Pivot or perish: Indian companies rethink business models to thrive during post COVID-19 world
Coronavirus crisis is unprecedented for all and its economic impact will linger on businesses for long time. For current situation, a concrete risk management approach, innovation in products, and implementing technological tools are significant measures. Through this, an organization can identify, prioritise, manage, and respond effectively to risks.
Anushruti Singh July 27, 2020
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Three months have passed, and experts are still finding it hard to figure out the scale and scope of COVID-19’s impact. While the chain of disease is still unbroken, the second collateral crisis in form of dismantled economic activity has appeared in front of the India Inc.
At least 70 per cent of economy runs on consumer expenditure which is now worst hit currently. This crisis has hence irreparably impacted businesses due to which many of them have already died.
Some businesses are just surviving somehow while others are thriving. The outbreak has forced the whole business world to make some large reforms. Also, a majority of Indian workforce is working virtually confined at their home and is rethinking of their business plans and strategies.
MSMEs as the epicentre of crisis
The micro, small and medium enterprises (MSME) sector’s revenue growth is wrecked heavily in this fiscal because of wrath of the pandemic. According to the figures released by CRISIL, Indian economy will contract 5 per cent this fiscal and MSMEs would be worst affected by this.
Talking about this, Business Coach and Founder of Bada Business Dr. Vivek Bindra tells, “The crisis has unleashed a never seen before financial crisis on a large number of businesses. This is visible in the form of falling sales and dropping revenues which is making their survival tough. The most severely affected in this are small businesses as for them sustainability is tough.”
The All India Manufacturers’ Organisation estimated last month that about 35 per cent of micro, small and medium enterprises and 37 per cent of self-employed individuals have started shutting their businesses as they observe no chance of recovery now.
A business may be doing great in pre-COVID era, but it is time of crisis which highlights its resilience. This infers that only organisations with good risk management system and strong IT infrastructure are able to survive in this commotion.
Reforming business along with changes
The advantage for India Inc is a large market and a strong industrial base to fall back upon. Hence, organisations can thrive if they work upon their product innovation, quality and sustainability. According to Vinod Tiwari, Regional Mentor of Change for Gujarat, Niti Aayog, there are many important key takeaways from the current situation especially for the industries.
He professes, “The crisis has brought some lessons about learning and adopting new innovations. People have largely learnt that hygiene and protection always comes first. They have also learned to be grateful for what they have and are now keeping an alternative solution of their resources. The crisis has also made people more than ready to accept the change.”
Tiwari adds, “They wisely manage their funds now and are cautious of spending to maintain healthy cash flow. The crisis has also taught that good bonding with the supply chain is beneficial and being sensitive towards nature makes a business sustainable. In these circumstances, it is important that small businesses take some radical measures to transform themselves, embrace digitization, and start innovating products to stay relevant.”
Technology and innovation- digital accelerator for business
Businesses were on a mission to digitally transform themselves and their operations since many years but were unable to do so. But this year, COVID-19 has catalyzed a massive adoption of digitalization among numerous organisations irrespective of industries and sectors.
The pandemic has shifted people’s mindsets and perceptions of their organizations. They have now understood that embracing change and organizational alignment are crucial to success. For Intellipaat-an online education and training portal, it was a challenge to shift entire online infrastructure to an agile work from home mode.
Its founder and CEO, Diwakar Chittora tells, “Improvement is a continuous process. We faced multiple challenges and some of them are related to infrastructure like power cuts or internet problems at employees end etc. We run over 200 trainings on weekends and for that we require heavy infrastructure of IT and hardware. However, the infrastructure was not available for work from home mode. So, we had to run a solution in cloud environment.”
Chittora now firmly believes that agile business model helped his business in surviving during a difficult economic scenario. He confesses, “We are succeeding because we have digitalized every department and process. It has led to huge efficiency in our operations. It was due to the strength of our existing processes that we were able to adopt digitisation readily.”
Similar rules are applicable for small businesses such as hyper-local retail or grocery shops to adopt digital tools as a business strategy. Mentoring one of the Atal Tinkering Labs (ATL), Tiwari believes that in the current scenario, being Online is going to lead the future. He claims, “You need to be visible where more than 4 billion eyeballs exist and not on the traditional business directory or yellow pages.”
He further adds, “For successfully navigating through the current situation, businesses need to adopt new kind of operating models such as online grocery stores, pickup solutions by restaurants and sellers of non-essential items etc. Businesses should also be proactive in uploading their products to e-commerce portals with free deliveries and easy return policies.”
During such times, a technology that provides the foundation for any transformation initiative such as an app or software would be a key to success. Organisations that can modernize tools on their own will see their chances of success increase. Companies seeking to thrive in this digital world should also make-way for tech savvy leadership, modern app or software development processes, and modern developer tools.
Business Coach Bindra also believes that it is important for small firms today to set a digital footprint in order to survive the high tide. He says, “As digital buying becomes a norm, it is important for organizations to have a prominent digital footprint. A good website, an e-commerce presence, and an active digital and social media marketing team that brings in traffic to the website are key features of good digital strategy.”
A global survey by VMware revealed that almost all respondents (97 per cent) have seen some success, big or small from their digital transformation efforts. The top three digital transformation priorities for organisations are increasing business efficiency (48 per cent), improving customer experience (42 per cent), and upgrading existing technology platforms (39 per cent).
Sumit Dhawan, Senior Vice President and Chief Customer Experience Officer, VMware asserts, “The speed at which organisations have moved their engagement to digital channels during the pandemic signals the critical importance of modern applications.”
In the similar vein, Sunny Nandwani, Founder and Managing Partner, Acuver- a supply chain management firm adjudges digital transformation as good adaptive measure.
He tells, “Businesses are keen to recover footfall by digitising previously offline categories and and by leveraging existing digital infrastructure to scale-up and include all products. Our clients are seeking automation at a rapid pace to reduce day-to-day operations costs.”
Nandwani further opines, “There is also eagerness to have multiple sourcing models and a diversified supplier base for each product. Companies are looking to extend the omni-channel aspect to the entire customer experience journey including returns. Overall, COVID has emphasised the need for digital transformation, and it is here to stay.”
Rethink and customise your business
Businesses already running on digital tools should rethink their business models for survival during the pandemic. According to Dhawan, businesses need to do more than transforming capabilities to deliver digital experiences for customers and for employees. He tells, “Ultimately, it is about encouraging technically able leadership, synchronization between IT and the business, and adopting strategic technology platforms to thrive.”
At the same time firms need to rethink in terms of innovative offerings, customising products and services, or realigning their business strategies according to changing requirements of market. On this Bindra advises, “Dedicate your innovation team to study the market, find ‘hidden’ opportunities that you might exploit and create novel solutions that can be helpful during these times.”
The best example this is of Moglix, a B2B e-commerce store for industrial tools and equipments. This startup changed the norms of business by foraying into supply of healthcare essentials. Joyjeet Maity, VP at Moglix tells us that with enforcement of lockdown, the startup faced challenges as there was sudden hurdles in supply chain.
With a strong supply chain across more than 23 cities in India, they were able to restart the supply chain within a week, matching supply and demand within each city or state. Joyjeet recalls, “We realigned our supply chain and teams to focus on providing PPEs, medical equipments and sanitization supplies to the government, hospitals, and essential services companies.”
Safeguarding business with risk management model
Coronavirus crisis is unprecedented for all and its economic impact will linger on businesses for long time. For current situation, a concrete risk management approach is a necessity. Through this, an organization can identify, prioritise, manage, and respond to risks for safeguarding their future.
Commenting on how risk management model is imperative for Indian firms, Hersh Shah, CEO at India Affiliate of Institute of Risk Management, UK comments, “The novel coronavirus pandemic has changed the world forever. As governments and industries adjust to this new reality, business leaders need to understand that risk management is now an irrefutable aspect of businesses.”
He further adds, “The COVID-19 pandemic has made businesses realise their vulnerability to an unforeseen or unplanned event and how companies need to strategically map out risks and have contingency plans ready to hit the ground running.” Usually a risk management cycle consists of prevention, detection, response and mitigation.
Companies which responded quickly are still on board. According to Shah, risks can be geopolitical or climate-related or societal. It can be in any form or aspect. He says, “Hence, companies need to incorporate risk management processes more than ever now into their new businesses models to run successfully.”
Shah strongly recommends appointment of a senior risk professional to set up a crisis management task force and plan for further actions and asserts, “Appoint senior risk professional like an IRM qualified member who will lead one of the structural change in how SMEs run their business.”
Moglix’s Maity agrees that businesses are realising the significance of risk management. Describing the situation of his firm and other stakeholders, Maity adds that there are many risks involved in relying on an offline supplier network and on single channel sales. They are now exploring digitalization to get their businesses online.
Maity informs us, “We are partnering with many such SMEs to help them in reopening and expanding their businesses. As our country’s economy is bouncing back with manufacturing and commercial sector is gaining back its momentum, we are gearing up to cater to the increased demand of business supplies through the e-commerce channel.”
For a business as each day is different during these uncertain times. Also, as risks change reformative methods also keep changing. Therefore, every business needs some sort of crisis management structure to prioritise, plan, and to take a corrective step.
Social media platforms as business strategy
An effective social media business model is also very significant like others. When organisations leverage social media platforms to reach out their target audience, they create rapport and value for consumers, prospects, jobs searchers, employees etc. The communication disseminated on media platforms or posts on social media helps businesses to communicate their vision and to promote transparency.
According to Nikhil Joshi, Co-founder, Digital Jalebi, interactive virtual events and marketing platform using VR, AR and experiential tools will prove to be the biggest transformation in business models around the world. He confesses, “Every activity that a standard marketing agency would do such as consulting, practices, activations, and events would migrate to digital in a non-COVID world.”
Nikhil further adds, “These agencies already have shifted to digital including us. Hence, we will have to find more immersive and powerful avenues in digital to cater to this huge audience. We will have to find more platforms and solutions to tackle all marketing needs.”
Araldite, a registered trademark brand of Huntsman Advanced Materials officially launched their brand on digital platforms during these unprecedented times. Shenoy Muralidhara, Commercial and Country Director while shedding light on new social media strategy opines, “Unprecedented times call for innovative solutions. At Araldite, we turned the obstacle into an opportunity by launching digital campaign a #bondsthatlastforever.”
Most of the experts are of opinion that the impact of COVID-19 has been significant economically and firms are expecting effects to linger for few more months. With major investments coming in the internet industry, India will soon be the digital capital of world. Pushing digital initiatives at a time when internet is penetrating at a rapid pace and Indians adopting online channels is the right strategy.
On this Joshi comments, “We feel that a lot of digital migration will be permanent because this pandemic has given clients an opportunity to understand the potential of digital. It has also made us understand the incentives of working on digital channels, impact of analytics, and deep insights about your end-customers.”
Further speaking on the topic, Araldite’s Muralidhara said, “We understand how the tide is turning currently. Therefore, we utilised the lockdown as an opportunity to foray into digital platforms and e-commerce. There are always things to learn whenever you do something new. Seemingly intriguing technologies have now become essential ways of doing business.”
On the same note, Styched—a youth fashion D2C brand is mainly focusing on attracting new age digital customers by engaging them on social media. Durga Dash, Co-founder and COO for the portal suggests that this time is best time to get acquainted with pulse of customers. It is more important in today’s times as physical retail has dwindled and might take even one to two years to bounce back.
Dash suggests, “The customer engagement and service teams need to look for objective and subjective behaviour signals to understand what customers value in the post-pandemic world and then work tirelessly to offer the same. In terms of awareness-building, having your voice on digital or social media is important but small businesses have to build the trust factor first.”
Joshi suggests that businesses need to change their business strategies. They should either go fully digital or tweak their model according to situations to survive in this pandemic. They cannot wait to get things better as it is not going to happen. Therefore, accepting the change and following new normal is the way ahead.
Modifying manufacturing model in accordance with demand
Until recently traditional manufacturing was all about quotes, tenders, and orders developed in large bunch. Most manufacturers are located overseas and there are enormous minimum quantities (or expensive penalties for small orders), and lead times are long. On-demand manufacturing or cloud manufacturing is a new emerging business model.
It makes possible for vendors to provide support for production right from the assembly of a single prototype till final product delivery to the customer. This is achieved using a cloud-based software platform that makes it easy for developers to get instant quotes, manage projects, and track inventory from any browser at any time.
Speaking on reasons behind implementing production-on-demand for apparels, Dash of Styched tells that earlier there was no iterative process between consumers and brands that made the latter understand which apparel the former wanted. Without a robust customer feedback mechanism in place, nearly 35 to 40 per cent of clothing had to be liquidated.
To prevent such wastage, the fashion brand has adopted a production-on-demand model. “With analytics and customer purchase history fed into design schematics, bare minimum inventory is required. Also, we can respond instantly to customer demands through this model. Hence, it leads to zero wastage and produces clothing that consumer will love for a lifetime,” informs Dash.
Fundamentals will keep everyone safe
Given the uncertainty in the global economy, sustaining a high growth trajectory will be a challenge for India. However, India is revisiting existing business models in a post-COVID world, states Niti Aayog report to the United Nations.
India’s second Voluntary National Review (VNR) titled Decade of Action: Taking SDGs from Global to Local on the implementation of the SDGs states, “The success of the economic growth strategy in the past five years and learnings from the same will inform India’s growth plans for next ten years.”
It adds, “While the Covid-19 pandemic has put forth severe breaks on the momentum of global economic growth, India is fast exploring ways of developing relevant sectors of infrastructure and industry, such as the pharmaceutical and health equipment sector. It is also revisiting existing business models in a post-COVID world by aggressive adoption of Artificial Intelligence and technology-based products and services.”
Nandwani of Acuver also feels the same. According to him this is the time to focus on basics, serving your customer best, and keeping operations lean with a focus on efficiency. “Surviving solely might not be possible. Hence, one must seek community collaboration opportunities within their eco-system.”
He confesses further, “For those who do not communicate much, this is the time to change that. These are very turbulent times and there’s nothing to lose by talking if you are facing difficulties and everything to lose if you are not. Make sure you communicate with everyone from customers to employees, partners and stakeholders.”
On the same note Tiwari, mentor at ATL suggests that the current crisis can be an opportunity for businesses with big. He advices, “There are numerous kinds of business which can be developed according to resources you have. Like manufacturing of premium quality masks, affordable sanitizers, supply of furniture to work from home, and home sanitization products.”
It is also important to adopt digital tools that automate a series of daily jobs and allow you to bring down costs. Over a long term, shifting from manual processes to automation will also help in effectively managing multiple stakeholder relationships.
He also suggests repackaging products or services according to changing relevant requirement. Hence, it is clear that technology is critical for future of businesses and it will play a distinct role to counter challenges. Further, India Inc. should also triple its efforts in product innovation. Ultimately, every form of business will be transformed in some way or the other when the crisis is over.