How COVID-19 is Transforming Business

In this EH Trade Talk interview, Aaron Lindstrom, Regional Head of Transformation and Digital Partnerships, will discuss the impact of COVID-19, how businesses have transformed, and finding opportunities even during these uncertain times.

Q: Businesses have had to change how they operate across the board. Collaborating, travelling, events, marketing, sales, finance, everything. From your perspective, what stands out the most as far as how B2B companies and their employees are adapting right now?

Answer: I think a lot of this can be summarized by a funny little meme that's going around social media that asks, "Who led digital transformation of your company? Was it the CEO, the CTO or COVID-19?" And of course, COVID-19 has a big circle around it. And we joke about that in the transformation world, but obviously, this situation has created unprecedented digitalization and transformation in almost every industry. It's really the first time, at least in our lifetimes, if not globally, that this kind of disruptive event has happened that's really impacted every aspect of trade, every sector across the board, positively in some but negatively in most.

And so it is really interesting to watch how companies react. Obviously, there's been a big push to get all noncritical employees out of common areas. We joke around, it's no longer work-life balance, it is work-life integration, that work is with you wherever you go constantly, 24/7. And that's been one of the biggest impacts, I think, on most of the people, both within the company and within our other partners, is really the idea of working on demand as many hours as it takes to get the job done and really striving to find that balance between your personal needs and your professional needs. And then obviously, there's been disruptions in the supply chain, shortages in toilet paper, if you're a Costco user, all kinds of things like that that have impacted us on both a personal and professional level.

Q: Some well-known brands like Groupon, Instagram and Slack were started in the Great Recession. What are your thoughts on innovating and finding opportunities even in this extremely difficult environment?

Answer:  Well, one of the silver linings is that every major disruptive event certainly causes a radical transformation and innovation throughout the world. In this specific situation that we're dealing with today, we're really looking at a shift in how we utilize our workforce. You have companies like Twitter that have come out and announced that they are going to allow all of their employees to remain home for as long as they would like up to, and including, indefinitely. It really changes the landscape of this need to have large real estate investments and open offices for collaboration. People are really learning how to digitally partner. A few years ago this interview would have been the two of us in the same room, at the same time, with lots of camera equipment. And now, we're able to stand this kind of stuff up across the country on our phones.

So I think you will see a lot of technology coming out of this situation and it's going to impact every sector of our life - how we travel, our leisure activities, even media delivery. You see that the streaming services are booming right now while traditional movie theater is obviously not doing so well. But the other thing to remember is that it is a great time to seize that opportunity. And it is cyclical in nature. You mentioned the Roaring Twenties following the Spanish flu pandemic. And we all know that the end of the 1920s, entered the Great Depression, right? So we have these periods of innovation and economic boom followed by really difficult situations. So I think for the innovators out there, it is a great time to launch. In the coming months, we should see everything up into the right, and there's really no better time to launch an innovative or radical transformation than on the upswing of the downturn.

Q: We hear the phrase "new normal" a lot right now. A lot of new business practices, working from home, what you mentioned as far as streaming services, are all good examples. Any thoughts on which of these kind of impromptu, need-based changes you expect companies to maybe adopt as more like long-term even after this crisis passes by?

Answer: When this all occurred, we think back to early March, as states in the US began to go into quarantine or travel bans, there was no schooling at all for children in most geographies. Well, now we have remote learning and next month, we'll have something else. And next month is whatever summer vacation follows after that. And so I think that companies need to be cognizant that it is a very fluid situation right now. I definitely think that technologies that will stick are typically technologies that will encourage remote participation and online joint collaboration. I think you're going to see more technologies that do this across company.

And I really think that anybody in the technology sector is going to be positively impacted by this. But I also think you're going to see some really radical transformation in supply chain, in consumer product delivery, in the nature of retail and entertainment. We have to remember that things like streaming services and collaborative services, those were on the rise before COVID and I think they're going to continue to rise after. I also think that you're going to see events that have unfolded, for example, in Wuhan, the revenge economy, where people are going to go out and spend money on novel new things that they never would've spent money on before, just because they can. And then that's going to change business practices. That's going to change finance markets, credit markets. It's going to be very fluid for at least the next three to four months, if not longer. Companies just need to stay open and evaluate what technologies they've implemented, what process changes they've implemented, and continue to innovate from there.

Q: Many companies are trying to find ways of doing more with less, of improving operational efficiencies. That's a focus area for you. How do you typically go about identifying and prioritizing optimization projects?

Answer:  Well, there's a couple of different things that people need to look at when they're standing up a transformation project or any kind of innovation within the company. The obvious place to start is what we call the high volume, low value applications. Those can be things like the processes for approving invoices, issuing checks, any data processing where information is passed from person to person or system to system. Those are great opportunities for things like API-based technology to really come in and give an efficiency boost. The next thing that people need to look at is what is the cost of development, and is this an investment we're making that benefits the long-term of our business or is this an investment that we're just standing up for a three-to-four-month crisis? And given that every company has limited resources, we always need to look at technologies and processes that can be basically reduced, reused, and recycled. So if we're creating an API-based product for one application, we really need to make sure that that underlying technology can be reused as often as possible.

And then the final evaluation we need to look at is how disruptive is this change going to be to our employees, customers, and stakeholders. We're obviously undergoing a huge amount of disruption just from the COVID situation. So to stack up tons of net new processes where we can't all get together in a conference room and train just requires different methodology, different considerations. And so once you put your project through those various constraints, it can give you some great guidance on where you should focus your efforts. Bottom line is anything that we need to do right now, at least for our organization and most other organizations, really needs to have a direct, tangible impact on our workforce and clients.

Q: Do you have any tips or tools you can recommend to our audience, probably credit managers, CFOs, really anybody in a senior position that's trying to figure out how to help their company seize opportunities they do see and still avoid a lot of risk?

Answer:  I think there are a lot of companies that have stood up very rapid technological responses to help, especially the credit and finance community, whether that's banks processing checks remotely, or credit organizations providing glimpses of data similar to our TradeScore platform. TradeScore gives companies a really easy-to-digest methodology for looking at the risk of their suppliers, customers, and competitors.

I think that there's a lot of things that companies can do to increase their efficiency. One note of caution with that, though, is that a lot of these API-based strategies have been rushed to market. Here at Euler Hermes, for example, we're benefiting from the fact that we have a three-to-four-year history of our SmartLink APIs that help our policy holders actively incorporate their credit insurance program into their ERP, CRM, or accounting platforms.

And while those products may not have been as initially well-received as we would have preferred, what we're seeing is that with the disbursement of workforces, the ability to hand a credit file from one person to the next is greatly diminished. There's a lot of data transfer. There's a lot of opportunity for error. The API-based products that we've had in our portfolio for a while is seeing a dramatic uplift, as well as, the new TradeScore program, we're expecting to have a great success in the market with that.

Q: Do you think embracing digital transformation before this pandemic somehow helped Euler Hermes coordinate a crisis response as well?

Answer: It certainly has. We already had some early learnings on how we can collaborate across geographies as a multinational company with a remote sales force. Again, that cross-geographic environment that we've had to learn to operate in has certainly given us advantage, but I can't say enough about how wonderful our IT department and our transformation teams from the board level with people like Virginie Fauvel; our local CEO, James Daly, and their support of our digital transformation efforts, left us miles ahead of our competitors.

We were able to effectively, in a two-week period, go from a very low percentage of home office, non-distribution staff being clustered into several geographically-centered offices to an entirely remote workforce with almost no disruption to the core underlying systems or our ability to deliver for our clients. Wilfried Verstraete, our CEO, has always had a huge emphasis on digital culture and transformation, and really that guidance that we've been benefiting from in the last few years from every level of the organization really put us miles ahead of being able to respond to this crisis in a very appropriate, very rapid manner without adding to the disruption that our employees and clients were facing.

Q: For short-term versus long-term needs, what are your thoughts on businesses balancing the need to reduce costs and risks right now with that responsibility and the need to adapt, innovate and grow, especially as we come out of the crisis?

Answer: I think there's a couple of things that companies can learn through our corporate journey into the digital transformation space and just responding to COVID in general. And the first one of those is that at every level of the company, the question is asked, where does transformation start? It should be in your seat. And again, going back to the last question, that's really an advantage that we had in this situation is that our senior management does embrace that philosophy. From the board level down, we're open to changing and really having an emphasis on what our clients and our customers and our employees need to get the job done. So as we look at short-term projects, I think it's important that if companies are standing up any kind of technological solution or process change to respond to COVID, that they either have an equally robust strategy from exiting that temporary process or they have plans to industrialize it and make it part of their workflow moving forward. Really standing up a response that's only going to be valid for three months is an exercise in futility because as we talked about earlier, there will be other downturns, there will be other disruptors. It could be an earthquake, a famine, an alien invasion, whatever it is that's going to be the next thing, right? We've got murder hornets and we've got COVID, and who knows what's going to be next out there.

So I think it's really keeping an open mind to how can we change what we're doing. By their nature, organizations have systems. And those systems have been flushed out and tested, and they work really well. The job of transformation and innovation is to see if they could work better? And so I think that now that we've gotten through the initial wave of the crisis, really, for both long and short-term applications, companies need to look at what can they do better, what have they learned through this experience, and make some really data-powered decisions about how they alter their processes forward. And I think there also needs to be a little bit of caution for how they innovate. I think that companies that throw too much money at too much innovation just for the sake of that checkbox are going to find themselves running in 15 different directions. So it's a really, again, silver lining that companies now have the ability to look at what are their critical functions, what services were they offering or systems that they have in place that really don't positively impact their employees, or clients. Remove that waste and then identify areas that can bring additional value. Anything that you can bring to value to the market as a COVID response right now is something that you should probably be doing anyway, right?

When we look at platforms like TradeScore that will give information to customers and help them make better decisions, those are things that we wholeheartedly want to continue after the crisis is over, and look at ways to build on those to bring new value propositions to our client base. And that's really the same journey that every company should be on right now.