‘Careful we don’t get caught’: DDB boss Marty O’Halloran on the risk of handling Covid too well

Recent photographs of well attended live events have become emblematic symbols of why New Zealand is currently one of the best places in the world to live.

While the pandemic rages on and Europe goes through yet another wave of lockdowns, life in New Zealand has, after a few sporadic weeks in lockdown, returned to normality – albeit with a slightly more cautious rhythm.

This is all good on the surface, but what will our cosy position mean in the longer term? Is the back-to-normal approach setting up the nation for a larger battle as we later struggle to play catch up with the rest of the world that has had no choice but to adapt, evolve and move on from what was once understood as normal?

DDB global chief executive Marty O’Halloran has been mulling these questions as he looks at the Covid response across the 90 countries in which his firm operates.

The Australian, who has called New Zealand home since moving to Auckland in 1988, tells the Weekend Herald he’s noticed a clear divide between the countries that have been ravaged by Covid-19 and those that have managed the pandemic a little better.

“New Zealand has always been an innovative economy but I think there’s a danger that other markets will leapfrog us if we’re not careful,” O’Halloran says.

New Zealand’s strong early adoption rates and small population have long made it a good testing ground for new technology, but the impact of Covid has flipped the script to some degree.

“I think for a lot of [New Zealand] companies, the pressure they thought they’d face just wasn’t there, and as a result they just slotted back into the way things were back in 2019,” O’Halloran says.

Meanwhile, workers abroad haven’t had the privilege of having the option to return to the past. And O’Halloran has seen the impact of this bleed across retail firms, oil companies, car dealerships and a range of other categories.

He points to the example of car dealerships in the local market, saying that while car sales have gone reasonably well in the last year, the industry still faces the long shadow of disruption through the introduction of subscription models, ongoing environmental concerns and growing preference for remote work. Those issues haven’t disappeared – and it’s pure luck that local dealers didn’t see the rapid change their counterparts had abroad.

“The acceleration through the last 12 months has been extraordinary in a lot of categories.”

He says the mindset among international organisations has shifted from focusing on the crisis to now looking at how to run their businesses over the next five years – and few are looking to replicate what they had in the past.

These observations are backed by research. A McKinsey report published in October last year found that Covid-19 had speeded up the adoption of digital technologies by several years – and that many of these changes would be here for the long haul.

The report found that the digitisation of customer and supply-chain interactions and internal operations had been accelerated by three to four years, while the number of digital or digitally enabled products in company portfolios had accelerated by a staggering seven years.

The report also found that many companies are now taking the more aggressive approach of investment in this technology to make sure it sticks into the future.

The point here is that the digital evolution of business internationally extends well beyond logging on to Zoom from home or sending a few messages from Slack. Companies are being transformed at all touchpoints on the supply chain as well as in the areas seen by customers.

To name a few, companies have increased the migration of assets on to the cloud, increased spending on data security, introduced additional suppliers to build redundancy in the supply chain and increased the use of advanced tech in making business decisions.

Given the extended lockdowns and restrictions, the average share of customer interactions that are digital has ballooned from 41 per cent pre-Covid to 65 per cent.

To businesses operating abroad, these aren’t nice-to-haves; they’re imperatives of operating in the current climate. Failure to evolve will mean losing their competitive point of difference or falling to vulnerabilities in the supply chain.

The question now is whether New Zealand companies have done enough to prepare for a global marketplace that will look starkly different from the one we’ve receded from during the pandemic.

“From a New Zealand point of view, looking at the change that’s happening around the world, have we got the talent and the technology to compete?” O’Halloran asks.

“The attitude has to change. We have to look at how we learn from what’s happening around the world and use that to actually take advantage of the opportunity.”

There are already examples of this thinking taking shape in New Zealand. The Warehouse’s launch of The Market has come at a time when its traditional retail business continues to perform well, but the company recognises that it also needs a strong digital arm to prepare for the onslaught of global tech giants in the local market. The Market may not be making much at the moment, but the hope is that it will grow in the coming years.

This approach is effective not only in preparation for the longer-term battles but also as a safety net in the event of the next pandemic or catastrophe.

New Zealand may have avoided the worst of the current crisis, but the taste we got should serve as enough of a warning that we may not be as lucky the next time.

The McKinsey study showed the most successful organisations during the pandemic reported a range of technology-related capabilities that others lack.

Global firms that performed well in the crisis were more likely to have the ability to fill tech talent gaps, more advanced than their peers in the use of digital tech before the crisis hit, first movers in experimenting with tech and were the first to market with innovations during the crisis.

Those moves often weren’t simply made in the reactionary panic mode when everyone was coming to terms with the impact of the pandemic. The foundations for that were set in the quieter patches before the pandemic hit.

With much of New Zealand business in a strong position, O’Halloran thinks the opportunity is ripe to look at how we can prepare for the future.

“There’s an interesting shift we’re starting to see, is in CEOs who’ve done a good job of managing Covid and its impacts on their business, but they’re now totally switching to innovation and looking at how to grow their businesses,” he says.

“I think that’s probably the message to New Zealand: be careful we don’t get caught.”

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