In a crisis, be a Kellogg...

Though terms such as ‘unprecedented’ have often been used in relation to the effects of COVID-19, when it comes to business resilience this isn’t entirely accurate. Organisations and industries have faced widespread challenges previously and survived. The Spanish flu epidemic of 1918 to 1920, the Great Depression from 1929 to 1939 and also the global financial crisis of 2007 to 2009 resulted in some of the same challenges that businesses are facing today and all have some significant lessons on survival.

Two words that become increasingly applicable in challenging times are flexibility and agility. As the world pulls the rug out from under their feet it is the businesses that think outside of the box, that appraise the situation with cool, calm heads and innovative thinking that will not just survive but thrive.

In Australia in 2020, that means taking inventory of your company’s products and services and, if your usual business operations aren’t viable, seeing how to adapt those services and products for a business that is. There are many industries that have been hit hard by the pandemic – tourism, travel, hospitality among them. But there are others that have seen their business models explode – meal delivery companies, cleaning services and online retail included. IT is another industry that has seen substantial growth. As other organisations hurry to adapt their businesses to an increasingly digital world, they need IT developers, architects and designers to help them do it.

Many other industries and organisations have had to radically change their thinking, however. A recent survey by business training agency, The Entourage, found that over 60 percent of small to medium Australian businesses have pivoted their businesses in order to survive the coronavirus pandemic. The survey included over 900 businesses, including ones like Aqua Gardening, a hydroponics retailer that capitalised on the fact that Australians have been spending more time at home by creating packs to help its customers grow their own vegetables at home. It also retrained its retail team to become over-the-phone sales consultants and placed a strong focus on its online strategy, which “until then had only ever been an afterthought,” according to owner Shiran Faast. The result was a tripling of revenue in a single month.

Other companies making the most of a digital approach include Henry and Grace Yu’s Freshchoy, a fruit and vegetable wholesale business that usually supplies Chinese restaurants. As those restaurants closed down during restrictions, the knock-on effect threatened the Yus’ business, so they began selling their produce on WeChat, dispatching from a central warehouse. Before long they were able to expand their service to 20 suburbs.

While digital solutions have been a major asset to many entrepreneurial businesses, other enterprising companies have combined them with a decidedly analogue approach. Examples are Melbourne bookshops like The Sun and Hares and Hyenas, both of which utilised delivery by bicycle, keeping their staff employed and healthy, and their customers happy with a contactless service.

Pivoting 180 degrees

While some companies find a way through by adapting the way they do business, others go further and change the very nature of their business. We’ve all seen the dry cleaners and clothing repair shops advertising face masks, but the owner of another Melbourne restaurant, the Basil Leaf in Fitzroy saw providing good quality fabric masks as a way to not only supplement lost revenue, but also as a way to give back to her community. Initially giving them away, Ann Do was persuaded by customers to charge for them.

Earp Distillery in Newcastle is another company that changed its production entirely. A decline in demand for its usual output saw it using the ethanol it had in abundance to make hand sanitiser – a highly sought after product in the pandemic. Perfume manufacturer LVMH took a similar approach, while JCB, which usually produces diggers, converted its factories to make the steel housing for a new type of ventilator.

Thinking big

Fortune can favour the bold when it comes to agility and resourcefulness in business, and the classic lesson from the Great Depression is Kellogg’s versus Post, the two companies that dominated the US breakfast cereal market at the time. Despite the doom and gloom, the former chose to swim against the tide, doubling its advertising, pushing into radio and strongly marketing its new Rice Krispies product, while the latter slashed its advertising budget. Post did survive, but it is Kellogg’s that is the household name and remains the top US cereal manufacturer today.

It’s a lesson that Australia’s Gerry Harvey seems to have taken to heart. His furniture, computer and appliance store, Harvey Norman, has conducted an unmissable newspaper advertising blitz over the last six months. And according to the Financial Review the strategy has worked. In September 2020 the company announced it had tripled its earnings, with a pre-tax profit of $178 million for July and August 2020, a 186 percent increase on the same period of the previous year.

Similarly proactive, Education Perfect is an online education platform that came into its own during remote schooling, but also used the experience to push into new markets. Offering free temporary licences to Asian institutions at the beginning of the outbreak, it signed up over 500,000 users in 100 countries.

IT, always IT

And perhaps more than any other industry, IT is the one best primed to thrive during challenging times. As an industry the very nature of which is to find solutions to issues, IT is the epitome of flexibility and agility. In a few short months, the teleconference service Zoom went from a little known app to becoming a verb like ‘hoover’ or ‘Google’, used and relied upon by millions, simply because its management was able to capitalise on an unexpected situation. Whether it will retain its current high valuation remains to be seen. But in 2020 it set the benchmark for agile responsiveness in business like no other.