28 Apr 2020
Chances and opportunities arising from the COVID-19 crisis: about innovation and the need to re-evaluate current business models
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In most parts of the world, many businesses are struggling due to the COVID-19 pandemic and the lockdowns. The coronavirus crisis has disrupted and is changing life and business as we knew them. As with any crisis, there is always an opportunity. The saying „necessity is the mother of invention“ exists not just by chance.
An example of breakthrough innovation after a disaster with global effects was the invention of the bicycle – dreamt up by Karl von Drais to replace equine locomotion after thousands of horses died of famine by crop failure in 1816 following the volcanic eruption of Tambora in 1815. Also, during the Great Depression resulting from the collapse of Wall Street in 1929, the chocolate chip cookie was invented. As cocoa was scarce, Ruth Wakefield used chunks of Nestlé chocolate for her cookies, published the recipe, Nestlé saw the opportunity and a success story was born.
But how can businesses approach innovation right now? How can companies reassess what they do and reinvent themselves to succeed, re-emerge or merely survive?
After fixing the urgent topics to cope with the crisis (operations, remote work, cash management, liquidity, amongst others), experts suggest building a task force amongst members of the team or within the company leadership. The team should be able to analyse the current business model including all aspects of it – products, services, channels, processes and of course, organisation. This team should analyse emerging trends in their industry – but also going beyond it - to develop the best strategic direction to move towards.
The team should be entrusted to find new, additional business ideas, based on necessary tweaks or regarding a shift towards other income streams. Also, it can be of great value to engage with customers as well as stakeholders and consider their input regarding the future of the business.
Ideally, the new ideas should still suit the company’s talent and competence, and it will be important not to lose sight of the company vision.
Depending on the industry, the innovation will need to be more or less revolutionary. Some key dimensions to look at:
Products & Services: What share of the total revenue is generated by each business division of the company, how are those parts affected by the COVID-19 crisis and how can the company develop new products or services (or adapt the current ones) to match the evolving demand?
Go-to market strategy: This includes the distribution channels including the various platforms and formats (physical, digital or a combination) and how they are balanced in the future?
Organisation: Depending on the needs, there could be organisational work needed. We are not necessarily talking about a leaner organisation resulting from a longer-term foreseeable significant reduced demand, but rather about new functions and people with new skills might need to be taken on-board, especially in the field of technology.
There will be, for sure, many new developments creating many new opportunities for businesses. The COVID-19 crisis is the big accelerator of the digital transformation.
Software and stay-at-home products as well as everything contactless – from payment to doors - will experience an additional boom. Innovation in general is expected to boom, just as it did after the 2008 financial crisis, when many innovative multi-billion businesses like Instagram, Uber, WhatsApp, and Dropbox were created by young people that would have gotten into “established” jobs if they had been available.
Where the offerings come from - whether they come from established companies or from start-ups - will depend on how fast established companies are open to embrace the evident trends towards what can become the new normal and adopt an agile “test quick” mode instead of wasting precious time in analysing and preparing businesses cases like in the old times.
It will be important to have a clear perspective on which direction to take and be the one to be at least one step ahead!