If there were awards for overused phrases in business, ‘disruption’ would have won hands down over the last decade. But Covid has ended that remarkable run…we’re now in a period of ‘The Great Acceleration‘ according to McKinsey. For the first time in economic history, instead of a chaotic response to an economic downturn, this crisis has strengthened those companies with momentum and eviscerated the others. Don’t get me wrong, disruption has been a useful and adaptable concept and it has taken a once-in-a-century event to kill it. So, what is the nature of the beast which has replaced it?
The phrase The Great Acceleration is the theory that Covid has accelerated existing trends. So what are those trends?
- Flexible (asynchronous) work – commuting may never recover, e.g. Comscore revealed that despite some social distancing restrictions being eased, people visiting the National Rail (the primary UK train service) online are still at 50% of pre-pandemic levels. And earlier this year 30% of US professionals said they would rather quit if they had to return to the office.
- Digital including e-commerce – it has been decades in the making and it’s now a must for businesses.
- Remote services – e.g. the 2021 Real Chemistry Study revealed that now 1 in 3 US patients with chronic conditions prefer telemedicine for routine visits and treatments of specific needs.
- Slowing globalisation – driven by protectionism (see following point), demands posed by the climate change control will favour spatially more concentrated supply chains.
- Polarised politics and protectionism – interestingly, suburbanisation has generally been accelerated during lock-down and is turning conservative areas liberal, but the outcomes of this change are likely to only be felt in the medium-term.
Technology in its purest sense is the common thread through these macro-trends. Dropshipping is the quintessential example of how business has been disrupted / absorbed by technology. It uses the internet, m-commerce, silicon hardware (laptops and mobile), social media (advertising), e-commerce, international business agreements for fulfilment and vehicular advancements to ship the goods.
There have been very few U-turns and these trends are now irreversible in the foreseeable future. But what’s likely is history will write the change as being completed during the Covid pandemic.
That’s not to say that all the winners have been large companies – Peleton and Gousto aren’t big companies. But they did have a strong proposition and foundations before Covid, and they are both examples of propositions addressing these macro-trends.
What Should Small Businesses Do?
It’s not a word I know, but it’s short-hand for getting started and future-proofing your digital funnel. It’s now as fundamental to running a business as having a decent website. Sure, it’s harder than it used to be to grab people’s attention, let alone drive them to a website to become a lead. But, this is simply how business is now done – especially for modern B2B companies. There are few other options. The dominant trend for businesses which are new to this is the move to first-party data gathering, triggered by the deprecation of third-party cookie support in browsers (which enabled very specific retargeting). Plus opt-out prompts on mobile devices (which has already happened for iOS and will soon happen for Android), which drastically reduces the amount of data app developers can harvest from mobile users for advertising targeting as well. On the other hand, the first-party data gathering value chain is an opportunity for:
- New technology – e.g. LiveRamp’s IdentityLink and Prebid’s Universal ID 2.0, and established CRM providers like HubSpot and Salesforce.
- Publishers – those who have a huge database of users will be in a strong position to partner (sell their data) with ambitious young companies.
- Digital behemoths – e.g. Apple, Google, Facebook and Amazon will hash out a bridge both technically (Amazon’s new ad identifier) and commercially to replace third party cookie targeting.
As per this LinkedIn comment last month, with an increasingly noisy and competitive market where leaders are even stronger than before Covid, smaller companies have to do things differently. And doing differently goes beyond ‘The Challenger’ brand ethos laid out in seminal books like “Eating the Big Fish”. This new era calls for ‘Contrarian Thinking’ as laid out by LinkedIn’s The B2B Institute Peter Weinberg in this post here. It’s the other side of the coin of a concept as outlined in the Conversation Agent this month which points to novelty being the secret to innovation. The starting point for this way of thinking is to admit that ‘doing the same’ is no longer viable in today’s world.
What Should Big Businesses Do?
The challenge is not just identifying the trends but also freeing up resources to act on them. In addition to the usual social media listening tools e.g. Brandwatch and Mention, there’s now other suites of tools such as SEO e.g. ahrefs, and even AI-enhanced scanning tools such as SparkBeyond which scrape billions of public pages which should feed into the large business decision making process. Acting on this intelligence is often hamstrung by rigid budgeting processes, social dynamics among the top team, and other organisational factors. Progressive companies have long adopted the ‘tiger team’ approach of quickly-assembled teams and a pre-prepared way of working. This has become table stakes in a post-Covid business environment.
The lesson is that you need to lead with a through-cycle mindset – thinking holistically about your strategy. Leaders tend to double down on innovation, sales and digital capabilities, but that requires first creating the optionality; not growth and investment at any cost but putting yourself in an operationally and financially stable position to act on opportunities. In Warren Buffet’s language – ‘when there’s blood in the streets’. M&A is another big lever, especially right now. Mergers and acquisitions are down this year, but judging by the activity in the past few months you would expect an upturn. What is my M&A strategy and my diligence approach? And in this new era, is my acquisition target fit to acquire new customers digitally and address all or any of the other big macro-trends?
In conclusion, the new king term aka ‘The Great Acceleration’ will surely be as overused as disruption was over the coming years in many strategy meetings. But, I’m afraid there’s no escaping it. So, sit back and relax – at least we’re at the start of the new era.