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How the TMT industry found reservoirs of creativity and resiliency during COVID-19

Corporate Risk Tools and Technology|Cyber Risk Management|Future of Work
COVID 19 Coronavirus

By Sara Benolken | September 9, 2021

It’s too soon to say we have put all of the challenges of the past year and a half behind us, but the technology, media and telecommunications (TMT) sector quickly learned new ways of doing business.

Willis Towers Watson recently completed research into risks surrounding the TMT industry. Unsurprisingly, our findings, which you can see here, were heavily influenced by COVID-19 and worries about new risks that will follow in its wake.

As I reviewed our findings, I thought back to the first few weeks of 2020, when most TMT companies were still working to understand the full scope and impact of a global pandemic. It soon became clear that business models, strategies and operations would need radical change.

The word “alarm” might be too strong to describe business behavior in those early days. Although I saw plenty of furrowed brows in client meetings and among my own colleagues as we came to understand COVID-19’s disruptive impact on everything from traditional office arrangements to supply chains, to shifting customer needs and expectations.

Resiliency, creativity, determination

I also noticed something else – a degree of resiliency, creativity and determination that was to power most TMT companies through the worst of the pandemic and an increasingly tough geopolitical environment. It’s too soon to say we have put any of these challenges behind us, but we quickly learned new ways of doing business. Many of those practices will stay with us, helping us continue to succeed and making us more resilient.

Think, for example, of remote working arrangements. Most companies, including Willis Towers Watson, had established the technology and protocols needed for employees to work from home after a hurricane or other natural catastrophe. They had, in effect, already created a new regional business model that could be scaled up to a global level as the pandemic forced widespread office closings.

Flexibility in redeploying technology was matched at most companies with successful efforts to keep workers engaged and motivated. In my view, the workforce and talent management element was the true key to managing through the brutal early phases of the pandemic.

Creativity was also at play as TMT companies embraced mission-critical behaviors around changing customer demands and expectations, sometimes with changes to well-established business models and strategies. This was evident within media companies. For example, The Walt Disney Company expanded its direct-to-consumer strategy while reorganizing to streamline operations.

In my meetings with clients, I found most of them had already accepted the fact that sure-footing is temporary in a sector that was already in the throes of digital transformation before COVID-19. Still, business leaders may have surprised themselves with their ability to change quickly and often to meet new business challenges. “Change?” one executive said. “Bring it on.”

Other companies discovered that weakness they may have tolerated in the past had to be corrected quickly. In other words, the past could no longer dictate the future. This may have been part of the thinking in AT&T’s recent decision to change course by separating its media and telecommunications operations to gain financial flexibility while concentrating on potential 5G and fiber growth opportunities.

Changes in risk management

Risk management has stepped up its game with more flexible and effective business continuity plans, including scenario planning. In a 2016 Willis Towers Watson survey, the possibility of a global pandemic did not show up among business threats most feared by TMT leaders. Yet risk managers moved quickly (often with our help, I’m proud to say) to contain and manage exposures. At many companies, risk managers began working more closely with corporate finance, procurement and other functions to systematically identify future threats or to build in the resilience needed for the inevitable black swans.

TMT companies also used the COVID-19 challenge to accelerate technological advances on several fronts. Digital transformation picked up pace, for one thing. McKinsey has estimated that business and consumer digital adoption moved five years forward “in a matter of around eight weeks,” spurred by the pandemic. Synergy Research Group research suggests that cloud-based computing rose more than 25% in 2020’s third quarter over the previous year, again driven by the pandemic.

In our work with risk and finance executives as well as insurers, we started seeing more widespread and effective use of data and analytics to identify, measure and manage risks. This welcome trend may only be peripherally related to the pandemic, but it suggests a new willingness among business leaders to apply analytics to risk management in ways that were overlooked or underutilized in the past. This is also true for insurers, who increasingly use advanced analytics to manage risk portfolios while providing financial benefits to clients who are best at managing risk.

Increased focus on ESG

More recent research suggests increased TMT focus on environment, social and governance (ESG) risks. If you have any doubts about the importance of this trend, consider Exxon Mobil’s shocking loss of board seats to Engine No. 1, a small investment firm that gained support from Vanguard, BlackRock and other major Exxon shareholders on the strength of its argument that Exxon’s future profitability and business success depends on reducing its carbon footprint while investing in green energy alternatives to petroleum.

Although Exxon is obviously not a TMT company, its loss will confirm TMT efforts to apply ESG principles to their operations. Shareholders, employees, political leaders, regulators and other stakeholders will increasingly hold business leaders accountable for responsible ESG principles, not just on environmental matters but in efforts to reflect consumer values and to achieve the brand and operational benefits of a diverse workforce.

The upshot of all of this is that TMT companies can gain a lot of satisfaction for the way they managed their companies through the heart of the pandemic, geopolitical stresses, and a complex legal and regulatory environment.

Being ready for the next surprise

I don’t mean to suggest that our work is done. “It ain’t over till it’s over,” as the great American baseball legend Yogi Berra once said. I see an indefinite and perhaps permanent period of load rebalancing as companies continuously evaluate what they need to do to remain competitive, profitable and in sync with their customers.

We know now that old standards aren’t going to work, and that abrupt, ongoing change is a permanent part of the business landscape. When we finish a day’s work, as I noted in our 2021 TMT Futures Report, we need to be ready for the surprises that we’ll find the next morning. This isn’t necessarily a bad thing if you expect change, and if your strategy, operations and employees are ready for it.

TMT executives get this, and they have become more confident and effective leaders by having been put to the pandemic test. Better still, I sense that their business acumen has been broadly supported by a determination to do the right thing. This is no small accomplishment.

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast Inc. (in the United States) and Willis Canada, Inc.

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Global Industry Leader, TMT Industry

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