My Post COVID-19 Digital Notes To Entrepreneurs

 Note 1: IT’S TIME TO DIGITIZE

I will keep clamouring for digitization in Nigeria. This is the time entrepreneurs need to move from a traditional way of doing business to digitization. This is because Nigeria has the same consumer features like China and the rate at which consumers in Nigeria adopt technology and most especially digital transformation in retail is unequalled to any other country in Africa. The consumer market in Nigeria currently is poised to be worth over $40 billion assumable now than even in 2020 and the second highest GDP with 16% in the country. This is not the time to sleep. Entrepreneurs operating at the low-end market should see digital as a way out unless it will soon become a mega threat, they won’t be able to deal with – it will be too late. Be like China. Africa must disrupt the retail sector by integrating all their operating models into digital through digital enterprise; digital jobs creation and digital consumption.

Note 2: COVID – 19 AND ITS IMPACT ON TODAY’S BUSINESS

COVID-19 pandemic is reshaping industries by disrupting existing businesses and operating models. But it is also having a profound impact on society, presenting a series of opportunities and challenges for businesses and policy-makers. For SMEs, it’s an uncertain time with lots of unknowns that will trigger changes in their markets. According to Google’s announcement, since the first week of February, the search interest in Corona Virus has risen by +260 percent globally, which has worried people across the globe. From social distancing to curfews and government and state-mandated closures, businesses are suffering the hardships of COVID-19. Authorities are advising people to stay at home, as the situation may continue for a while. While some companies are open to remote operation of their employees, others cannot. Small businesses would also be negatively affected as consumers go out less and turn to shop alternatives. Small Companies will need to act quickly and plan to take advantage of the turnaround and brace themselves for the repercussions of COVID-19. A lot of work culture has temporarily changed as businesses continue to implement necessary work from home policies.

In Africa, the situation is adversely affecting small businesses as many small business owners are confused on what to do to salvage the unexpected shutdown – most of these businesses do not have a digital structure that enables them to manage customers and employees remotely and run an effective online business. The possible future effects on businesses will be lack of cash flow to fund operations of their respective businesses; inability to pay salary which may result to employee downsizing; customers will begin to seek alternatives where they can access products and services remotely in the case where businesses do not have the facility to deliver such value. With over 50 percent of small businesses depending mainly on raw materials to create their final products, these periods will pose a huge challenge and surviving through will be difficult. Businesses who took loans, if unable to generate revenue will find it difficult to pay banks back. In Africa where it is almost impossible for the government to respond swiftly to the rising challenges that await small businesses, what should business owners do to salvage the situation before it gets out of hand? This is why the Digital Enterprise Kit was developed to help startups and SMEs survive COVID-19 crisis now and after by developing and integrating a digital operating model that works and drive growth.

Note 3: TIPS ON BECOMING A DIGITAL CEO

Becoming a digital CEO, I will say, can be a daunting task especially in a world where things are changing by the second, and therefore requires a radical approach to stay atop. Winning in the marketplace as a CEO means catching the competition by surprise. Not surprisingly, this process also surprises the consumer and nowhere so frequently today as in the world of digital, whereby the time the user gets around to reading the consumer product instructions, for example, as in the case of electronics, the gizmo to which it refers is obsolete. This is a world where imagination is no longer enough and as such, as a CEO with a forward-thinking enthusiasm for technology, you’ve got to “smell your instinct” to unlock digital value within the ecosystem you operate in. The modern world has been built on the foundations of the industrial revolution with its roots in scientific concepts of deductive reasoning and the economic logic of maximizing self-interest. From a research paper prepared by Deloitte for the retail sector in India, excerpts that interest me posit that ‘Digital has helped build a parallel narrative of inductive doctrines where the focus is on looking at “convergence” between sectors, breaking down functional silos within organizations by “customer-centric” opportunities to collaborate even with competition by developing a “co-opetition” mindset, “co-ownership” of investments through franchisees/alliances for scalable growth with a low level of assets intensity, building relationships with a new generation of interconnected customers who are involved in ‘co-creation’ of products/services and a long term orientation of ‘continuous learning’ through feedback to better improve a customer delivery model.

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So, to be an active player in decision-making at the forefront of digital, the CEO needs to adopt the following: You must rework your business models by engaging in a digital transformation exercise. Chances are that your business wasn’t birthed digital like Amazon, but chances are also good that if you don’t respond to the digital revolution, you just might become the next borders if you don’t adjust to the way customers use digital products and services and this is not about ‘looking and feeling digital’, by developing a nice website or mobile app, it is about ‘being digital’ which means using technologies like cloud, mobile, and agile development to create a better customer experience that becomes revenue. You must develop a digital strategy for your business and this demands that you adopt new tech-tools that keep your products and services alive in your customers’ digital life also known as their ecosystem. As you develop your digital strategy, you need note that the digital wheels are in motion (because of any digital business in a work in progress) as we have to consistently work to provide customers with better products and find ways to reduce the cost of delivering the products. Establish clear digital services. Some CEOs can’t get their heads around digital innovation. When that is the case, CEOs should trust a lieutenant like a chief digital officer to lead the company digital strategy.

Adopt a digital-first Push all team members to develop a digital mindset and should this should reflect in performance, communication, customer service etc. Create a platform of digital champions who constantly drive internal digital seminars and education to grow into a full pledge digital business. Build your business model around the customer. The customer is king. Yes! But customer loyalty is key. How do you use digital to create an all-inclusive digital ecosystem that measures the loyalty between your business and the customers? As a digital CEO, you must take into cognizance digital consumption – the race to meet customer expectations, reinventing your business offerings to keep with rapidly evolving expectations of digital customers? The model you adopt must convert product and services to experiences. Create ‘hyper-personalization’ opportunities, and give the digital customers the ‘ownership to access’ as customers buying journey has moved from a typical ‘buying’ behaviour to ‘sharing’. Get your own ecosystem. As a digital CEO, you should start by focusing on one business unit or product line where you aggregate customers for a specific set of product or service – this will help to quickly gather analytics to help you improve your product and customer experience and expectation. Position as a responsible digital company. This is very important because customer trust is key to the growth of your business in a digital ecosystem with data and privacy breaches in the news nowadays, it is crucial as a digital CEO you pay attention to every aspect of your business digital ecosystem. The long and short of this is whatever you do, protect customer trust.

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Finally, on becoming a digital CEO you should know where exactly you stand in the digital ecosystem. You need to determine which front- end strategy makes your business succeed from the point of segmentation, positioning, operating format, business models, customer experience, merchandising, loyalty programs, pricing and POS solution. You need also determine which revenue model works perfectly for your business within the digital ecosystem. It could be one or a combination of the following: transaction, capacity leasing, licensing, subscription, commission, advertising, trading, donations, and subsidies. To conclude, digital transformation is real and fast catching up with businesses.

Note 4: BECOMING A DIGITAL ENTERPRISE, THE 9 REVENUE MODEL

A truly digital enterprise stands for more than just using new technologies for the sake of it. Rather, what truly distinguishes and gives a digital enterprise its competitive advantage is its culture, strategy and way of operating. Digital enterprises strive continuously to enable new and leaner operating models underpinned by agile business processes, connected platforms, analytics and collaboration capabilities that enhance the productivity of the firm. A digital enterprise relentlessly searches out, identifies and develops new digital business models, always ensuring that customers and employees are at the centre of whatever it does. There are a number of areas that many companies will need to reassess and reform if they are to become digital enterprises. Three key areas have been identified digital business models (what companies need to do); digital operating models (how they can do it); and digital talent and skills (who they need to work with to succeed). In the scheme of digital transformation or enterprise digitization, many businesses are moving beyond viewing technology merely as a cost and seeing it as an important enabler of revenue generation.

A recent survey found that 45% of IT executives see growing revenue through improving digital capabilities as a top priority but then in Africa, the rate at which IT executives integrate technology business process is low and this is largely due to the fact that the CEOs are yet to exist within that frame of mind. Most CEOs believe that their companies can implement a successful digital transformation simply by launching a digital business unit and hiring a Chief Digital Officer. The reality is successful digital transformation demands a culture sponsored by the leadership that promotes innovation, encourages risk-taking and empowers employees at all levels of the economy. Becoming a digital enterprise requires at first level that you decipher the problem gap, otherwise known as the job-to-be-done according to my favourite Harvard Business School Professor, Clay Christensen, vis-a-vis the customer segment you want to focus on as that will pave way for designing the framework of operations. The truth is digital technologies have enabled the emergence of the following business models:

peer-to-peer networks, freemiums, delivering outcomes (mainly driven by the Internet of Things), crowd-funding/crowdsourcing as a service, eCommerce/marketplace and personalization, among others. There are quite a number of Nigerian startups that ultimately run completely on digitization to generating their revenues, an example is Paylater, a financial technology platform that started off by borrowing customer money without collateral within seconds literally are now creating more services within the value stack. Paylater runs on a revenue model where commissions are made in the form of interest on loans received from the platform. Since my focus for this article is on revenue models for running a successful digital enterprise, I will share the nine models and a bit of explanation for each. A careful study of each model will open up the possibility of what will work for your digital enterprise ideas and could guide your eventual strategy development as a startup.

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Based on this I will share sneak peak explanations on the nine revenue models:

Transaction. Traditionally manufactured products are packaged and resold from one to many users; ownership is transferred from seller to buyer through distribution channels.

Capacity leasing. Capacity is monetized in the form of human time, machine or asset availability; companies manage the supply of capacity through demand forecasting, customer orders and sales.

Licensing. Technology, brand or intangible assets are licensed for periods to reflect the value of the original invention but without the inventors needing to market or sell the product/service themselves. Subscription. Products/services are subscribed to, usually for a period, which can be as short as a day but often for longer, locking customers in with a reduced upfront cost.

Commission. Agents collect commissions (or a margin) for matching buyers to sellers for a given product/service; agents can be people or, more recently, scalable digital platforms.

Advertising. Often used in media and entertainment as a way to distribute and share ideas, with associated products/services marketed through the medium. Trading. Buy low, sell high, if successful; traders monetize mispriced goods and services due to fluctuations in demand and supply using market knowledge. Donations. Often found to be transactional or subscription-based for individuals to participate either on a one-off or regular basis; philanthropic donations can often provide intangible benefits to the donor. Subsidies. Often found in public service organizations whereby traditional revenue models only make up part of the cost to provide the service; subsidies typically incentivize improvements in quality of service.

Note 5: THE CONCLUSION

My advice to anyone looking towards starting or transitioning into a digital enterprise is simple. You must understand that the consideration is not of later but now because by the time it is obvious, it is too late. What that means is, now is the time to act.

Similarly, some CEOs think Digital is a back-office issue focused on achieving operational efficiencies. The reality is, companies that have implemented digital technologies across their business have been successful in enhancing revenue sources, competing against digital natives and outperforming peers.

Another notion is, it is believed that companies can implement a successful digital transformation simply by launching a digital business unit and hiring a Chief Digital Officer. Successful digital transformation demands a culture sponsored by the leadership that promotes innovation, encourages risk-taking and empowers employees at all levels of the company. Many boards do not have generational diversity or the digital literacy to successfully digitize. Digital transformation needs to be owned by the CEO, who must be accountable for its success. incumbents will need to transform themselves into digital enterprises to thrive, and this transformation will need to be far more profound than merely investing in the latest digital technologies. Analogue companies do, however, need to develop digital capabilities to survive. Without these, they may not go bankrupt but will have to settle for a low-margin utility model for their business.

So, in an era like this, it is quite imperative that companies begin to look inwards and outward in developing new digital approaches that enable their digital transformation and creating pathways that help unlock digital value across sectors and industries, as well as reignite a new sense of customer relationships and product development. When companies think ahead and adjust their business models just as change comes, then the opportunity to grow and remain in business across times becomes more evident, pragmatic without the fear of surviving uncertainty just like the case of COVID-19.

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