Busi­ness mod­els un­der scrunity

[1]

The Corona crisis also shows us how important digitization and the use of digital media are. What do you think: Can this crisis basically be a kind of wake-up call or catalyst for digitization in Germany?

Prof. Dr. Daniel Schallmo: That is an interesting question. Basically, I think the corona pandemic and the associated crisis are dramatic when you think of the number of victims worldwide. But anyone who knows the Chinese word for "crisis" also knows that another meaning is "opportunity". So every crisis also contains an opportunity. And I can see that quite clearly at the moment.

We have hardly been able to see the development we have noticed in the digital context in recent weeks. For many people, working from home and communicating via video telephony were rather alien. Furthermore, the infrastructure in the form of headsets, cameras, etc. was often not available.

And to answer your question: A resounding "yes" – the Corona crisis is both a wake-up call and a catalyst: a general wake-up call that shows how sensitive and vulnerable we are; a wake-up call in the digital context that shows that we have a lot of catching up to do, for example, in terms of equipment, acceptance and use of digital potential. Furthermore, I also see the Corona crisis as a catalyst, because at least currently the mindset has changed. Companies and institutions, for example, have adapted to the new circumstances in a very short time.

[2]

There's a lot of actionism these times: According to the motto „necessitiy begets ingenuity“, Enterprises become creative, focus on video conferences, online marketing, virtual purchase miles, on-demand supplies and much more besides. Do these changes and innovations only survive the crisis – or are there trends that you expect to see long-term consolidation in the post-corona era?

Prof. Dr. Daniel Schallmo: 

I think that the changed mindset mentioned above and the greater acceptance and use of digital media are currently showing us what is possible and also what advantages are available in terms of usage.

According to a study by the Federal Institute for Population Research from 2018, 26.8 % of all employed persons (around 11 million people) needed more than half an hour to get to work. Just think of the economic and ecological damage this causes. Currently, the number of active commuters is much lower, since the potential of digital media is (must be) used more intensively. The question is, however, how much of this will be taken over in the post-Corona period.

With regard to innovations in marketing communication and sales, there are certainly some current good examples of how companies are dealing with this. Whether, how much and how these innovations will be carried over into the post-Corona period depends basically on many factors, which, as with any innovation, also apply. First of all, this includes customer acceptance. Are they prepared to use "crisis innovations" even in retrospect, or do they prefer the "tried and tested" way? Another factor is the behavior of competitors. If they offer the "crisis innovations" in a more mature form and at a lower price than "tried and tested" solutions, this can be a reason for broader acceptance and thus use. Ultimately, it depends on the respective product and service. A YouTube tutorial on how to cut your hair does not replace a visit to the hairdresser. However, a sales talk on sports shoes can be both personal and virtual.

I would like to adapt the often mentioned principle: "Everything that can be digitalized will be digitalized" into "Everything that was digitalized during the Corona crisis will remain digitalized if the customer demands it".

[3]

Some companies seem to have found it easier than others to switch to other business models due to the crisis. How can companies proceed to adapt their business model during the crisis?

Prof. Dr. Daniel Schallmo: First of all, it is important not to get into pure actionism, but to keep a cool head. I therefore recommend a clearly structured approach consisting of four phases with guiding questions.

1. Taking stock: What is our current business model? This involves outlining the business model of a company with customers, services, value creation, partners and finances.
2. Risk analysis: Which elements of our business model are threatened by the Corona crisis? Here, the risks for our own business model are specifically listed and evaluated.
3. Idea derivation: What ideas do we have for adapting our business model? This involves concrete opportunities that can currently be used to counteract the risks.
4. Implementation and continuous adaptation: Which ideas can we quickly implement, test and, if necessary, adapt? This is the implementation part, which is also about testing ideas and concepts and adjusting them if necessary.

This approach can help companies to derive structured ideas for adapting their own business model and to implement them.

[4]

Team meetings via video, jour fixe via business messaging: The daily work of many employees is currently limited to their own four walls. What does this mean for collaboration in companies, especially in those where the cooperation structures have perhaps been insufficiently digitalized up to now?

Prof. Dr. Daniel Schallmo: The current situation presents each of us with special challenges; nevertheless, I am positively surprised by the newly established routines. In the first week of the initial restrictions, we could observe a kind of shock and uncertainty due to the unprecedented situation. In the second week, new forms and media of cooperation were explored and tried out. And starting in the third week, existing routines were adapted and new ones established.

The new forms of collaboration and changed routines are accompanied by a high level of uncertainty. Employees ask themselves whether their workplace is secure, how and when it will continue, etc. This requires managers and their employees to convey a minimum of stability and routine and, above all, to enable proximity (even if only virtually). This means being available and communicating regularly (e.g. once a day) with the entire team or with an employee. It also means trusting employees and delegating responsibility.

On the part of the employees it is important to accept the transferred responsibility and to organize themselves and thus define their own way.  For both employees and managers, it is important to make agreements, define goals together and be available.

The listed points are not new, but belong to the characteristics of agile organizations. These characteristics also include teams organized in networks, flat hierarchies, fast decision-making processes and a performance orientation. Companies that have had an agile organization for a long time and practice an agile way of working therefore have a clear advantage.

[5]

What distinguishes a strong leader in this time?

Prof. Dr. Daniel Schallmo: In my opinion, there are a few important points that particularly characterize a strong leader in the current situation. First of all, it's about communication skills, i.e. giving feedback, listening, being available and communicating at eye level. Especially when leading at a distance, orientation towards people is just as important as in a normal situation. This means showing appreciation and respect for the employee just like in normal situations and maintaining a rich relationship. This also includes leading employees in a trustworthy manner.

Decisions should, if possible, be made in a team and quickly agreed upon in order to enable goal-oriented action. This also requires transparency, which requires free access to internal information.

In terms of media competence, managers should act as role models and master technical communication media or be open to these media and create appropriate structures. Another characteristic is prioritization, i.e., setting a clear focus and accents and aligning activities with the necessity for the company. Finally, it is important to make the sense of one's own actions tangible to all employees and to communicate this to them.