The Great Disruptor
Various commentators around the world have observed how COVID-19 has led to rapid change in many business sectors. It has acted as a great disruptor or as an example of Joseph Schumpeter’s creative destruction.
The general idea behind applying these terms to the worst public health crisis in a century is that our accepted norms and way of working have changed so radically overnight. Consumers now have a new set of needs and expectations. It has opened up new business lines, accelerated the adoption of technologies such as video conferencing and dramatically diminished the use of cash and the need for business travel. It has rewarded the early-adopters and punished the late. While the shift in consumer preference is ultimately driven by an agenda of not-becoming-infected, or by actions of the Government, its effects are very much similar to what you would witness in an event of seismic creative destruction: very rapid changes in behavior.
Which sectors have been challenged? The business sectors most affected by COVID-19 have been those with products and services that are difficult to offer remotely or because they were outright suspended by government decree, such as the hospitality sector, retailers, promoters of events and personal care. It is still to be seen how these will recover once the crisis has passed.
One of the industries most dramatically affected, and perhaps permanently so, is the airline sector. Passenger demand decreased dramatically during the pandemic and passengers have looked to alternatives, from staycations to video conferencing. As a result the ICAO is forecasting 1.2bn less international passengers by September 2020 and perhaps there will be lasting consequences for this sector. Another way to illustrate the impact across other sectors can be seen below:
COVID19 and your business model One approach to the virus is to treat it as an adversary, which is the basis for the saying the best defense is a good offense. In other words think of it as an aggressive competitor and rapidly adapt to overcome it by utilising the new normal, new rules and the change in public behavior to your advantage. Examples of rapid adaption
There have been many good examples of business owners very rapidly changing their business model and how they interact with customers to keep their business running during COVID-19:
Clothing retailer Alton Lane closed all of its showrooms due to COVID19 and instead launched virtual appointments and started manufacturing masks from leftover dress shirt fabric.
Brewer Two Birds Brewing launched a Drive-Thru Bottle Shop as well as offering free delivery.
Improvisational theatre company The Second City launched their improvisation classes online.
Manufacturers such as Bedford Industries quickly repurposed a number of manufacturing lines to start producing plastic face shields.
By assuming an “active approach” to the virus, these companies are not only able to diversify their income streams, but also build up goodwill and media exposure.
We have also seen examples of local cafés and restaurants who have transformed their operations into food/beverage delivery and take-away ventures almost overnight. Indeed the independent, small business sector seems to have adapted quicker than the larger chains, presumably out of an absolute necessity to survive. What doesn’t kill you, makes you stronger.
Our view At Yoba we understand that many businesses are facing a time of extreme distress and that it might be incredibly difficult to invest in new business areas. Most businesses are in the same boat, however, and those that dare to think outside of the box may be rewarded accordingly. The question to ask if you are looking to reinvent your business model, at any time, not just during COVID-19 is: how can I satisfy my customer demands in a way that my competitors cannot?
Answering that question may help businesses survive or reinvent during this pandemic.