Covid-19 forces rethink of operations and digitalisation

Singapore

BOOTS on the Web is just as important as, if not more important than, having a presence on the ground, say consultants, as border closures and widespread movement control orders brought about by the Covid-19 pandemic has brought about a rethink of operational expectations and norms.

"It certainly has been a big setback in terms of the internationalisation process, but it also depends on how deep you already are in the internationalisation journey," says Ng Siew Quan, Pricewaterhouse Coopers (PwC) Asia Pacific leader, entrepreneurial and private business.

Those further along in their journey might even have found that with Covid-19 taking its toll on different countries at different stages, their internationalisation efforts have provided them with an edge.

But what is interesting is how Covid-19 has forced people to start looking at how they can operate and even open markets remotely.

"E-commerce is borderless. And if they can leverage that, with the Singapore branding, they have an edge."

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Wilson Chew, who leads the strategy team in PwC's entrepreneurial and private clients practice, adds: "Internationalisation is no longer just about boots on the ground, it is also about boots online and capturing eyeballs online."

This push towards digitalisation is proving equally important for a sector not usually associated with it - manufacturers.

Diaan-Yi Lin, who leads McKinsey and Company's Singapore office, points to a survey of Asia manufacturers the consultancy conducted which found that one in three cited challenges with worker unavailability during the pandemic.

Fast-tracking automation programmes to stem worker shortages definitely helped, but so do technologies that enable remote collaboration.

"More advanced solutions like wearable technologies for remote assistance, predictive algorithms for maintenance, or dashboards that enable remote monitoring of factory performance also help relieve constraints on worker availability," she says.

Both PwC and McKinsey have been supporting local enterprises picked for Enterprise Singapore's (ESG) Scale-up SG initiative. The 2.5 year programme has seen two intakes of businesses; the consultancies have supported over 20 companies each.

Companies that participated vary - some were heritage brands such as Bee Cheng Hiang and Markono, others were younger brands like Cocoba (behind IRVINS salted egg snacks) and Castlery. Sector-wise, beyond F&B and retail, there were also businesses from R&D-focused industries like KH Roberts and and engineering solutions firm PATEC.

To help these companies "scale-up", a lot of the focus was on internationalisation, business model reinvention and of course, digitalisation, says McKinsey's Ms Lin.

The consultancy in fact had to do its own pivot when Covid-19 hit, as they focused efforts on helping firms weather the storm. But ultimately, the key tenets remain, she says.

"Clearly, the big Covid-19 trend is digitalisation. And for a lot of companies, we were already working on how to incorporate the use of technology and digitalisation into their models," she says. "The other question is 'How do I reinvent my business model?' Covid just intensified and accelerated the importance of (answering this question)."

ESG's deputy chief executive Ted Tan agrees.

"Companies will have to go beyond basic digitalisation efforts and look at more sophisticated technologies that will set them apart," he says.

Beyond building up capabilities, being agile and ready to invest in innovation, it is also about reskilling and upskilling workers.

But McKinsey's Ms Lin says that for many SMEs, structured talent development is not a priority item. Instead, the tendency is to focus on the "commercial" components such as sales.

"Many of the SMEs coming into the programme, I would argue, are a little bit behind in structured talent development. With us asking them to reinvent their business model, build new skills, and take on digitalisation, this is further exacerbated."

For PwC's Mr Ng, being prepared is a key differentiator.

"This is an unfortunate but good test for companies that have invested upfront in proper governance, proper systems, proper processes, finding the right people to do the job, and providing the right training," he says.

"Those that are suffering the most have been reacting to orders and have not taken the time to diversify ... It stresses the importance of doing the preparatory work."

While the challenges thrown up by Covid-19 are very real, McKinsey has counselled the companies they are working with to keep one eye on the larger picture.

"Focus on what it takes to return, which is a more short-term focus, but then also have a group of people who are predominantly working with us more strategically to think about what it would take to re-imagine your business," Ms Lin says.

Similarly, ESG has an eye on the bigger picture. They are currently in discussion with potential partners and companies for a third run of the programme. While the core attributes they are looking for remain unchanged - a proven track record of growth, strong leadership and ability to contribute to Singapore - there will be a greater emphasis on technology-focused companies that are positioned to capture growth opportunities in the new normal says Mr Tan.

He adds: "A key element of Scale-up SG hinges on 'community' ... There is no better time to band together than in difficult times. We encourage companies to be open to partnering each other, be it to help one another or jointly explore business opportunities. Strength in numbers allows for more creative collaborations and fosters a supportive environment for businesses to emerge stronger together."