When Covid-19 first hit, businesses responded in the way we would have expected, putting the safety of their people first before facing the loss of customers and revenue. Now as the crisis continues to ebb and flow, many are innovating.
In a recent issue of the MITSloan Management Review, Michael Wade and Heidi Bjerkan, present a framework for how businesses can explore opportunities by adjusting their products and their infrastructure.
Using the three steps of that MIT framework, we take you on a tour of how some small and medium-sized businesses are choosing to thrive.
1. Same product, different channel
- Reaching new customers. Many restaurants shifted quickly from dine-in service to pickup and delivery. But that hasn’t come close to making up for lost revenue. And yet while demand for restaurant service is down, there is a dramatic increase in food insecurity for millions of families. The proactive solution: Create an opportunity for restaurants to continue operating by partnering with nonprofits serving the hungry. The nonprofit World Central Kitchen is paying restaurants to create individually packaged fresh meals that it then distributes. This partnership supports both those who need meals and the restaurant workers and drivers who need to earn a living.
- Changing the business model. QuarterWorld, an Oregon games and activity arcade, closed in early March due to health safety concerns. But management soon realized that although they couldn’t allow people to come to their location, they could bring the games to people’s homes. The company now offers month-long rentals of its arcade machines, including delivery and pickup. By shifting the business model from on-premises to monthly subscription, QuarterWorld helps its community shelter in place while keeping employees on the payroll.
- Opening up new geography. For more than a decade, the Salvadoran company Speak English has helped students improve their career prospects by boosting their fluency in conversational and business English. By pivoting from a pre-crisis conventional classroom setting to online classes, learning labs and practice opportunities, Speak is not only sustaining its business but also expanding its business outside El Salvador.
2. Same infrastructure, different product
While large global manufacturers like Ford, General Motors and Lego have received media attention for reconfiguring small parts of their production lines, small and midsized manufacturers are often even more nimble than these global giants.
- Repurposing production. Hatch Exhibits, a Maryland-based company that makes colorful displays and pop-up exhibition booths for clients such as YouTube, Under Armour and Google, saw its entire business stall as the meetings industry shut down. Hatch’s owners reluctantly laid off all 23 employees on a Friday, but by Monday had reconfigured the facility — designing and producing medical gowns and masks with the same types of materials and techniques used to make banners and graphic displays. Now the firm can hardly keep up with the nation’s demand, and employees are back on the job.
- Turning the tables. Based in Guatemala, Ethilos Global produces software that protects companies from employee ethical misconduct, fraud, corruption and regulatory non-compliance. As clients instead became concerned with safeguarding the well-being of their employees, Ethilos quickly pivoted and developed Covid Alert — a communication channel between businesses and their employees, with protocols that incorporate legal restrictions from the Guatemalan government.
3. Same employees, different employer
Many businesses, such as large retail department stores, airlines and hospitality chains, employ talented staff they are unable to retain simply because there is no work.
- Seizing opportunity. As an essential business quickly expanding into on-site testing, the retail pharmacy chain CVS needed to hire 50,000 new employees. So it began partnering with companies including The Gap, American Airlines and hotel companies Hyatt, Hilton and Marriott to recruit their already-trained customer-facing staff. This partnership serves both the companies hiring and the ones retrenching, as well as their employees.
- Tapping talent. In El Salvador, the demand for bakery products has increased significantly, as many industrial bakeries were forced to lock down during the quarantine. To meet growing demand created by the shuttering of its much larger competitors, artisanal bakery Tuco & Tico needed to hire new employees. It recruited skilled bakery help who had been working in kitchens at now-closed hotels, and enlisted admin help from dental offices, which are not allowed to operate for at least six months.
Long after the pandemic is behind us, businesses will be remembered for how they responded. The most agile organizations will hold on to the innovative spirit and behavior this crisis engendered. They will continue to create product and service adjacencies and proactively build diversity into their portfolio to protect against future risk. In doing so, they will have turned a crisis into an opportunity for learning and growth.
Angela Scalpello is a C-suite advisor and consultant, and a member of the Bpeace Board of Directors. Her son, David Foy, is a soccer performance coach. Together they produce the podcast Talking Talent.