I’d like to retire the term ‘crisis’ from current business and economic journalism. While the pandemic has doubtlessly jolted our social and economic realities, it’s important to remember disruption is not a unique or singular occurrence. Disruption is always happening.
As sail gave way to steam and steam gave way to rail, so our business practices are forced to evolve in 2020, driven by current and future consumer needs and met with ever-advancing technology. Some business owners will hope to endure these changes. Our next great business leaders are embracing them.
One major difference between our current situation and previous disruptive historical events is the pace of the extinction of certain business practices. At no time in history have we been able to learn so much so quickly about the changes shaping our reality and future needs. Change itself is constant, but it is truly rare for change to announce itself this rapidly.
Thus far, we’ve been bombarded with media messages detailing the downside of this rapid change. But in the interest of fairness, let’s consider the upside for a moment.
Look for opportunity
Business owners need to use this disruption as an opportunity to examine the shifts in consumer habits – some of which have not so much shifted as they have accelerated. By examining and listening to consumer needs, business owners will find the inefficiencies in the market.
Wherever there is inefficiency, there is opportunity. Agile businesses will be able to pivot decisively toward the opportunities that are shaping our future.
Despite the current climate of despair over an unseen future, I’d argue you don’t have to look far to find unmet needs: The pandemic has flashed a spotlight on the inefficiencies in every industry, not least is the overseas-based supply chain reliance and our current reality of unreliable suppliers. A weakness in this chain could mean opportunity for your business.
The question business owners shouldn’t be asking themselves is: “Can my business change?” In this environment, businesses must change and wholeheartedly. Thinking small will not get you far in rapidly changing times.
The first question for business owners needs to be: “What do I change?” Maybe your product is out of step with demand: Instead of filling bottles with luxury shampoo, you could fill them with hand sanitizer.
Maybe your market has upended: All that toilet paper headed to empty college dormitories and hotel rooms could now be repackaged and used to stock empty grocery shelves.
Or maybe, the structure of how you do business has changed. Restaurants that can open at 50 percent capacity may need to rely on, and ramp up, carryout services for the foreseeable future.
But just because you can fill a need or manufacture an urgently needed consumer good doesn’t mean the consumer will necessarily buy it. The competition isn’t always your biggest competitor.
In this environment, the biggest challenge businesses will face will be meeting the interests of the consumer in the most efficient way. But figuring out what consumers need entails more than reading a newspaper article about mask shortages. Instead of rushing in to manufacture masks, learn about the organizations buying them, and find out exactly what they need.
Finally, businesses need to consider how to change and come up with a change-management plan.
Tale of 2 leaders
Businesses needn’t go through the transformation process alone or guided by guesswork. If you need help finding answers, or even coming up with the right questions to ask, find an experienced advisor to help guide you through the process.
Are you in a position to invest? Many opportunities do – and will — exist for investors that examine the market dynamics which are emerging and are willing to do their homework.
The difference between a business that is enduring and one that is thriving, or dominating, can be summed up in the story of two leaders who ran the same company at different times in its history.
Thomas Watson led IBM in 1943 and famously said there would never be a market for “more than five computers” in the world.
IBM dominated the global market as a computer hardware manufacturer, until Baltimore native (and Johns Hopkins graduate) Sam Palmisano, son of an east Baltimore grocery-store owner, took over in 2002 and restructured the company dramatically, divesting its hardware business and shifted to leverage technological advances and meet the expanding international consumer need for technology services.
One leader was called crazy. The other was considered smart. Guess which one of them led IBM to dominance? The kid from the east side of Baltimore who took a big chance in response to even bigger changes.
Christopher Helmrath is the managing director of SC&H Capital, the investment banking and advisory practice of SC&H headquartered in Sparks.