Is your brand wasting the Covid crisis?
By Dheeraj Gupta
Out of every calamity arises a great opportunity. For China’s e-commerce giant Alibaba, the turning point came in 2002-03 with the SARS epidemic, when the company convinced millions of people to try shopping online. If you view Covid-19 from the lens of opportunity, the silver lining will be visible; and in that change in perspective may lie our collective re-emergence.
While habits die hard, every crisis causes its share of long-lasting changes. For example, women got a taste of work and financial independence during and after the first world war. Lebanese statistician Nassim Nicholas Taleb, who coined the term ‘black swan event’, used the 2008 financial crisis (a black swan event induced by the crashing of the US housing market) to argue that if a broken system is allowed to fail, it actually strengthens it against the catastrophe of future black swan events.
Many broken systems failed during Covid-19, such as unfocussed businesses. The upheavals have raised fundamental questions about some widely accepted corporate beliefs. This brings us to the issue of how not to waste the Covid crisis, and five strategies that can help companies.
The first is introspection: whether it be in terms of the role and scope of purpose in businesses or the need to look beyond the ecosystem of customers, employees, business partners and shareholders. Companies can also reimagine the efficacy of quarterly and annual evaluation horizons and how to establish a balance between short-term efficiency and long-term resilience.
The second is customer focus. There’s an intense desire to connect deeply with customers — this is significant, particularly because when times are good, all teams are engaged in seizing market share relentlessly. Customer satisfaction becomes secondary when sales are robust. This is a great time to build customer loyalty.
The third aspect is to weed out what is not working. Businesses should use Covid-19 as an opportunity to cut loss-making lines and focus on the part of the business that survived this crisis. This includes streamlining of processes, weeding out dormant models, bad systems and bad ideas. Organisations have to focus on who ‘they really are’. And cost-cutting is not the holy grail. In a massive study of 4,700 public companies during past recessions, researchers at the Harvard Business School found that the most energetic cost cutters “have the lowest probability — 21% — of pulling ahead of the competition when times get better”.
The fourth aspect is to look at the opportunity presented. For instance, in the case of some QSRs, on the B2C side, rentals are very attractive and people are moving to more hygienic options. On the B2B side, more entrepreneurs want to get into the business. Hence, this is a great time for asset-light businesses such as franchising.
The last aspect is digitisation. The pandemic has fast-tracked digital transformation, because it became an issue of survival. Companies embraced digitisation because customers went online, as there was no alternative to online services.
Summing up, business leaders who can seize this opportunity will mitigate the pain for employees, consumers, shareholders, suppliers and communities. The big lesson from past crises is that the competitive order within industries will change far more now than it ever will in prosperous times. According to a McKinsey report, in the technology bust of 2000-2002, 47% of the tech companies that went into the downturn as leaders emerged as laggards, while 13% of those that went in as laggards came out as leaders. That’s a radical reordering of a giant industry, and it all happened in just two years.
As seen in all crises, the big post-Covid winners will be the bold ones that break from the mainstream, acting courageously and fast.
The author is MD, Jumboking