3 Ways You Can Fix Your Business Model to Survive 2020 and Beyond
2020 is far from a typical year - no industry has escaped the challenges of the Covid-19 pandemic and the accompanying economic crises.
Despite the world being on lockdown for the past 3-4 months, trends have moved faster than ever. As we look to a post-pandemic future, industry experts have turned their attention to defining the “new normal” and finding an exit strategy for their businesses.
This month, the economic impact of the coronavirus has overtaken health consideration as the primary global concern. Countries are beginning to lift restrictions and jumpstart their economies. But of course, customer expectations, needs and wants have shifted and businesses need to meet those needs while trying to survive.
John F. Kennedy once said: “The Chinese use two brush strokes to write the word ‘crisis’. One brush stroke stands for ‘danger’; the other for ‘opportunity’. In a crisis, be aware of the danger, but recognize the opportunity.”(1)
You now have the opportunity to rethink your business model and adapt to the “new normal.” If you’re not sure where to begin, check out our list of the three directions you could take your business:
1. Keep Key Activities the Same;
Change Channels and Customer Relationships
One of the first ways many businesses adapted to the global crisis was by moving their successful products and services onto an online channel. This may occur through the digitization of physical products or, in the case of services, through a technology-mediated delivery solution.
Best practices:
- Mattel, which includes Barbie, American Girl, Fisher-Price, and Thomas & Friends in its catalog, organized the Mattel Playroom, an online resource full of free activities and entertainment for kids. The playroom enriches the lives of children and parents, providing a welcome distraction during a time of uncertainty through cross-collaboration.
- Tesla has responded to the ‘“contact free” demand by changing its retail model, launching a contactless test drive service in Beijing and Shanghai starting March 2020.
- Chinese car company Geely released contactless car keys delivered by drones to new owners.
- Airbnb launched Online Experiences, allowing virtual tourists to “travel” via Zoom to meditate with Buddhist monks in Japan, visit with the dogs of Chernobyl and cook with a Moroccan family in Marrakech.
2. Keep Key Resources the Same;
Change Key Activities and Add New Partnerships
Crises are reducing the demand for many products and services, which causes an underutilization of a company’s key resources. Factories run under capacity; restaurants, bars, and hotels are empty; service providers are unused. While the need for some products and services has fallen, new demands arose. Take advantage of this shift by deploying existing resources to perform different key activities and/or build strategic partnerships that could make a positive difference.
Best Practices:
- Ford Motor Company and GE Healthcare joined forces with 3M to assist in the production of health equipment including respirators. During the world wars, Ford also led manufacturing efforts and built tanks and planes.
- Luxury group LVMH switched its perfume production lines to manufacturing hand sanitizer for French health authorities.
- LC Waikiki, a fashion manufacturer brand from Turkey, switched to producing millions of surgical face masks per week.
- In South Africa, mobile phone operator Vodacom is partnering with health insurer Discovery to offer free virtual doctor consultations to anybody worried that they may have COVID-19 symptoms, through Discovery’s DrConnect platform.
3. Keep Key Resources & Key Activities the Same;
Add to your Customer Segment & Key Partners
The pandemic has also exposed the vulnerabilities of the global supply chain. With border restrictions, slowed-down or completely closed production facilities, loss of migrant labor and raising awareness on how local SMEs are suffering, many countries had to switch to a more closed economical system.
Instagram even launched a tag to support local businesses. This brought opportunities in some industries to build new partnerships and extend their customer segments.
Local farms were one of the early adapters that shifted from B2B to B2C models. In the United Kingdom, YouGov research found that since the pandemic began, 3 million people had ordered a vegetable box or ordered directly from a farm for the first time. Unprecedented demand for the ‘From Farm to Fork’ movement has also been reported from farms in Germany and France.
Best practices:
- Wholesaler Smith & Brock in London launched a new home delivery service called Knock Knock, offering seasonal fruit, vegetables and dairy boxes.
- Natoora, whose produce graces the menu at Michelin- starred Per Se, began selling produce boxes in New York and London
- Kiğılı a turkish men suits brand partnered up with local food brands to start selling their products via Kiğılı’s website
- EVYAP group which includes Duru, Arko, Evy Baby and Activex in its catalog, decided to add a subscription based model to target the B2B segment due to an increasing demand on soaps and sanitisers during this period.
These were just 3 of our favorite ways companies have adapted to ever-changing consumer needs - but there is no limit when it comes to redesigning your business model!
If you are curious about the opportunities out there to rethink your business but need guidance, you can count on us to help you discover your potential.
1) Ritter, Thomas & Carsten Lund Pedersen (2020): The impact of the corona crisis on your business model. Workbook. Copenhagen Business School, Frederiksberg, Denmark.