The pandemic and economic depression the world faces is a dark period for all businesses, but there are also opportunities. The companies that see the opportunities, and pivot to exploit them, will succeed, while those that fail to innovate will fade away.

As we emerge from this pandemic in 2021, what about the longer term? Pundits agree that the world has changed forever, and while there will be some return to normality, many markets, industries, and buyer behaviors have been dramatically altered for the long term.

This begs the question: Will companies have to re-imagine themselves and create new products and new services, or perhaps even invent a new business model? Probably many will. In fact, it is already happening. The  ability to pivot and innovate quickly thus holds the key to the future as the world recovers from the pandemic and the new normal starts to take shape.

In response, management faces two fundamental questions, one strategic, the other more tactical:

Strategic questions you need to ask yourself

Should you pivot your business, and if so, which markets should you target, and with what kinds of products or services? And how do you reach these markets?

For example, MATT is an SME manufacturer of medical diagnostic equipment, selling to physiotherapists to measure a patient's walking gait. But some patients were avoiding the physio's office. Fortunately, advances in Lidar offered a solution, and so the company ported the application to smart phones so that people could carry out these measurements at home, guided by instructions from their phone and sending results online to the physiotherapist. Thus, MATT re-oriented its business to produce at-home diagnostic equipment, selling directly to consumers – a major strategic change that involves new technologies, new applications, and new markets and customers … in short, a new business model. Most important, this response to the pandemic promises to create sales for the longer term, as many patients will prefer the convenience of at-home diagnosing instead of an office visit.

Tactical questions you need to ask yourself

How can you respond or pivot more quickly to new opportunities and changing markets? For example, if that diagnostic device company uses its existing development process and methods, and simply tries to do its development projects faster, it likely will not work well. So, should they adopt Lean or Agile methods in their product development, or some other new tools? What will accelerate this pivoting process?

The need for pandemic pivots

History has many examples of business opportunities being seized during periods of crisis. A recent Forbes article reminds us that Covid-19 is  not much different from other crises: Although the future looks bleak for some firms, there is always an opportunity. The Japanese understanding of the word “crisis” includes both “danger” and “opportunity”; thus, “from the most adverse of circumstances, such as a global health disaster, can arise innovative beacons of hope”.

What is the best strategy to adopt during a recession?

A Harvard Business Review study of firms' strategies and performance during several recessions provides sage advice: The findings are stark and startling. “Seventeen percent of the companies in the study did not survive the recession: They went bankrupt, were acquired, or became private.” And the survivors were painfully slow to recover: About 80% had not regained their pre-recession growth rates (sales and profits) three years after the recession; and 40% of them hadn't even returned to their pre-recession sales and profits levels.”

Some firms in the HBR study elected a strictly  defensive strategy, cutting costs to survive, but did not do well after the recession. Others chose a  strongly aggressive and offensive strategy – buying companies or building totally new businesses – again with poor results.

But the firms that elected the right balance between defensive and offensive moves fared the best. Such firms cut costs and improved operational efficiencies, but they also developed new markets and invested to enlarge their asset bases, much like Corning did. And they increased spending on R&D and marketing, which yielded only modest benefits during the recession, but helped to increase sales and profits afterward.

How to find that winning pandemic pivot opportunity?!

Start with VoC

The first place to begin the search is with your customers and their needs. The HBR recession study found that “progressive companies stay closely connected to customer needs – a powerful filter through which to make investment decisions.” Many of your customers' needs, behaviors and even their businesses have changed as a result of the pandemic. Some of these changes are obvious, and do not need much of a market or VoC (voice-of-customer) study.

For example, the trucking industry has seen its customers' business models change dramatically – “some for the good, some for the bad. Their supply chains are unrecognizable from a year ago. The distillery down the road now makes hand sanitizer. The automotive supplier in the next town makes parts for ventilators. The sporting goods manufacturer you used to haul for is running its assembly line 24/7 to keep up with demand.” And so, by coordinating their pivots with their customers, truckers have already made “vertical pivots by providing new services, like pick and pack, final mile, and freight brokering. Other truckers have made geographical pivots and are running new lanes to help change the direction of their fleet.”

Leverage your strengths and assets

When life gives you lemons, start making lemonade! Looking for ways to leverage your core competencies or build from your assets is yet another viable way to identify potential pivot opportunities.

A core competency assessment usually begins with a listing and analysis of those things your business does better than your competitors (for example, a certain manufacturing capability or skill, or a technological know-how), or those assets you possess (such as a production line, or raw materials). But the analysis is always done with  a view to how these strengths can be used to advantage, often in a new product or service, and let you  gain competitive advantage.

Do the due diligence 

New ways to reach the customers

Pivoting may also mean seeking online and virtual ways to reach your customers and generate sales, simply because in-person sales calls and face-to-face communication is limited in today's pandemic. And the pandemic has forever changed the behavior of customers, many who had rarely purchased online prior to Covid-19 have discovered the benefits of online shopping and purchasing.

This advice applies not just to consumer-goods firms, but also to B2B companies, many of whom have been slow to embrace eCommerce. A Forester study reveals that in the U.S., B2B eCommerce “will reach $1.8 trillion and account for 17% of all B2B sales in the U.S. by 2023,” and that “74% of B2B buyers conduct research online before purchasing.” Further, an unexpected “91% of B2B customers use mobile devices to search for a product, and 25% use them to make a transaction.”

Accelerating the pivots

Re-think your firm's innovation process and methods – moving to new approaches and a redesigned process. Here are four proven ways to accelerate the process and get new products to market faster.

Apply Lean methodology to your innovation process: Value stream analysis is a well-known Lean Six Sigma methodology, designed to remove waste and inefficiencies from business processes; and it has seen widespread success in factory-floor settings.  But the Lean method can also be applied to new-product development, specifically to make your idea-to-launch system more efficient.

Adopt Agile development methods: Even firms producing physical products have benefited from Agile Development methods in recent years. Agile Development has its roots in the software industry, where it results have been well-documented.

Use focused project teams: A lack of focus and inadequate resources – spreading people too thinly across too many projects – has been identified as a major impediment to rapid delivery of new products.

Deploy new digital tools: Numerous digital tools are available to accelerate the product-development process.

Keep your business agile and flexible, and be ready to pivot

The economic depression the world faces is a daunting prospect for all businesses, but there are also opportunities. Those companies that see the opportunities and pivot to exploit them will succeed, while inflexible companies will be the first to fail. “Those that cannot adapt to the ‘new normal' will end up paying the price for building a rigid business model based on the idea that change will never come.”

Of course, those that do fail open the possibility of increased market share and sales for the survivors, allowing them to prosper even more. Change always creates opportunities, but also threatens the timid and the blind. Those businesses with foresight, courage, and the ability to change how they do business will be rewarded.

The full article including lessons learned and references can be viewed here.