How To Jump-Start Your Business After (Towards The End Of) COVID
With the end of COVID it is time to accelerate growth once again
Image Credits: forbes.com
“The parties were bigger. The pace was faster, the shows were broader, the buildings were higher, the morals were looser, and the liquor was cheaper.”
No-one captures the mood of the ‘Roaring 20s’ better than F. Scott Fitzgerald in The Great Gatsby. In the aftermath of the Spanish Flu people were ready to party. The Golden Twenties—as the German’s called them—was also a period of economic prosperity characterized by the mass adoption of cars, phones, radio and appliances.
Are we at the cusp of a similar boom? Medical sociologists widely agree that the appetite for hedonistic pleasures—and the rise in consumption accompanying it—is typical after a pandemic. And similar to the 1920s, technology developed in prior decades might be ripe for mass adoption. In a recent McKinsey survey executives note that their companies are already seven years ahead of where they expected to be in terms of digitalization.
With more and more signs pointing towards growth, strategists can start to plan a re-boot, knowing that recovery is not spread evenly. Here are four suggestions of how to make the most of unfolding opportunities.
Staged acceleration of different activities based on diligent segmentation
During the pandemic demand patterns shifted substantially. Online retailers like Amazon or Alibaba were the big winners of this trend. We can expect a revival of brick-and-mortar as 91 percent of consumers missed shopping in stores. But not everyone will be celebrating. The trend towards e-groceries, according to a recent study, is likely to stick. The appetite for a weekly odyssey hunting for basics followed by a long queue at the check-out is apparently limited. What people are missing are experiences, such as trying on a new dress in the company of friends. And of course, on top of the list for many, is eating-out.
For some product categories where we can expect strong demand eventually, it is likely to take a while for normality to return. For some companies that means attention needs to shift in a way less obvious than before the pandemic. Take airlines. China offers us a glimpse of what might happen with leisure trips picking up fast, but business trips staying at a much lower level. A similar pattern was visible after the 2008 financial crisis. This time round it is likely to be even more enduring, as many prefer a Zoom call to an exhaustive overseas trip.
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The point here is that companies need to carefully segment their activities to figure out how the shift towards online affects a particular part of their business. Once they have done so, they can take appropriate action by either accelerating, adapting (often digitally), or reducing a specific product line.
Operational growth with inbuilt resilience
The late Harvard historian Alfred D. Chandler argued that General Motors was able to overtake Ford in the 1920s because of its superior production system. As cars became a widely available mass-market product, GM also had a broader product line on offer.
During COVID, many industries were forced to cut back production. As order books for 2021 and 2022 are bursting they are struggling to keep up with demand. Similar to the 1920s, we can expect those who are able to accelerate production and bring exciting new products to market to be the big winners. That requires laser sharp attention on execution.
At the same time, memories of the struggles during COVID should be a reminder that resilience matters. Recent technological developments made re-shoring a viable option. This is not only politically popular but also reduces the heavy reliance on a more vulnerable global supply chain. For example, aspiring mountain bikers in Southern Germany and Austria struggle to find new bikes, as China primarily ships higher-margin e-bikes at the moment. German bike maker Corratec’s shops, however, are fully stocked as they assemble locally.
Building some slack into the system also makes sense. When lightning struck a fabrication line in Albuquerque, critical mobile phone components used by both Nokia and Ericsson were contaminated. Nokia had an early warning system in place and was able to negotiate production shifts to other sites. It also had alternative suppliers for most of the contaminated components. Ericsson was not that well prepared for hick-ups in the supply chain. By the end of this year Nokia’s global market share had risen by 30 percent while Ericsson lost 3 percent and eventually decided to move its phone production into a joint venture with Sony.
The way forward is clear: ramp up production but be smart about resilience.
Eye on anomalies
One of the main challenges of a new era is the accompanying unpredictability. Which products will be in high demand? What specific technology is offering true performance improvements? Which new types of business models will work?
Martin Reeves, Bob Goodson, and Kevin Whitaker from the Boston Consulting Group point at the power of anomalies. They are trends in an embryonic state, hard to notice and difficult to quantify. If companies want to spot such anomalies they need to embrace ambiguity. Engage with potential rather than actual customers, look for unusual datasets such as social media texts, and be prepared to make commitments. Alibaba, for example, launched Alipay in the aftermath of the 2003 SARS epidemic when B2B e-commerce had picked up but consumers were still wary of online purchases. Alipay reduced the transaction risk for them. Investing big in a hard-to-quantify trend clearly paid off in the long run. In 2013 Alipay overtook PayPal as the world’s largest mobile payment platform.
One way that is particularly promising when searching for anomalies is open strategy. Outsiders are more likely to come up with fresh ideas less visible from the C-suite. Their thinking is less restricted by existing business models and help those in charge to develop a more open mindset.
Put humans first
Companies and individuals adjusted to remote work remarkably well. But for many this came at a stark personal cost. 10 hours of consecutive online meetings are exhausting. A Microsoft survey found that 40 percent of the global workforce is planning to quit its job this year. And those most likely to act on their dreams are high-skilled employees who built a financial cushion during a year of restricted consumption. Their rallying cry: YOLO, a nod to rapper Drake who popularized the acronym for “You only live once”.
As ramping up operations and further moves along the road of digitalization will depend on your ability to hire exactly those type of people, many companies will face a problem. They did not help themselves when one of the first victims of the pandemic was the promise to embrace all stakeholders, not just shareholders, equally.
It is time to rectify this. First, employees should finally get the long promised flexibility that works for them. For most people 3 days in the office and two of remote working seem to be the preferred option. Qualtrics, for example, is adopting this model after surveying its employees.
Secondly, as Gary Hamel and Michele Zanini argue in Humanocracy, it is time to free the ingenuity of workers from the shackles of bureaucracy. If people waste less time filling out forms, they are able to concentrate on more inspiring parts of their work.
Expect some bumps in the road
As you switch into the post-pandemic mode and fully embrace growth, be aware that some bumps in the road are still likely to sit ahead. With the new delta variant of the virus spreading, further lock-downs can be expected. Still, it is time to switch gear.