I am seeing a lot of company respond to the current COVID crisis using approaches that are similar to the one used in 2008 financial crisis. They are wrong.
During the financial crisis of 2008, companies conserved cash, they laid off workers, cut costs dramatically and survived through the crisis. There was widespread government stimulus. Some of the economies had much less impact than others. Companies got back to business as usual as the crisis passed, though there is still debate if we have fixed the problem.
The current COVID crisis is very different, the cause of this event will be debated for long and for once didn’t originate from the financial system. It has had significantly higher impact and has devastated economies across the world. There is hardly a country that has not been hit and stimulus aren’t the solutions, though may be necessary.
However, the bigger difference is that the COVID crisis will leave behind changes that are permanent. There will be more awareness of health and hygiene and this may be for the good of humankind. Travel necessity will be evaluated more rigorously, technology will be used to significantly reduce business travel. Work will never be the same again and so will be the case of education. Transportation industry will change for sure, the impact of the virus on public transport system at least in the highly populated metros is still not clear. There is a possibility of limited decongestion of cities.
Fundamentally, we aren’t spending enough time to explore how our societies are going to change. But change, it will.
These changes will throw up tremendous opportunities for growth, totally new solutions, new products and new business opportunities and the time for business to focus on these is now. Not after recovery, for it may be too late. The most foolish thing organization may be doing is let go of people and cut costs. You will be losing talent and loyalty.
According to a McKinsey study, 90% of executives from Fortune 500 companies interviewed by them believe that their business will significantly change and 85% believe that their customer need will change significantly over the next few years due to COVID.
Yet, only 21% responded that they have the resources, expertise, and importantly commitment to focus on growth at this point.
Their study further showed that the focus on cost reduction, restructuring, etc., is the dominant type of action being taken.
Many seem to be under the impression that after we have a vaccine and once we fully open up, it would be back to normal old days.
Plenty are going to be disappointed. There is enough evidence that some of the behavioral changes of people are permanent.
· A lot of people will continue to avoid crowded places
· People will avoid travel unless necessary
· Business travel will reduce, more use of technology, video meetings, and webinars
· Big fat weddings will reduce
· More crowding of roads; more personal vehicles as people avoid public transport
· More tech purchases and less of fashion items
· More e-commerce purchases and fewer visits to malls
All of this has an impact on the industry, some positive and some negative. There are significant growth opportunities here and it is up to organizations to grab these. One clear factor is this, this is an opportunity to examine new growth drivers. The McKinsey study identifies another significant trend; companies that embark on innovation programs during crisis outperform their peers. The graphic below is self-explanatory.
What are you doing in the crisis?
1. Waiting for things to become normal?
2. Cutting costs and restructuring?
3. Exploring new growth opportunities and innovation?
If you are doing 1 or 2 all the very best wishes. If you are investing in discovering opportunities for new growth and innovation, kudos, you are likely to emerge from the crisis stronger and as a winner.
If you are looking for support on your growth and innovation journey, we are happy to help.
Krishnan is an innovation consultant and focuses on helping people and organizations innovate and build capabilities for innovation. He brings over 25 years of experience in the industry and consulting. You can reach him by phone / WhatsApp: +919791033967 or email: firstname.lastname@example.org