Six pandemic lessons enterprises can learn from startups

Dig­i­tal trans­for­ma­tion. Until now, many found the phrase con­fus­ing, neb­u­lous, even mean­ing­less alto­geth­er. But like so many things over the past 18 months, the pan­dem­ic changed every­thing. 

With glob­al lock­downs forc­ing com­pa­nies to trans­form their oper­a­tions, the adage that dig­i­tal trans­for­ma­tion was “do or die” sud­den­ly came to pass. More than ever before, dig­i­tal capa­bil­i­ties became inte­gral to day-to-day oper­a­tions, almost across the board.

Small­er organ­i­sa­tions might face greater pres­sures, so they def­i­nite­ly look at what they can do with their assets

Lega­cy mind­sets real­ly did slow peo­ple down, while dig­i­tal natives thrived. Those that lagged before strug­gled even more, while the dig­i­tal natives and star­tups were well equipped to deep­en their capa­bil­i­ties and improve their offer­ings, thanks to their nim­ble­ness and agili­ty. 

So what lessons do these small­er, younger play­ers offer to old­er and big­ger enter­pris­es? Here are six key take­aways. 

Flexible working

A hybrid work­ing world is on the hori­zon, with com­pa­nies rely­ing on a mix of in-office staff and remote work­ers, depend­ing on neces­si­ty. Down­siz­ing on expen­sive office estate has obvi­ous finan­cial appeals, but it also offers real oper­a­tional agili­ty for a huge range of organ­i­sa­tions. 

Engine B is a start­up that pro­vides data ser­vices to the pro­fes­sion­al ser­vices indus­try. It won £1.7m in fund­ing in April 2020, just after the first UK lock­down. 

Accord­ing to CEO Shamus Rae, the com­pa­ny had a “big advan­tage over most of our larg­er coun­ter­parts” because it wasn’t run­ning any lega­cy sys­tems. 

“All our work and sup­port sys­tems were in the cloud and we were already lever­ag­ing remote out­sourced ser­vices for finance and HR,” Rae says. When the pan­dem­ic hit, Engine B was impact­ed ear­ly, he says, because some of its staff became ill. It quick­ly moved to remote work­ing before the first lock­down, min­imis­ing fur­ther risks. 

“We were lucky to be in a co-work­ing space where we could ter­mi­nate our office at short notice and piv­ot to remote work­ing with­out any con­tin­u­ing costs.”

Once the pre­serve of star­tups, more Sil­i­con Val­ley busi­ness­es are adopt­ing a mixed or remote mod­el. Com­pa­nies like Git­Lab, for exam­ple, have long been major­i­ty remote, even before the pan­dem­ic struck. This set them up for the future of work, expand­ing their tal­ent pool in the process.  

Automation

Mar­tin Rehak is CEO and founder of secu­ri­ty fin­tech start­up Resistant.ai, which launched in 2019 and grew over the pan­dem­ic. For com­pa­nies to remain com­pet­i­tive, they must com­mit to automa­tion in the same man­ner as the small­er, dig­i­tal-native com­pa­nies, he believes.

Busi­ness­es must take automa­tion and dig­i­tal trans­for­ma­tion seri­ous­ly or die, says Rehak. The way for­ward can be illus­trat­ed by devel­op­ments in chess over the years. Com­put­ers long ago proved their chops against humans at the ancient game, a supe­ri­or­i­ty that remains the case today in a one-on-one match. But econ­o­mist and for­mer youth chess cham­pi­on Tyler Cowen notes that if humans and com­put­ers work togeth­er against anoth­er com­put­er, they make a for­mi­da­ble, prac­ti­cal­ly unbeat­able team 

“If you want to oper­ate in the new world, you’ll have few­er peo­ple, they’ll be bet­ter trained and they’ll be experts,” Rehak says. Organ­i­sa­tions sim­ply shouldn’t use employ­ees to do menial tasks that should have been auto­mat­ed a decade ago. “That is the big trans­for­ma­tion.”

Incubators 

Enter­pris­es have long found val­ue in run­ning cor­po­rate incu­ba­tors, attempt­ing to bring some of the start­up mind­set to lega­cy com­pa­nies that may be over­wrought with gov­er­nance, hier­ar­chy and red tape. 

Cor­po­rate incu­ba­tors bring ear­ly stage star­tups under the tute­lage of the par­ent organ­i­sa­tion, allow­ing them to oper­ate with auton­o­my but with access to resources and guid­ance that oth­er­wise could be hard to come by. 

The par­ent busi­ness, mean­while, gains access to dis­rup­tive tech­nol­o­gy, inno­va­tion, and an out­siders’ per­spec­tive with­in the walls of the com­pa­ny before the busi­ness spins out. 

It’s clear that some large cor­po­rates have long under­stood the val­ue in look­ing to star­tups and SMEs. But there’s plen­ty to learn in a more gen­er­al sense, too, and espe­cial­ly over this recent, strange peri­od. 

“I think that learn­ing will con­tin­ue and inten­si­fy” after the pan­dem­ic, says Hele­na Nim­mo, CIO of soft­ware devel­op­ment com­pa­ny Enda­va. A lot of large com­pa­nies have already estab­lished dig­i­tal incu­ba­tion units where they tri­al a new dig­i­tal lay­er on top of some of their her­itage IT, she notes. For many com­pa­nies, it’s now OK to try and fail. 

“I think that is a huge shift in many mind­sets.”

Omnichannel

It’s no secret that many tech com­pa­nies flour­ished under the chal­leng­ing cir­cum­stances of the pan­dem­ic. It was anoth­er mat­ter for retail­ers. 

The brands of high-pro­file casu­al­ties like Arca­dia Group, which went into admin­is­tra­tion last Novem­ber, were quick­ly snapped up by dig­i­tal-first retail­ers such as Asos and Boohoo. The reliance on brick-and-mor­tar stores meant busi­ness­es like Top­shop and Bur­ton weren’t con­sid­ered viable as they were.

The fact that huge e‑commerce plat­forms absorbed them sug­gests a shift­ing require­ment for gen­uine “omnichan­nel” retail, where dig­i­tal plat­forms are meld­ed with phys­i­cal assets but in a smarter way than mere­ly occu­py­ing pre­mi­um real estate loca­tions. 

Per­haps noth­ing could have saved Arca­dia from its fate, but there are lessons to be learned all the same. Take the auto­mo­tive sec­tor, which ini­tial­ly felt the full brunt of the pan­dem­ic as economies every­where buck­led. After a recov­ery in search queries towards the end of 2020, deal­er­ships began to con­nect their offer­ings dig­i­tal­ly. They altered the online buy­ing expe­ri­ence based on cus­tomer need, merg­ing dig­i­tal chan­nels with phys­i­cal logis­tics.  

Partnerships

Many of us gave cash a wide berth, with busi­ness­es favour­ing con­tact­less pay­ments. San­tander, which had faced chal­lenges from chal­lenger banks such as Mon­zo, took the oppor­tu­ni­ty in 2020 to rethink its approach to dig­i­tal. 

Rather than turn in-house, it part­nered with fin­tech start­up Per­so­n­et­ics to dri­ve the back­bone of its dig­i­tal offer­ing. The bank launched My Mon­ey Man­ag­er in Novem­ber, bring­ing it some­what up to speed with the neobanks. 

This is a clear-cut case of an enter­prise turn­ing to a fin­tech start­up to deliv­er the capa­bil­i­ties it had been lack­ing. The bank takes this seri­ous­ly, view­ing start­up col­lab­o­ra­tion as a key pil­lar in its strat­e­gy. It hopes to work with the busi­ness­es that emerge from its fin­tech ven­ture cap­i­tal arm, Mouro Cap­i­tal, which it spun out in 2020. 

Sweating the assets

A lot of cor­po­rates fail to look for­ward in their busi­ness strate­gies, align­ing the tech­nol­o­gy strat­e­gy and roadmap accord­ing­ly, says Jaco Ver­mue­len, a port­fo­lio CTO cur­rent­ly at BML Dig­i­tal. Remote com­mu­ni­ca­tion tools like Skype lin­gered on many of our machines since its first soft­ware client was released in 2003, but it wasn’t until the pan­dem­ic that busi­ness­es were forced to use such stuff remote­ly.

How­ev­er, small­er busi­ness­es have a stronger imper­a­tive to actu­al­ly utilise what they’ve paid for, gain­ing max­i­mum val­ue. 

“Small­er organ­i­sa­tions might face greater pres­sures, so they def­i­nite­ly look at what they can do with their assets,” Ver­mue­len says. “Since they are in a near con­stant shap­ing phase, they look at how these need to be aug­ment­ed or replaced when it does­n’t meet the objec­tives they’ve had for the busi­ness.”

To make the most of a company’s assets, a shift towards an out­come-based mind­set is required. Star­tups have long had a ten­den­cy – espe­cial­ly in the soft­ware indus­try – to pri­ori­tise results over process. It’s some­thing enter­pris­es would do well to con­sid­er ahead of any future crises. 

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