Digital business model check in the face of Corona

In business life, small, medium, and large companies are always dealing with all kinds of changes. The invisible mutations appear here only in retrospect. Regular overhauls require the new processes. Technical novelties force upgrades and extensive changeovers. Everything takes place in a global context, which is difficult due to political borders.

Now COVID-19 shows that the effects of a pandemic are not just a viral threat. Global travel routes spread infections at blazing speed. However, nobody expected that the culture of mass sporting, cultural, and tourist events would lead to Superspreadings.

So far, risk analysis classified pandemics as an unlikely health threat. The indirect consequences for the economy and society were not on the radar screen. Now it becomes apparent that countries and even regions are closing their borders for fear of infection. Global mobility is collapsing. Logistics chains move only essential goods. Allowed are the systemically relevant industries – health and medical, water and energy suppliers, waste management companies, food manufacturers and distributors, logistics and storage companies, information, and communication services.

Anyone talking about a return to growth is misjudging the situation. It is now a matter of survival as a world, country, company, family, and human being. In the context of social distancing, it is time for companies to examine the digital change readiness.

The Business Model Canvas provides a helpful structure. Let us take a closer look at the individual fields.

  • Customer segments
    Regions with poor Internet connectivity have little digital opportunities – e.g., simple smartphone apps. if possible, that require small bandwidth. Some customers depend on mainframe systems from the last millennium – the low level of cloud usage and interconnectedness requires support when switching to the 21st Companies that keep their IT state-of-the-art need powerful interfaces for their offerings – e.g., cloud-based touchpoints as well as increased use of multi-media, and mobile services. To be able to select the most potent measures, customers should be sorted according to their significance and digital affinity.
  • Value proposition
    With the eyes of the customers, you can take a look at your offers. Which ones are already or can be easily digitized? Looking at it is mainly about the services that have been offered so far through personal contact. There are many different ways to deliver a service via the Internet – e.g., a visual hotline, video chats, webinars, or virtual publications. Determine the advantages that arise for customers and check whether you can provide these services economically. Eventually, describe and communicate your value proposition to current customers. Do not forget to show your new offers on the Internet to those who are not yet your customers.
  • Channels
    Personal contact must be spread over a larger area due to the distance rules. The regulations make digital channels more interesting. After almost thirty years of the Internet, it is time to deal with them. Those who have already established channels have an advantage – starting with offline media such as videos and PDFs and moving on to web-based ones such as e-mail, websites, blogs, chats, forums, and the like. The question is, what should be expanded or used more intensively. It is also a question of identifying and introducing new opportunities – including the economic aspects (see below).
  • Customer relations
    Services that can be digitized range from personalized support, to help for DIY with appropriate digital learning packages, to the creation of communities with mutual help. You should ask yourself: What kinds of digitization do the customer segments expect? Which digital interfaces have we already established? What digital touchpoints exist? How much do digital relationships cost?
  • Income sources
    Digitization is not available for free. Therefore, the questions on the income side should be answered. What digital benefits are the customer willing to pay? Which digital offers are already paid for by the customer? Which digital payment procedures have already been introduced? Which digital payment methods do the customer want? What proportion can digital services achieve? Do not let yourself be dazzled by apparently free offers. You just have not recognized the costs yet. Unfortunately, this perspective results also in customers being unwilling to pay for digital services. Clarify your revenue model and underline the advantages of your offer – e.g., no use of data by third parties, data security, hosting in a safe country.
  • Core activities
    You need a clear understanding of what you require in order to deliver digital services – to render your value proposition, in your distribution channels, in your customer relationships, and for your digital revenue streams. The entire value creation process is involved – development, production, sales, after-sales, and all cross-sectional tasks. Digitization accelerates all activities, as the boundaries between the areas affected are reduced to a single click, towards suppliers and customers, and geographically. Just think of logistics systems that handle the management of freight through automated agents – the container searches for its route, books the necessary freight space, and reliably arrives at the port of destination as soon as possible.
  • Core resources
    Your current resources have the capabilities that your old business model required. Digitization needs new skills – e.g., handling the laptop/ smartphone/ IPAD/ computer, mastering all kinds of software, as well as telepresence in video conferencing. It is not enough to provide the appropriate programs. The employees AND managers need proper introduction/training. People are the eye of the needle through which the elephant must pass. Besides, you need the appropriate hardware and software, access to the Internet wherever you are. At the same time, existing office space can be used for other purposes. The crucial resource is the money to procure the means – and this at a time when sales are declining.
  • Core partners
    The idea that the IT sector is predestined for digitization may be right, but it ignores the actual tasks that are currently being carried out. Furthermore, the predominant work consists of operating the running systems and solving problems. You need new partners and suppliers. Who are the main digitization partners? Who are the main digitization suppliers? Which digitization resources come from whom? You should consider that after Corona, these partners will remain part of your extended enterprise.
  • Cost structure
    The most critical point at last. What costs are incurred as a result of digitization? How are the digitization costs distributed? What costs do digital activities generate? Many people believe that you can run your business with the many free tools from the Internet. Considering the implementation and personnel costs, this is not advisable as these free tools have limited possibilities, which in turn generate exceeding personnel costs – up to the point of shutting down the provider of such a product if the users do not contribute to their efforts. Since budgets are no longer covered by sales anyway, it is crucial to plan the business model holistically, i.e., to concentrate on the revenue generators – and nothing else.

Bottom line: In Paris, a star cook had to close her restaurant due to Corona, while costs continued to run. She quickly adapted her business model. In the beginning, she sold homemade cookies and discovered that customers appreciated this new business. Now she offers goods from the region. This kind of flexibility and decisiveness is required today. By reviewing your business model concerning new digital services (see above), you can adapt your business. After Corona will not be comparable to the past.