COVID-19 is proving to be an on-going inflection point stimulating radical and potentially long-lasting social, cultural, economic, and political change. Inflection points change the rules of the game and they change the future.
On Wednesday 20 May 2020, we participated in a webinar hosted by the University of Birmingham Dubai as part of a new series of fortnightly webinars, Business Bites. These provide industry insights into the effects of the current COVID-19 pandemic. This webinar explored the relationship between risk and value in the management of existing business models under the title ‘Precarious Economies’. The discussion raised four interesting challenges for businesses.
The first challenge concerns managing the relationship between risks and returns within corporate business models. There is a danger that businesses focus too much on cost control, profitability and the distractions of the immediate, or the everyday distractions involved in running a business. The best managed companies will have developed risk management strategies that include constantly scanning the horizon and evolving to fit. Most crises are unpredictable, but not unexpected. Responding to crisis, and planning for crisis, is part of everyday business practice. This is a key point. All companies need to stand back to appraise the resilience of their business processes combined with their ability to realise all types of values for actual and potential customers. COVID-19 has shattered complacency.
The second challenge is centred on the management of people and developing blended or multimodal approaches to realising value for clients. This sentence perhaps needs to be translated. The emphasis here is on ensuring that there are different ways of engaging with customers and in delivering or co-creating products and services. For COVID-19, this includes homeworking and new forms of online working practices. There is no question that COVID-19 has altered the ways in which business processes and tasks are delivered. One consequence will be the development of a new balance between online and face-to-face provision, and between local production and global supply chains.
The third challenge revolves around the management of innovation. Innovation is a creative process often informed by chance encounters. The challenge for firms is to ensure that chance encounters, including those based on casual chat, continue to catalyse innovation within firms. Thus, firms understanding the importance of these more informal innovation processes will be developing novel approaches to ensure that employees working from home will still have opportunities to innovate based on serendipitous encounters outside of the office kitchen, or corridors.
The fourth challenge reflects an on-going shift in customer behaviour towards businesses that adopt a triple bottom line approach. Such firms balance profitability with creating wider environmental and economic impacts. The key point here is to consider the contribution a triple bottom line and effective ESG policies can make to risk reduction combined with profitability. It has now been proven multiple times that a shift towards more responsible forms of business behaviour is associated with higher share prices, enhanced profitability and the development of longer-term relationships with customers. Firms must focus on the relationship between the different values that are placed within products and services, and to understand what stakeholders are looking for post COVID-19. More than ever, balancing profit with alternative values, and the successful communication of this narrative, is likely to result in enhanced profitability, against a backdrop of shifting expectations.
For all firms, COVID-19 is a moment for a corporate stocktake. This must include a focus on products, services, business processes and stakeholder communications. It is an opportunity to identify what a company does well but could do better. It is also a time to identify where a company needs to change and how easily it can pivot and flex in volatile times. COVID-19 has magnified weaknesses in company processes, business models and in product delivery systems. It has also revealed that lessons from the past, including the SARS crisis, have not always been learnt.
Predicting the future is always a dangerous activity. Nevertheless, there is one certainty. Better managed companies perform at an enhanced level during a crisis. The three challenges for business leaders that COVID-19 has highlighted are:
1) Managing company processes and employees;
2) Restructuring and adapting as economies recover, and;
3) Developing strategies that reduce a company’s exposure to risk.
The best managed companies will have seen COVID-19 as an opportunity rather than a challenge. There are multiple opportunities that lie in store for business leaders ready to champion the potential benefits of fast-speeding change in the world around us. Those that adapt well will see retained and improved customer loyalty, revenue opportunities for new products and services and increased employee productivity and loyalty, adding up to a more sustainable business overall. This will help add a protective layer for similar situations that no doubt lie ahead.
COVID-19 has focused our minds on our individual health and fitness levels to enhance our ability to respond to the pandemic. This lens is a fitting one for business leaders as they consider the changes needed in their organisations to achieve the same outcome.
Professor John R. Bryson (BA (Hons) TCD, PhD Leic., FAcSS, FRGS, FHEA, FeRSA) has held research and teaching posts at the Universities of St Andrews, Cambridge, Wales and most recently at the University of Birmingham where he is Professor of Enterprise and Economic Geography. An economic geographer whose research focuses on understanding people and organisations in place and space and the ways in which place-based adaptation occurs including understanding barriers and enablers to adaptation. He has made significant contributions to understanding and explaining the complex ways in which production is organised through space and in place and via a variety of forms of enterprise. Much of his research has focused on developing an integrated approach to understanding city-regions. One of his cross-cutting research interests including understanding rapid adaptation during times of disruptive and radical change. This includes citizen-led end-user innovation, the development of alternative solutions including research on responsible managerial practices.
Sarah is a Director at leading strategic communications advisory firm Kekst CNC. She has lived in the UAE for the last 13 years.
A seasoned reputation strategist with more than 25 years’ experience, Sarah has spent much of her career advising large corporates in Europe and MENA on corporate citizenship strategies designed to maximise stakeholder value. Projects have included the introduction of ‘sustainable coffee’ and capsule recycling at Nestlé Nespresso, ethical cocoa bean buying at Cadbury Schweppes, low-income community support strategies in KSA for a Saudi Aramco joint venture and, most latterly, involvement in Majid Al Futtaim’s recent announcement to commit to the eradication of single-use plastics from its entire business by 2025, a project she was involved with for almost three years. She has also advised a number of environmental NGOs and related government entities in the UAE and further afield.
Sarah has a fundamental belief that effective sustainability and social responsibility policies create significantly enhanced organisational health and longevity. She advises on the impact and linkages of such investments with the corporate reputation, the customer brand, the Employer Value Proposition, financing benefits and the organisation’s ‘licence to operate’ overall.
Sarah is a graduate in European languages with separate postgraduate qualifications in strategic marketing and boardroom leadership. She is currently studying for an MBA at a German university and has guest lectured at Zayed University and INSEAD. Sarah has a particular passion for the marine environment, which led her to qualify as a Marine Mammal Paramedic and undertake volunteer work with the Marine Conservation Society of Hong Kong.