Navigating new realities
What does business modelling for a post-COVID-19 look like?
On a global level, societies and businesses are trying to navigate unchartered waters. With a high level of uncertainty and conditions changing every day, making decisions is becoming more challenging.
We are in the middle of a storm that is affecting everyone, be it on a personal or professional level. Although some industry sectors, like HoReCa (Hotel, Restaurant and Catering), may be feeling the impact more than others, no one has been spared the effects of COVID-19. Priorities now revolve around personnel and customer safety, business continuity, damage control, cash flow management and short term planning. However, there is a common hope: that the storm will pass and normality will resume, but this will be a “new normal”.
The new normal will start with social distancing, new health protocols (for business, transportation, accommodation and entertainment), financial recession and new habits. Businesses have already been called to take bold decisions for their future, by selecting between three main strategic options:
- Do nothing. Doing nothing can be a rational decision. Companies that face minimal to no impact may decide to continue with business as usual.
- Stop business. In cases of severe impact, companies may decide that there is no viable solution other than to stop doing business, sooner rather than later.
- Transform. In most cases, companies will have to seek the optimal degree of transformation. This option may include a short-term transformation to make it through the crisis, and/or the transformation towards the new normal.
As in any typical strategy workshop, organisations’ management teams must define their vision and identify their strengths and weaknesses. Based on those, they must start to innovate and define their optimal route. Companies with a strong customer base should try to provide additional value and harvest the benefits. Companies with strong logistics can find new opportunities in newly formed ecosystems, and so forth.
Irrespectively, if the objective is survival or growth, all five main elements of a business model must be reassessed: Customers, products, channels, partners and suppliers.
- Customers of yesterday might differ from customers of tomorrow. Decision-making and purchasing powers are changing hands. New and alternative market segments are joining the game. Companies must identify them and impress them by providing the ultimate customer experience. They must demonstrate to their customers and society how much they care. This is a period that we will all remember; a period when trust and loyalty must be built.
- Products must adapt to the new reality. Their price and characteristics must be relevant to customers’ abilities and needs. The product mix must be optimised for digital consumption.
- The shift to digital channels is accelerated. Limiting physical interaction during the sale, distribution and customer care cycle is becoming a priority. Marketing is rapidly moving from traditional to digital media.
- The relationships with partners and suppliers have to be strengthened. Practices where one tries to survive at the cost of the other are short-sighted and doomed to fail. Transparent mutual beneficial agreements can ensure business continuity and sustainable growth.
Even in such situations, there is always a silver lining in the form of an opportunity or unseen benefit. Management teams in every organisation are called upon to take tough decisions; to move out of the comfort zone and to innovate. They should not focus on what could be lost, but on what can be gained through their ability to adapt. Reaching out to strategy and business consultants may offer a fresh view, facilitate the innovation process, and provide support throughout the transformation journey. Most companies will come out of this crisis, but some will come out even stronger.