The Coronavirus pandemic (COVID-19) has left a trail of problems in the form of layoffs, shrinking economies, weak purchasing power, etc. We could get a clearer picture in the coming weeks but for that the pandemic must first be conquered. But there is a big change happening and that change could drastically modify how we look at business models in the future. Here are 10 ways in which Coronavirus could change business models forever.
How COVID-19 will change business models?
Greater shift to Digital (no touch)
People spoke about this trend even after SARS and MERS, but they were never global pandemics. COVID-19 is in a different league altogether, impacting over 190 countries. Indian ecommerce websites have reported a 35% jump in volumes but that could just be the beginning. With crowded places still at risk combined with better connectivity, we could see a quantum shift to digital ways of transacting. Be it banking, shopping or trading; get ready for the new era where online rules the roost.
Beginning of the end of office culture
The COVID-19 has helped businesses learn that working from home (WFH) is a viable option. It needs better coordination, smarter use of technology and higher commitment levels to succeed. But in most organizations, it is working perfectly. The concept of the physical office is likely to undergo a shift. It may not be immediate but the trend has begun.
From competition to cooperation
In very low profile news, ITC opted to sell its Aashirvad Atta through the online sales channel of Jubilant Food Works (Dominos Pizza). This opens the doors for a new type of cooperation between competitors, where each company only focuses on what it can do best. Perhaps, Jubilant will not be valued on how many pizzas it can sell but how effectively it owns and influences its customers.
Elimination of plethora of pointless jobs
Rajiv Bajaj loves to share a story of how on his first day at office, their Japanese partner asked him his role. That was the moment Rajiv understood that every team member was required to contribute to output. The last few years has seen the rise of many jobs with ambiguous boundaries and fluid definitions that are hard to measure. They may be the first to be eliminated in the days ahead. Coordinators, thanks, but not thanks!
Business travel reduces substantially
This may not happen immediately but eventually it should happen. During the lockdown, most businesses have cut down on travel and relied on videoconferencing as a replacement for travel. While some travelling would still be inevitable, the whole concept of an army of employees living out of their suitcases is largely unnecessary and not entirely productive.
Big boost to local sourcing and Plan-B approach
Indian electronics industry realized that it was not able to get inputs from China. The industry was paralyzed by the lack of inputs and the absence of Plan-B. The Coronavirus will make countries increasingly wary of too much dependence. National policy will gravitate more towards self-sufficiency in a number of areas like food, key inputs, defence, etc. Above all, businesses will focus more on creating a back-up plan for Black Swan events.
Cost and efficiency ratios take centre stage
If the driving metrics of the last few years in the stock market has been growth and profits, that is likely to shift now. Of course, growth and profit will still remain critical, but businesses will also be evaluated on other sustainable factors like efficiency of assets, cost competitiveness and owning the customer experience. These will start to play a larger role in the valuation models.
Effort to continuously engage with the customer
When factories reopen and production commences; will customers still be loyal? That will largely depend on how effectively you engage the customer. Companies that have invested time and resources in engaging the customers during the phase will come out the winners. Above all, continuous customer engagement will become the leit motif of most businesses.
Cloud could get its biggest boost ever
Software companies have been privately admitting that clients who relied on the cloud have done better in these tough times. The whole concept of data storage and processing via secured servers could give way to the cloud. That will anyways be necessitated as we talk about a decentralized office model. But cloud computing and cloud storage could be the certain way ahead for businesses.
Towards more flexible business models
Once lockdown is lifted, how quickly can business get back to full production? That would largely depend on how flexible their business models are. But, businesses will now go about building such flexible business models as part of a conscious strategy. Leaner structures, back up production facilities, 3D printing could all become integral aspects of a flexible business model.
The downside impact of COVID-19 and the lockdown are inevitable. The big takeaway could be the way it changes our business models. The efficiency gains could far outweigh the temporary losses that most people are worrying about.