Turning adversity into opportunity
During the last four global economic downturns, about 14% of firms actually managed to raise both profit margins and sales growths – and they managed to do so by adapting to needs, quickly. The SARS epidemic of 2003 was credited with birthing global giants JD.com and Alibaba, while the 2008-09 financial crisis saw an exponential growth in shareholder values for companies like Starbucks and American Express who thrived upon making the shift to digital operating models during this time. The coronavirus pandemic is likely to be no different.
COVID-19 is going to accelerate several global trends. Most companies will primarily focus on recovery whilst realigning resources to be better equipped for adversities such as supply-chain breakdowns and personnel shortages. The path to recovery will demand innovation and AI will lie at the heart of most of these innovations.
Success, however, is not going to be easy. Most firms are still at the nascent stages of a complete digital transformation; they need to act quickly to acquire the requisite skills and adopt new ways of working on their AI journey. For digital natives, or those already using AI, the challenge will be to increase scale in order to match expected returns. Adopting an AI framework will allow better navigation of challenges such as sharp fluctuations in consumer priorities and investor confidence, uncertainties in supply and demand and reallocation of workforces.
One big shift of approach could be in resourcing. Forsaking the prevalent practice of lowering costs of production by concentrating on low-cost locations, firms will now be looking to build greater redundancy into their value chains. Online transactions in goods and services and remote workplaces will become norms rather than mere reactions to a supply shock. Advancement in robotics and automation will enable machine-handling of tasks that previously required human intervention – allowing production, logistics and other similar operations to be run remotely, and round-the-clock. Simulation of live work environments and creation of on-demand labour forces will be central to AI-based platforms. Machine learning and advanced data analytics will allow firms to recognise consumption patterns better, thereby allowing the delivery of more nuanced, hyper-personalised solutions and services to target consumers.
We stand at the crossroads of work cultures, pre- and post-COVID-19. It appears that survival and thriving will be reserved for firms who can best facilitate a seamless juxtaposition of human judgement and artificial intelligence. They are the 14%.