Businesses today face three sets of forces that are concurrently disrupting the global economy. First are transformative changes brought about by the 4th Industrial Revolution. Second are changes that have been set off by the fundamental shifts taking place the world over well before the onslaught of COVID-19, notably the breakdown of globalization, increasing nationalism and growing political extremism. The third and most recent set of forces are those that have been unleashed by the coronavirus pandemic.
Under the unsettling conditions that prevail in today’s business environment, existing business models and old ways of doing business have become largely dated and ineffective. In order to survive and thrive under the newly emerging business conditions, companies must pursue new, novel, and heretofore unproven strategies.
In adapting to the so-called New Normal, businesses may adopt either of two broad strategy options. If they are experiencing only limited threats from both the pandemic and the structural changes that have been taking place beforehand, and can therefore safely weather the storm — or even prosper — they may opt to navigate the crisis, seizing opportunities as they occur and fending off threats as they arise. Or, if they were already in a decline when the pandemic struck, they may choose instead to use the crisis as a catalyst for change.
ALTERNATIVE SURVIVAL STRATEGIES
The structural changes that are taking place as a result of the pandemic will affect businesses in different sectors of the economy in different ways. Companies must therefore pursue different survival strategies. Depending on the special set of circumstances that they face, companies may choose any of the following strategies.
• Straying — strategies pursued by firms confronted by severe structural challenges arising from the ongoing pandemic, and facing ominous threats to their continued existence. Major players that are engaged in the travel and tourism sectors, such as those in the airline and hospitality industries, retail merchandising, and entertainment, fall under this category, along with the small ancillary businesses that form part of their extensive supply networks.
• Consolidating — strategies implemented by firms in the wholesale business, those that engaged in metal production, high tech, and textiles, many of which need to redefine their business models in order to survive under the newly emerging business environment.
• Recovering slowly — strategies that are suitable for firms in non-food retail, professional services, and banking.
• Continuing, or staying the course — strategies that are well suited for businesses that are neither doomed to extinction nor destined to prosper as a result of the crisis, such as those in real estate, pharmaceuticals, and financial services.
• Seizing — strategies that are appropriate in industries that will profit the most from opportunities arising from the changing global business environment and the ongoing pandemic. Food retail, online food ordering and delivery platforms and those that offer data storage services are among these sectors.
Whatever survival strategy is adopted, it is imperative for firms to reboot their business models in order to enhance their chances of surviving the crisis, if not indeed to thrive in it. These are the essential steps to be taken:
Re-establish financial viability as quickly as possible. In order to immediately recoup as much lost ground as possible, it is essential for business organizations that have been adversely affected by the crisis to respond to the fast-moving situation as quickly as possible. Under the highly dynamic and unpredictable circumstances as those that exist today, timeliness is crucial, and flexibility is key. What is needed is a startup mindset which favors action — even impulsiveness — over deliberation, and testing, or experimentation, over analysis.
Firm up relationships with stakeholders. Times like these require business organizations to reassess their relationship with their stakeholders on whom they depend for their continued existence — their customers, their workers, and the other firms that form part of their extended value networks. It is therefore crucial that they rethink and strengthen their relationships with them. The following steps are necessary:
• Focus on changing customer needs. Companies need to understand what customers will value under the New Normal, and develop new products and services, or repurpose existing ones to better serve those needs.
• Address the pressing needs of workers whose lives and livelihood are under threat. Companies must reassure their employees as best as they can that their jobs are secure and their incomes are assured. Operational procedures must be reconfigured and job assignments modified to enhance working conditions and lessen anxiety among workers, particularly those who are required to work from home.
• Adjust ecosystems to new realities. In responding to crisis-related disruptions in supply sources and distribution channels, adaptability is essential. This means changing the existing ecosystem and considering nontraditional collaborations with nontraditional partners up and down the supply chain.
• Rebuild operations. This includes accelerated end-to-end value-chain digitization. Even before the coronavirus struck, many companies have already been digitizing their operations. Accelerating these efforts will enable them to achieve substantial benefits in productivity, flexibility, quality, and end-customer connectivity.
This also means having to embrace the future of work. The future of work is defined by the extensive use of automation and technology. This process has been going for years since the onset of large-scale digitization in the early 1990s, and COVID-19 has hastened its pace. Employees at all levels of management and operation and across all functions are learning to work remotely using digital communication tools. Production operations even go further with the continued decline in manual and repetitive tasks and a rise in the need for analytical and technical support. This shift calls for sizable investment in workforce re-training aimed at developing new skills and work attitudes, primarily those that are relevant to the handling of large volumes of information using advanced digital tools.
Rethink the organization. The massive structural transformation that is taking place in the world of business as a result of the pandemic calls for major shifts in the operating models of business organizations which compel them to work in new and unaccustomed ways. Strategic goals have to be re-thought, managerial roles re-configured, and operational procedures re-invented. In a world characterized by rapid change, volatility and unpredictability, quick, decisive moves should replace the sluggish decision-making processes that have long been the bane of corporate bureaucracies. n
This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.
Niceto “Nick” S. Poblador is a member of the MAP Inclusive Growth Committee and the MAP Management Development and Human Capital Committee. He is a retired UP Professor, and until recently was a Professorial Lecturer at the UP School of Economics.