecedently, for the first time, it introduces SCENARIO™ (SucCEss iN pAndemic RecessIon cOntext), a comprehensive framework of best practices for transforming SMEs to digital and running digitalized businesses.
First Step to Survival: Understand the Whys and Wherefores of the Digital Economy
The rare businesses thriving in today’s economic slump pivoted to the digital economy. According to a World Economic Forum’s report, “ in a matter of eight weeks, the economy vaulted five years in consumer and business digital adoption.” The report confirms what we all suspected, “The outbreak has led to structural shifts including in customer preference of digital engagement and moving to remote working models for employees, which are likely to remain.”
First thing, forget what the jokers of your noisy industry are saying about it; knowing it’s “an economy based on the internet” won’t help.
As illustrated (wikipedia), digital economy refers to the business and social activities structured around a couple of dominating online marketplaces:
It involves a variety of players including Consumers who buy and consume Digital Products; Suppliers who develop, supply and sell digital products under the control of Dealmakers, very often platform owners, who take advantage of their platform electronic algorithms to promote and distribute products and facilitate business transactions.
Let’s detail the key things you need to know about the platform business ecosystem!
The key impacts to know about digital products and services
“What’s exactly a digital product?” clients ask me! I always answer the same, “It’s any product and service you may make money with online.” Period.
They’re intangible in nature, they don’t have any physical form or substance, and they cover a wide spectrum of areas including Video, Books, Photography, Music, Tutorials and Guides, Software Programs, Culinary Recipes, and many, many more.
They’ll positively impact your business; you won’t have to manage inventory, you won’t need spaces to store them; depending on your business, delivery will take no longer than a mouse click; and you won’t have any material and manufacturing costs.
However, the first thing to keep in mind is, to deliver value, your digital products should address consumer expectations related to the Covid-19 terrible socio-economic context.
Keep that in mind!
Understand this 1.8 billion people and $4.8 trillion online market, it’ll make your business prosperous
You’ll be happy to learn that in 2018, 1.8 billion people worldwide purchased online, generating that same year $2.8 trillion in revenue.
According to Statista, a German company specializing in market and consumer data, online sales are expected to grow up to $4.8 trillion by 2021.
As you can see, making prosperous business online isn’t a fiction!
Online consumers can be defined as those who, as part of their subscription to one or more online marketplaces — Amazon, Walmart, eBay, Alibaba — will purchase your digital products.
Today, buying online is the new normal; everybody does it whatever the location, gender, and income. In the United States, for example, sixty-nine percent (69%) of Americans are shopping online, this number is expected to reach ninety-one percent (91%) by 2021.
Second thing to keep in mind, online marketplaces, whatever your location, will give you access to an extraordinary global market of 1.8 billion consumers.
Understand your next Online Marketplace Seller or Provider role, it’ll fInd your business
A question many entrepreneurs need clarification on is, “What is it like to be an Amazon or whatever marketplace seller or partner?”
What you need to know is, as part of your partnership with marketplaces, let’s say Amazon, your primary responsibility will be to supply and sell digital products in line with specific standards; it could be music virtual albums if you’re a musician, kindle e-books if you’re a writer, and videos if you’re a video producer.
It’s important to know that, meeting these standards equals higher rankings and therefore increased sales. More importantly, marketplaces will charge you fees — either hefty or reasonable.
The third thing to keep in mind is, nearly one billion items are sold online worldwide, for instance, over 400 million items are sold on Amazon.
Online Marketplaces are your next partners, understand how you’ll deal with them
Make no mistake about it, you won’t have the choice but to deal with marketplaces — Amazon, Walmart, eBay, Alibaba.
They’re your next partners!
In many entrepreneur’s minds, marketplaces remain a blurry notion; it deserves clarifications.
Here’s what I can tell you about it!
In its simplest form, online marketplaces are websites that connect sellers with buyers, all the transactions are managed by the marketplace owner. Companies, basically use them to reach customers who want to purchase their products and services.
Online marketplaces are more than websites to sell goods online, Amazon for example as Krista Fabregas makes it clear, “Once you’re an Amazon seller, you become part of the Amazon experience that attracts a huge audience of loyal shoppers.” She adds, “The Amazon selling machine is designed to give customers exactly what they want, and that strategy pays off big. Shoppers come in droves, drawn by Amazon’s vast selection, competitive prices, excellent shipping, and sound reputation, to name just a few of its many sales-driving perks.”
So, get ready to deal with online marketplaces as important as Amazon, eBay, and Walmart in North America, Pay Pay Mall in Asia, Mercado Libre in South America, and Fnac in Europe.
Fourth thing to keep in mind, online marketplaces are your next partners. There are one hundred fifty-three (153) of them around the world, they’ll give you access to a variety of markets — Retail, Auction, Consumer electronics, Fine Art— across the five continents.
Second Step to Survival: Understand the Changes Brought in by Coronavirus and Platform Business
Now that you’ve got a realistic picture of the platform business, its ecosystem, stakes, challenges, and opportunities, you’re set to take the next step to survive the pandemic recession. It’s about getting effective answers to that question you may have in mind:
“What’s the impact of the pair Covid-19 and platform business on my industry, on my business, and on the way I run it? ”
Here are my thoughts, observations, and recommendations!
Understand the Covid-19 recession’s business impacts and the bounce back options it offers
Simply put, a recession is a decline in economic activity that lasts several months where businesses and consumers lose confidence and reduce investment, production, and consumption while taking the economy into a vicious circle that continuously kills jobs and businesses.
I let you look at the social damages around you but also the bounce back options!
What’s happening with the Covid-19 pandemic is, the social distancing measures taken by governments worldwide including Stay Home and Remote Working orders have slowed down the economic activity; deprived of their consumers and entrepreneurs, SMEs are seeing their sales dropping.
The good news is, the bounce back options are many. Examples!
Education: Virtual schools and academies are booming, teachers should seize the opportunities!
That’s not the end of the story!
You can make extra money by setting up a profitable teaching business, the global e-learning market is projected to be worth $325 billion by 2025! Using webinar platforms like ClickMeeting and GoToWebinar, or e-learning platforms like Udemy and Teachable you can set up an online academy and earn a reasonable living with it.
Music: Digital music and video streaming services offer musicians a projected market of $22 billion by 2025
In music, the case of Naneth Nkoghe, a talented singer, song writer, and producer from Gabon, tells a lot about the trend in the industry. Confronted, like most artists, with a brutal drop in sales, she felt the digital music segment with its numerous platforms like Spotify and TuneCore, and more importantly the projected revenue of $22 billion dollars in 2025, offered the best option to stay in business. “The prospect that hundreds of millions of people across hundreds of countries could listen to my music is simply amazing” she confidently said.
I could go on citing more digital transformation opportunities like supermarkets extended to “drone-based food delivery to isolated rural areas” imagined by businessman Marc-Henri O. Dexter, restaurants conversion to deluxe online ordering restaurants, shoe stores conversion to online shoe stores specializing in stay at home shoes, but I think the point has been made. The question now is, “is your presence on digital platforms enough to avoid bankruptcy?” As the next section explains, the answer is clearly no!
Final Step to Survival: Implement a winning digital strategy as alone, partnering with marketplaces isn’t enough
Don’t listen to what certain digital transformation experts say; making money online takes much more than partnering with Amazon or flooding Twitter and Facebook with tweets and shares that don’t make sense to your business.
You wouldn’t be here reading this article!
Qualified digital experts confirm it, succeeding in this pandemic’s recession demands a complete adaptation of your business to the platform business and a business model centered on solving the Covid-19 social issues consumers are challenged with. Expert Kaan Turnali, is consistent with that when he says, “Digital transformation isn’t a technology makeover, it’s a business revolution.”
Don’t think for a minute that subscription to platforms and hyperactivity in social media are enough
Once again, don’t let self-proclaimed digital transformation experts fool you with the “miracles of technology” they make money with; you’ll also need to understand your future online customers.
As digital graphic design expert Lilian Roger explains it, “researching customers allowed me to identify Facebook as a credible market to do business in as well as a variety of tailored services.”
Understanding your competitors and how to deal with them will also be the heart of your daily concerns. For Ms. Nkoghe, this might take the form of “regularly tweeting inspiring extracts of my top lyrics” she said.
And last but not least, your business operating model — the way you do business. You’ll need to adjust your workforce’s skills, roles and responsibilities, your processes and practices, and infrastructure and tools.
If you’re worrying that, “the article suddenly got tougher,” I can only agree with you; transforming a business to make it profitable in the middle of a terrible pandemic recession isn’t a child’s game!
To achieve that goal, you don’t have the choice but to do what so many entrepreneurs and SMEs are reluctant to: develop your business Digital Strategy.
Too many experts misunderstand digital strategy, they wrongly implement it
Business author Henry Mintzberg said, “strategy is not the consequence of planning, but the opposite: its starting point,” he is right.
Digital strategy can’t be narrowed to “ the use of technology to run your business or how well you use technology to create new digital products and services” as I read it all over the place. Rather, it refers to the plan that explains the organizational, operational and technological tactics you put in place to achieve a financial goal.
The organizational dimension relates to how you coordinate from the staff and task perspectives your marketing, sales, digital product development, and customer support activities. For Ms. Nkoghe, it’s about how she’ll distribute roles and responsibilities across a spectrum of activities including Web Master, Social Media Watch, World Music Competition Watch, Lyrics Writing, Musical Arrangement in a way that guarantees benefits.
The operational aspect addresses the activities, tasks, and best practices likely to make your staff excellent at their marketing, sales, digital service development, and customer support work. Technology relates to the infrastructure and tools likely to make effective and efficient your marketing, sales, digital product development, and customer support tasks.
Mr. Roger acknowledges the benefits of taking the time to develop a digital strategy, “It was a fabulous experience in many respects; it allowed me to spot our weaknesses including ineffective marketing, lack of technological watch, exclusive focus on product development at the expense of the entire business.” He also admits, “However, digital strategy development is extremely complex as you have to consider so many factors and put them together into a coherent plan. That’s not easy, I’m a graphic designer!”
Lilian Roger is right, here is the solution I offer: SCENARIO™ (SucCEss iN pAndemic RecessIon cOntext)
Transform your business for the Covid-19 recession using SCENARIO™
Most successful digital entrepreneurs claim it, “succeeding in this pandemic recession depends on a virtuous circle of clearly identified groups of activities” including Strategize, Transform, and Run. The following exhibit illustrates the virtuous circle model underpinning the SCENARIO™ approach:
Here is how you can use the framework!
First thing, depending on your business size, set up a project team involving your relevant marketing, sales, post-sales, and product development staff and share the project’s objective as “adaptation of the business to the platform business.”
Involve the team in a three-step business transformation journey including Strategize, Transform, and Run.
Strategize: define your financial objectives and agree with your staff on the means to achieve them
“Most companies don’t have a strategy” says Harvard Business School Professor Michael Porter, when they have one, for varied reasons, “over 70% of them fail” says a study.
How can you go about it?
Involve the project team in a workshop of at least four hours and start by identifying your customers, the problems they face during the pandemic and ideas of solutions likely to fix them.
Then, get concrete answers to the following questions, they’re about your next marketing strategy and how you’ll deliver value to your customers:
- What benefits do you want to offer? What marketing messages do you want to send?
- What marketing, sales, digital service development, and customer support best practices and related tools do you need to excel at?
- What are the new roles and responsibilities, processes and practices, and infrastructure and tools that impact your business?
During the workshop discuss the following:
- Adoption of Content Marketing as the way to promote your business and services online
- Adoption User Experience (UX) Design as the foundation of your digital service development approach
- And adoption of Agile methodologies as the means to implement a highly collaborative environment
Transform: implement your digital product delivery pipeline from the organizational, operational, and technological perspectives
Contrary to what most experts suggest, digital transformation isn’t narrowed to deploying digital technologies — Cloud Computing, Analytics, Artificial Intelligence (AI), Internet of Things (IoT) — That’s a dangerous oversimplification.
The digital transformation of the business is primarily the implementation of the decisions made in the Strategize phase; it’s about deploying the retained roles and responsibilities, developing and training concerned staff to the selected processes and practices along with tools and apps enabling them.
Here’s how you can move forward with it!
Involve the team in another workshop, and make sure the staff doing the operational work participates.
Then, draw on the white board, a five-step Product Delivery Lifecycle including Plan & Measure, Develop & Test, Release & Deploy, and Monitor & Improve.
Collaboratively, for each step, address the following questions:
- What activities should be performed?
- What roles and responsibilities should we implement?
- Who are the right persons to appoint?
- What tools and apps are needed?
Once the product delivery lifecycle is configured, get the concerned staff trained not only to the selected tools but also to the operational interactions they’ll be involved in.
Run: running your digital business on a daily basis
“How all this works on a daily basis?” is what you may have in mind.
The Run step reflects the network of money-making activities carried out across the business, they result from its digital transformation.
Work on a daily basis is structured around a virtuous circle of activities grouped into Operational and Support. Let’s discuss your next operational activities:
Lead Generation — It’s about mobilizing relevant staff as defined in the Transform step to rouse the consumer’s interest or enquiry into your digital products through sharing content (blog posts, videos, articles) and interacting and engaging with them for mutual benefit (networking) on social media. The bottom line is to convert leads to prospects through establishing a first formal contact.
Prospect Nurturing — It’s about mobilizing relevant staff as defined in the Transform step to feed prospects with a variety of resources (blog posts, videos, articles) likely to incite them to buy your digital products.
The bottom line is to convert prospects into buying customers.
Sales Closing — Refers to the set of tasks carried out to convince the prospect to make the purchase decision. The bottom line is to get the prospect’s purchase decision.
The support activities act as your business watchdog whose job is to make sure that you’re doing well versus your competitors and customer satisfactions:
Competition Watch — Its about mobilizing relevant staff as defined in the Transform step to collect, analyze, make decisions about your competitors’ performance. The bottom line is to identify and take actions needed to make your products competitive and profitable.
Customer Watch — It’s about mobilizing relevant staff as defined in the Transform step to collect, analyze, make decisions about acquiring new customers and keeping existing ones loyal. The bottom line is to identify and take actions needed to make your customers profitable.
Product Development — It’s about mobilizing relevant staff as defined in the Transform step and taking advantage of methodologies such as UX, Design Thinking, and Agile to design, develop, test, and roll out digital products that meet your customers’ expectations.
The key takeaways
This article inspired from my next book, How to Thrive in the COVID-19 Recession by Going Digital Using SCENARIO™, seeks to pave your way to successful digital business. It sends three vital messages:
- The Covid-19 recession is devastating, it may last two, three, or four years, no one can predict.
- Reinvent your business, platform business isn’t perfect, but it’s the safest option so far. It’s worth giving it try.
- Plan your digital strategy around the Covid-19 social issues people are challenged with, then implement it from the organizational, operational, and technological perspectives.
How to Thrive in the COVID-19 Recession by Going Digital Using SCENARIO™: Framework and Techniques for Building Innovative and Profitable Digital Businesses will provide insights into how to leverage the SCENARIO™ framework and make your business prosperous.
Like what you’ve read? Share the article to make it viral so as many entrepreneurs as possible read it, give me some applause by leaving a comment below, and visit my website — Philippe Abdoulaye