Focus Forward Volume 9: The Post-Covid Business Model: Resiliency and Continuityby Erin Maynard
The coronavirus pandemic is what mathematical statistician and risk analyst Nassim Nicholas Taleb would call a “black swan” event—an extremely rare event with severe consequences that can cause cataclysmic damage to the economy. These events can’t be predicted by standard forecasting tools, and in fact, these tools can increase vulnerability by providing a false sense of security and propagating risk. There is no way to prevent a black swan event, but there are ways to prepare for them, including by building responsive, robust systems that will insulate your business as much as possible.
What coronavirus has taught businesses—from multinational conglomerates to local mom and pop shops—is that most were too entrenched in their business models, too set in their ways to be able to respond with resilience to the rapidly changing environment that COVID-19 caused. In a climate that demanded businesses be able to nimbly pivot from one set of state mandates to another, all while dealing with supply chain access, business continuity, product launches, employee engagement and customer communications, many faltered. According to the Federal Emergency Management Agency (FEMA), 40 percent of businesses do not reopen following a disaster, and another 25 percent shutter their doors within one year. What’s worse, the Small Business Administration (SBA) found that over 90 percent of companies fail within two years of facing a disaster.
Admittedly, the coronavirus pandemic isn’t your typical natural disaster. It is, as mentioned earlier, a black swan event. So the statistics from FEMA and the SBA can only serve as possible projections for what the so-called “new normal” might look like. What we do know is that already 3 percent of restaurants are permanently closed, and the National Bureau of Economic Research reports that as of the middle of May, at least 2 percent of all American businesses have folded. While the full economic impact of the coronavirus pandemic won’t be fully measurable for months, if not years, what we do know is that in order to survive in the post-covid landscape, you’re going to need a resilient business model.
What does it mean to build a resilient business model? Gartner, a leading research and advisory company specializing in advising all aspects of business management, suggests a five-step approach to developing a resilient business model:
Define the current business model
Assess the impact
Your current business model should already be well defined, so identifying the uncertainties is the first crucial step. Use your experience with COVID-19, as well as any other events in your business’s past, to pinpoint areas that are especially vulnerable. Obviously, part of the problem with a black swan event is its unpredictability. But while it may be difficult to imagine an exact scenario, you should be able to identify general uncertainties. Once you have, you need to assess what the impact to your business will be by conducting a business impact analysis. This involves identifying categories that could be impacted, developing timelines, defining impact scales and scoring criteria parameters, and identifying and assessing risk dependencies. Once you have completed the impact analysis, you can design and implement changes to your current business model.
As we transition into the new normal, and start moving forward, there are certain telltale signs we can look to as bellwethers. For example, there are plenty of signs that e-commerce is going to be huge. In fact, 20 percent of people said they’d purchased clothes, groceries or household supplies online when otherwise they would have bought them in person. What’s more noteworthy is that 73 percent of people who purchased clothing online during the pandemic stated that they plan to continue to do so once restrictions are lifted. In fact, across all categories, more than half of new online purchasers intend to keep shopping online.
Of course, online shopping, especially during a pandemic, can have its own issues. In fact, nearly a quarter of shoppers reported unpleasant experiences, mainly due to items being out of stock or delivery issues. And even in these difficult times, customers are holding businesses to a high standard. Brandwatch’s Consumer Research platform noted a significant uptick in people telling businesses that poor delivery service had resulted in customer loss. Another area of concern is that the over 55 demographic often finds online shopping complicated, and worries about security. In order for retailers to remain competitive in the aftermath of COVID-19, they will need to focus on these pain points.
It’s not only customers that businesses need to pay attention to. Despite the economic uncertainty, or perhaps because of it, 67 percent of people who were seeking a change of employment prior to the pandemic are still planning on switching jobs. Social media is abuzz with people talking about the benefits of working from home, and more and more employers are realizing the benefits as well. Companies that don’t offer the flexibility of remote working are going to lose out to those that do offer the perk.
Of particular importance moving forward will be a company’s IT staff. Increased reliance on e-commerce and remote employees means upgraded security features as well as increased infrastructure management. While nearly two-thirds of IT professionals believe their companies are either “very” or “extremely” prepared to handle another situation like the pandemic, the same percentage also cited the importance of business continuity as one of the pandemic’s enduring lessons.
The shock of the pandemic is waning. It is now time to reestablish a sense of routine. But this new routine must include changes in the approach to your business. As you move forward, take stock of the effects of the short-term changes you made during the pandemic. Which will continue to help drive your business forward, and which need readjustment? Where are your vulnerabilities? How can you improve efficiency? What expenses can be reduced? When should you invest in future technologies to keep your business’s forward momentum?
If you need help figuring out the best e-commerce set-up for your business, or need to know more about social media advertising, 360 PSG is here to help you reimagine your business for the post-Covid world. To learn more about how we can help your business thrive in the new normal, please visit our website.