This is not the first time that economies have fallen on hard times due to a global crisis.
Very much like H1N1, the dot-com bubble, and the Great Recession, coronavirus has had a historical impact on countries and economies across the world.
Survival is at the heart of it all during times like these, but is striving to survive the best possible business strategy?
A study by Harvard Business Review showed that during the Great Recession, firms that cut costs hard and fast didn’t necessarily flourish. In fact, only 21% of firms that cut expenses were able to rush ahead of the competition once things got better.
It seems that companies that focused more on operations and invested in new assets, research and development and marketing had a far greater chance of thriving following a major crisis.
Amazon took this exact approach during the dot-com bubble. Not only did they hire more people, but they also restructured their business model. Instead of slowing down, the brand scaled up. Opening up the platform to third-party sellers was just one of the tactics that got them to where they are today.
There’s no doubt that it took some time to see the results of their efforts (4 years), but today, they are one of the largest marketplaces in the world and trade at over $200 a share.
The Pivot
There has always been some debate around whether pivoting is an effective business strategy.
While pivoting involves making drastic changes to a business, it doesn’t necessarily mean the entire business needs to be altered.
Very often, just addressing one problem area is enough to have a positive impact on the future of an organization.
Focusing on a different set of customers or vertical, employing a new revenue model or turning a product feature into a standalone product are just some examples of how the pivot strategy can be used.
Pivoting starts with identifying the strengths of an organization and your employees are one of them. Instead of only relying on employees to help your business survive following the aftermath of the COVID-19 pandemic, use their skills to innovate and pivot the business.
Involving employees in this process broadens insights and increases opportunities for growth during trying times.
This alone explains why so many organizations have expanded their workforce during pandemics and global crises.
A Crisis-Focused Strategy
By converging technologies and skill, and identifying new gaps in the marketplace, it’s possible for businesses to set themselves up for future success instead of merely surviving.
However, the key is to not be too aggressive. Unfortunately, the process of coming out on top after a global crisis requires patience, persistence, and continuous strategy optimization.
Take HP for example – During the 2000 recession, the brand invested billions in branding as well as research and development. They made the decision to double-down their efforts, but far too aggressively. Unfortunately, this decision placed too much strain on the organization, particularly at a management level. With everyone spread too thin, their efforts had a less than favorable outcome once the recession ended. Instead of surpassing competitors such as Dell, their revenue levels dropped well below what they expected.
In order to survive and thrive following a crisis such as COVID-19, it’s essential to make selective defensive moves, while still taking actions that spur growth. This requires CEOs to have an eye for opportunity but also financial prudence. It’s about adopting strategies that have the potential to create reliable returns within a reasonable period.
Collaboration, Care, Communication
Coming out on top following a pandemic starts with collaboration. Use the people and resources around you to devise strategies that utilize your organization’s strengths. Work together to increase productivity and efficiency and identify opportunities for growth in ways that don’t increase costs unless it’s absolutely necessary.
Some growth opportunities do require a financial risk, but this is where financial prudence comes into play.
At times like this, it’s also essential for brands to communicate more efficiently, this applies both internally and externally. What can your organization do to keep employees motivated and working as a team as you navigate these changes? What can your organization do to communicate more with existing and potential customers in a more empathetic way?
As you execute changes and make strategic decisions, it’s vital to keep communicating and collaborating.
Instill the message that this is not just about surviving, it’s about taking steps to secure a future for everyone involved in your organization, including those who support your brand.
As Published on Air Doctor.
Comments