How COVID19 is Accelerating the Adoption of a Digital Economy: The COVID19 Recovery Plan for Businesses

by | Oct 27, 2020 | Industry | 0 comments

The interruption brought by the COVID19 pandemic has fast-tracked digital adoption in all sectors of the economy, like education, healthcare, agriculture, supply chain, banking, and work. This has made companies’ pre-COVID19 digital transformation efforts out-dated in a short time.

Although the previous digital investments businesses and governments made have enabled them to support their operations and legislate continuous strategies, leaders must now focus on recovery despite the unrelenting uncertainty. According to the latest study by McKinsey $ Co, the best way forward is to accelerate their digital transformation efforts.

“The scale of the change and the speed at which it’s happening is shining a bright light on the fact that companies are facing a once-in-a-generation shift. And for all the uncertainty about what the future will look like, it’s clear already that it will be digital,” the authors write.

During the Great Recession of 2008, companies that made quick and smart moves ended up surviving and performing well, demonstrating the significance of acting with a through-cycle mind-set. The McKinsey authors strongly believe that the Corona Virus Pandemic is likely to speed up the migration to a digital economy and shake up the business landscape considerably.

Even before the virus became a pandemic, 92% of companies felt that their business models needed to embrace the digital way of doing business. The firms listed on the S&P 500 Index have an average age of 22 years, down from 61 years in 1958.

To speed up digital transformation, McKinsey believes digital pilots and strategies must develop into logical and integrated digital engines, which push the business forward. The evolution should occur at the centre of a company’s decision-making process, and through the creation of new companies.

Roadmaps

CEOs must take a step back and review their road maps and expectations about value and feasibilities. For instance, predictable information regarding consumer behaviour, supplier dynamics, and regulation have changed significantly during the COVID19 pandemic.

Technology priorities should also be reassessed. According to the McKinsey study, the pandemic has ensured that “technology is a primary driver of value, not just a support function.” Such information is essential since the principal factor regarding technology has been the cost. Leaders must now expand the definition to incorporate value creation, flexibility, cybersecurity, and resiliency.

Alignment

Once a roadmap is reviewed, managers must eliminate the barriers of working remotely to realign company goals and provide resources to achieve their new targets. The study cautioned against creating another business outside the company due to a lower success rate. Instead, new companies need corporate support and stability missing in disjointed start-ups.

Agility

The study suggests that lessons learned from responding to the COVID19 pandemic should be applied to enhance a company’s overall agility. “The nature of the crisis has required teams to act quickly amidst uncertainty, make decisions with limited oversight, and react to fast-changing situations.”

To “accelerate the metabolic rate of their business,” McKinsey authors argue that managers should retain what has worked well and not revert to their old ways of operating.

The Acceleration of Blockchain and Digital Currency Adoption

As governments and central banks understandably strive to ease the pandemic’s economic effects, fears over the unprecedented monetary and fiscal response to Corona Virus is already making many people seek financial shelter in precious metals and cryptocurrencies. Since April, the price of Bitcoin has steadily increased by over 40%, and over the last year, it has doubled in value. The increasing use of digital currencies shows the need for the traditional banking system to be robust, cost-effective, and reliable.

As the cracks in the traditional financial system are now being stretched further from all angles, it has strengthened the case of decentralization as a robust and reliable model during uncertainty.

As central banks reduce interest rates to almost zero, savers in various countries face challenges earning significant interest on their deposits. Most of them are now turning to Decentralized Finance (Defi) interest-earning platforms because of the significantly high-interest rates. In the past 12 months, Defi platforms’ value has doubled to more than $855 Mn.

The use of stablecoins to earn good interest, transact digitally, and store value is quite attractive for individuals worried about the volatile nature of cryptocurrencies, like BTC. Asset-backed tokens, like USD PAX, also act as a haven for countries facing currency inflation.

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