PostCOVID19-The Era of Continual Reinvention of Business Models

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Pandemics and significant events of such nature redefine the paradigms of existence. Purely from the observation aspect, we see organizations that are flourishing and others who have either lost out or are just about managing to survive. What creates this dichotomy? I was intrigued as a Design Thinking Practitioner and thus started my research. My findings are summarized here, and if people at large can benefit this effort is well spent. Even after the intensity of the Pandemic subsides, the consumer habits would have changed, and the reinvented business models would have transformed the way businesses operate; thus, these discussions here would remain relevant is my far-fetched guess. The hypothesis’s that present themselves in the given situations are as under:

1. Based on various thought leaders, COVID19 is here to stay, and we need to learn to live with it at least for some extended period time now and it thus can be treated as a null hypothesis.
2. The Alternative hypothesis would be
   1. COVID19 is here for good, and we need to learn to live with it permanently as it is a smart virus that will keep mutating. This is a drastic viewpoint discounting scientific prowess that humans have developed.
   2. We will return to normal with medical remedies overcoming the intensity of virus even if we don’t eliminate it in a short period considering the prowess of medical science and our experience with developing vaccines and medical line of treatment including medicines.
   3. The virus will mutate and ultimately lose its potency and eventually be like a mild flue is a more optimistic viewpoint on nature’s law of impermanence.

If we consider all the above hypotheses in their totality, it is a sure thing that the quest and fight for human survival will redefine our lives entirely with all the changes in habits and innovations that are imminent. This will counter the hazards that the pandemic, economic, cyber and biological warfare shall pose. The new world order is thus here to gain velocity. Innovation, by its virtue, will redefine the environmental forces both in businesses and personal lives. Thus, we are surely on a path of reinventing all that we do.

So, who is doing well in this Pandemic? Let us study the premises as always to approach a management problem. If we were to use the cybernetic paradigm of understanding the environment, we have the following observations:

1. Economic factors of willingness and ability both seem to have diminished in areas where human interaction and contact is excessive. Ability is undoubtedly constrained owing to uncertainty and also a lack of cash flows, but it will ease out over time.
2. The Pandemic is creating irregular cycles of lockdown, which makes the demand uncertain, but ultimately demand in its new formats will pick up. The business cycle will operate its course though unpredictably.
3. Supply chains are getting reconfigured, putting pressure on production and primary activities of the business value chain. Massive innovation is anticipated here.
4. New needs are getting established, or existing are redefined and thus resulting in innovations. Demand for new ways of doing things is on the rise.
5. Consumers are looking at alternatives and substitutes to satiate their needs. Older norms are seen as risky propositions.
6. Fundamental needs are still being satiated at the same or higher velocity, but consumer satisfaction expectations have changed for sure.
7. When entertainment is inhibited, consumers move to alternative ways of gratifying their needs. Technology is the crucial factor here of immersive experiences.
8. Stresses are creating new behaviors, and unconscious suppression of desires are finding new ways of gratification. Toxic consumption of products and content is on the rise.
9. Technology is now a significant force of innovation, but many think it is an alien thought.
10. Certain luxury products are now becoming necessities; thus, dormant sales here are peaking.
11. Economic measures and reforms initiated by the Government to boost demand may directly benefit you, or you may be a delayed beneficiary in the supply chain. All Governments are fighting for existence and will keep happening else the angst of subjects will consume them.
12. Direct to the consumer seems more of the possible option with technology cleaning up the intermediary channels. So, what do the intermediaries do?
13. Sourcing options will now be mitigated to deal with risks China model of “Big is Better” has failed that I talk of in many of my conversations. It was too totalitarian and concentrated.
14. This Pandemic has redefined business relationships; loyalties will shift to enterprises that offer sustainable least human contact possibilities. There is no loyal consumer anymore say many thought leaders. Only competitive competence will win with the core being technology.
15. Finally, core competence also lies in building frugal lean speed teams that can adapt to contingencies. Responding to ambiguities is a critical competence in humans that we will look for.

If we look at these premises, no wonder technology companies are doing exceedingly well, and e-commerce is booming. Showrooming is now replaced by webrooming. Buyers will webroom and search for options on the Internet. Smartphones will be evolving to becoming front end buying experiences. Smartphone and app revolution is going to be big time. The Internet of Things is a speed innovation area. The Internet of Things is one experience where Pandemic is forcing disruption, and innovation responds to it. However, with the demand becoming scanty, these changes will be speeding up the creation of demand. Willingness is more potent than ability in the coming times. And the sheer effort of sustaining oneself in trying times will create the willingness which will be deciding factor than the ability alone.

So how should we reinvent our organizations? Fortunately, our organization was geared up, so most of my conversation is based on my first-hand experience. Also, I have studied organizations that are doing well as a Business Coach. My profession allows me privileged interactions with business leaders of organizations of all types and sizes. Thus, let us take the discussion ahead in the form of a study of the Business Value Chain Analysis; Porter’s much-acclaimed model is so eternal in its use, and I am in love with it.

1. Primary activities
   1. Inbound logistics: Sourcing is not an issue at the base need level. The market is starved. The challenge is the logistics carrier’s ability during crises. This area will need a lot of technological innovations by using the 4PL and 7PL agencies. The innovation of inbound logistics in terms of safety stocks and erratic conditions arising out of economic, cyber, and biological warfare is the key. Internationally distributed multi-option sourcing is now the key to sourcing strategy. Unfortunately, only the fittest will supply, so choose your suppliers well. Risks will have to spread what the China Model taught us.
   2. Operations: Human contact is seeing pandemic conditions amplifying the damage. Factories are optimizing by running extra shifts, but what about the ones that are running all shifts to capacity? The Internet of Things based manufacturing with remote operational control is the key here. Automation will be on the rise at the cost of social issues created in terms of employment. However, the unique talent will always be in demand. The logic will be that humans get affected machines don’t. Thus, pressure on academic Institutions to revamp syllabus post-COVID is a dire necessity. Soft skills will become hard skills by the day. 3D printing will make life easy on the shop floor with lean plant layouts. But where do the ancillaries go then?
   3. Sales and Marketing: This is one area that will see a drastic shift and complete disruption. As I said earlier, we are bound to move to smartphone apps, and e-commerce is the in thing now. Digital marketing and big data analytics will be on the rise. The problem statement is that companies will have to reach the customer and effect a sale before the consumer hits on to analytical options that will throw up alternatives. The buying decision must happen instantly when the need arises. Thus, consumer behavior will be mapped on the Internet, and personal data privacy will be a big question. Devices that listen to you will feed information in advance to companies, and thus organizations would need to have robust data gathering and analytic mechanisms. The ethics of this action will always be a dilemma question soon.
   4. Outbound logistics: Responsiveness to the customer would be prime, given the uncertainty. Customer loyalties are going to be wanting from now on. To keep the pricing low i.e., the efficiency of the supply chain in control, the secondary activities would have to be made exceedingly lean. Door delivery will become a preferred norm as shopping experience may not be as enjoyable as before as the unconscious fear of catching the virus will keep playing. Even vendor meetings on-premises would be a safety hazard. With remote working norms, drones and sophisticated delivery options will be explored. In multimodal transportation, drones will play a vital role now. Amazon has pioneered it and shall soon be an essential reality in all business realms. 3D printing will redefine the way people consume. If I can print at home or in the plant, why buy and wait? Just download a digital file modify to my taste and print. This eliminates significant supply chain issues. What happens to the dealers and retailers then?
   5. Shared Services: The primary and secondary functions in services will have to go digital, and with the advent of 5G and augmented reality coupled with quantum computing, we are entering a sci-fi stage of service experience.
2. The secondary activities of administration, human resources and finance are all set to be driven by Artificial Intelligence and Apps. This is one area that will ultimately be technology-driven. People’s development will now be through digital conversations only. This will reduce the infrastructure costs and other overheads that need to be allocated to production. R&D will be the prime department, as fast-paced innovations are the key to success now.

The above will ideally drive costs down for competitive markets, but niche products and services could drive insane profitability.

If we study the Business Value Chain and reinvention strategy, it seems like technology is the key to all solutions. It is essential now that de-risked businesses will have to be up to speed on technological innovation and their integration. What I like about cloud technology is now it is all subscription-based thus can be written off on Profit and Loss account for the year. Since they are not depreciating assets, they feed the idea of cash is king. While production will still have depreciating assets, but 3D printing will redefine the way we work in operations. Ancillaries and global sourcing may become history once 3D printing commences as the entire product will get printed. It will start with consumables and gradually move to full-blown products. Robots will be intelligent and will find places everywhere. After all, they can’t catch or spread the virus.

There is a lot to be excited about and a lot to be worried about. Technology & Information officers will now rule the roost. Digitally savvy people will be in demand. Analytics and big data will be demi-gods. Supply chain consultants driving innovations will be in high demand because, as we see during periods of crisis, keeping the supply chain alive is key to the Nations’s economy.

CXO’s will have to change. Their past behaviors of success will not yield future success. They can’t anymore put the pressure down the line for business. They will have to reinvent themselves and be life-long students of management and their domains because knowledge is the power and eyes to bail you out of such a crisis. Mediocrity and unsubstantiated beliefs at this level will just not do. Tech-savviness will be an eternal competence from now on. They will all need Mentors as it is no longer a single person game anymore. Collective wise leadership will only succeed.

My conclusion thoughts would be that strategic alliances with specialized partners would be the key. Fixed costs would need massive control, and business models with variable costing would be ideal. Foreign currency dynamics will be up for change, and stocks in technology will boom. A lot depends on how senior leadership changes its paradigm in every organization.

Are you reinventing your business model based on technology and knowledge? Is technology the center of your core competence? You are then set for a big game, and you have the cash in hand. It is no longer produce or perish. It is all about reinventing or become obsolete and vaporize in the crisis.