How to turn a crisis into an opportunity: business strategy in the midst of the Covid-19 pandemic
By Anna Itkin
A black swan event is described as an event that comes as a surprise, has a severe impact, and is often inappropriately rationalised as being obvious in retrospect. By some perspectives, the above definition describes quite well the Covid-19 pandemic. Some historic black swan events were the rise of the Internet, World Wars, the burst of the dot com bubble, and financial crash in 2008. The impact of each of these events had led to a new reality such that there was no going back to the past “normal”. With regard to the Covid-19 pandemic, McKinsey & Company writes: “In this unprecedented new reality, we will witness a dramatic restructuring of the economic and social order in which business and society have traditionally operated.”
While this pandemic is by all means a human tragedy and a crisis, not all black swan events are. And even more so, the perception of it can be different depending on the observer. Taking this notion further, our perception of the event really depends on our relationship to uncertainty. The pandemic is the way the pandemic is - with all its uncertainty and its wide reaching impact. We are upset and impacted by it on many different levels, but the existence of the pandemic and its immediate consequences are not something we have the power to change. What we have is power over our actions given this situation – for every breakdown there is a breakthrough waiting to happen.
Thinking about the Covid-19 pandemic is in fact an exercise in systems thinking - we clearly see many different players around the world intricately interconnected and impacted by each other. Full lockdown in China and later in Italy meant for many companies around the world that they can’t fulfil orders to their suppliers and had to shut down or significantly minimise their operations, laying off many of their employees. But beyond all, it is no longer debatable that social wellbeing – health, access to healthy and nutritious food, access to ecosystem services, fair wages, and an equitable infrastructure - are fundamental to any flourishing economy and society. Thus, when thinking about actions, it is the investment in social wellbeing in its broadest sense that needs to be a priority for governments, corporations and enterprises of all sizes because without working people who create tangible value for our societies, there cannot be flourishing economies.
While the full scope of current events continues to unravel around the globe, what is certain is that there is no going back to “business as usual”, no matter where you are as an enterprise – close to bankruptcy or doing really well, ‘hanging in there’ or caught in a limbo of uncertainty. Change is unsettling. We seek security in what we know and all we know is the past, so not surprisingly we automatically want to go right back into the known way of being and doing “the moment the pandemic will be over”.
However, we can also see this as a window of opportunity. This kind of shock to global systems has already impacted the way we work, live and interact with each other and what we care about. It has created a shift in expectations from customers, employees and citizens. While there is no certainty about tomorrow, as leaders – of our lives and our organisations – we have a say about the kind of future we want to create. Being a leader means we can shape our reality - we can determine what kind of future we want to lead to. And this future is created now!
By giving up frustration, upset and fear, a space of incredible action becomes available. New challenges that we face point to changes we must make to our lives, to the way we do business and to how our systems are structured and operate. This is where we ask - what have we learnt so far? What are the needs of all our stakeholders? What are our strengths and weaknesses? How can our purpose/reason for being help to address these needs? Answering these question provides an opportunity for organisations to fundamentally reconsider their purpose, value propositions and markets, the future of their capabilities and resources that they can develop now to address the need of the future (being created through these actions). Companies can use this time of change to fundamentally rethink their approach to leadership development, investing in their people and the relationships with all their stakeholders.
Among multiple failures in our systems, one clear vulnerability the pandemic has exposed is of the global supply chains. China, for example, accounts for about 50 to 70 percent of global demand for copper, iron ore, metallurgical coal, and nickel. We could see a dramatic restructuring of the pre-pandemic order in that the pursuit of efficiency is giving way to the requirement of resilience and re-evaluation of risk—it could mean the end of supply-chain as we know it, moving from globalization to regionalization, if production and sourcing move closer to the end user. For example, scarcity of raw materials sourced from afar can be addressed with urban mining solutions giving rise to implementation of circular economy strategies. This is an opportunity to future-proof supply chains, reduce risks due to future unpredictable disruptive events, increase transparency, create local jobs, and contribute widely to local economies, societies and the environment.
Another area where the same disruption is having dramatically different impact on organizations the world over is leadership. Unprecedented crises such as Covid-19 lead to real tests of leadership capabilities and skills, reflected in the different ways leaders respond to the current situation. Organisations which are run by leaders who prove to be disengaged from their employees, surrounding stakeholders and the frequently dire situation they are finding themselves in tend to be merely reactive in this time of uncertainty and see their teams and surrounding environment grow apart during this crisis.
In contrast, open minded and engaging leaders see their teams grow together, collectively working through the challenges and creating new possibilities for the business.
One such example is HUNGRY, a catering company that connects top chefs with businesses looking for high-quality food offerings. The pandemic has forced many hospitality businesses to make a choice— innovate their business models, or risk layoffs and economic troubles. The CEO took a strong stand, committing to not letting go of the team and to working together to define their new purpose. Knowing that everyone needs to eat and knowing that there are many who have been laid off and cannot afford their next meal, they have decided to shift the company’s business model to at-home food deliveries during the pandemic where users can order meals for up to eight people, cooked by local chefs and delivered right to their doorstep. Already under their initial business model, HUNGRY donated one meal to someone in need for every two meals purchased. They now continue these donations, giving four meals to families in need for every meal ordered. Considering all its stakeholders, leveraging on its network of chefs who cook great food, remarkable logistics and delivery capabilities with food safety trained delivery captains in several cities, the company managed to reinvigorate its business, reached out, tightened and expanded its stakeholder network, and ensured their team remains cohesive and committed.
As Albert Camus once said “In the depth of winter I finally learned that there was in me an invincible summer,” and this is our opportunity to start developing the future we want that actually works for society at large, the environment and economy. If we want to really address the crisis, we can’t just repair a broken system, we must reimagine it!
This is the challenge of our lifetime, and the opportunity of our lifetime, to really stop and think about the future and what is best for humanity, and ask “what is my role in it”?