Corona crisis lessons for leaders in the digital economy
Many small and mid-sized German companies, for instance—previously sluggish and unconvinced of digital progress—were forced to digitalize. Those that had already invested in digital gained a competitive edge over their analogue peers.
But not every digital innovation will survive. Savvy business leaders must identify and draw from the lessons of this crisis to secure, innovate and adapt their business investments for the Covid-19 landscape.
Offer more pragmatism, less luxury
As a rule, investors and consumers are protective of their liquidity and are thus much more scrupulous when it comes to new ideas. Early adopters are a rare breed. This is certainly evident within crisis conditions, which enforce economic and technological pragmatism. Concepts stemming from overhyped technologies with little actual change like the blockchain or from over-interpreted needs for convenience from a lifestyle before the virus will have a much harder time than before. The public will spend more money for real solutions to real problems, and less money for luxury products trying to stretch niche desires into mass needs.
By and large, digital technologies are on the winning side here. The technology enabling us to work effectively and efficiently from our home offices is, prima facie, useful during and after a pandemic.
For business leaders, the changes also provide an interesting Petri dish. They should observe the good, the bad and the ugly effects of the technological change enforced by the pandemic, to see which management style works (or doesn’t work) in a higher technologized situation and how they could leverage this to achieve higher efficiency for some lines in their organization.
Partner with the state
The overall maturity of digital technologies and businesses associated with them has evolved into a state of high complexity. Government bureaucrats already struggled a lot with this complexity, making largely weak decisions based on a paradigm of lowest possible reputational risk. In providing monetary support to the economy during the crisis, the state has taken, in effect, a seat in the corporate boardroom when it comes to decisions on innovation and growth. In recovering that investment, the state will be thus more relevant and visible than before.
Again, for digital technologies, this may be a good thing. In Germany, for example, Chancellor Merkel already announced that the money spent as support should also modernize the recipients digitally. However, this may not improve unless bureaucrats change their mindset or—better—become entrepreneurs. The stresses on global supply chains demand fewer rigid dependencies, greater flexibility, better redundancies, and corporate-state cooperation in the control of critical supply chains for health, food, defense and telecommunications.
Rising international tensions and global poverty resulting from the crisis will have a strong impact on digital security in many different ways. There will no longer be polite restraint in using cyberespionage and cybersabotage to spy on and manipulate states and economies. Cyberattacks and digitally scaled information operations can very effectively plunge national operations into chaos or render them economically and politically impotent, even while almost invisible and averting escalation of violent conflict. On the ground, residents of failing or struggling states may find cybercrime attractive, as it is widely free of consequences and very high in returns.
All these security issues will then again impact digital business, investment and state involvement in innovation. Discussions about technological sovereignty will accelerate, and the result will be a decoupling of important technologies from international markets. Germany and Europe will build up specific technological competencies locally. An interesting thing to observe in this is the intersection of geopolitics and technology politics. Companies may soon be forced to pledge allegiance to certain sides – and to accept the costly technological consequences of that choice and its multiple political and economic implications for decades.
Largely, an already complex field has just been accelerated into even greater complexity. Security, sovereignty, economy and technology will become a daunting, intertwined challenge. Making the right choices at the right time will decide the fate of many organizations over the months to come.
This article was originally published by Forbes on July 8, 2020, and republished with permission.