It has become quite evident that a) we will not return the “old” normal b) we may not return to any “normal” and c) changes can no longer be categorised as “good” or “bad”, as it is incumbent on us to make them “good”.
In the early days of the pandemic, a group of genetic scientists at the University of California, Berkeley, swung into action and converted their lab into a COVID-19 test processing centre. Putting their regular research work on hold, the biologists conducted thousands of tests per day by leveraging automated robotic technology that enabled them to process the swab results of patients in a record 12-24 hours.
The world of higher education has pivoted in other ways, too, to combat COVID-19. For instance, the National Institute of Information Technology (NIIT) in Neemrana, Rajasthan, swiftly transitioned to a digital mode when Lockdown 1 came into effect in India. Like scores of schools and colleges around the world, NIIT also started imparting online education through video conferencing and other virtual means since students had to return to their home towns in the wake of the pandemic.
Not just in the academia, the staggering impact of COVID-19 has unleashed a wave of innovation and witnessed the birth of new ideas across the innovation landscape. I strongly believe the shifting sands triggered by the pandemic will reset everything as we once knew it and push businesses to learn how to tackle the unknown in a crisis.
Pivoting is paramount to startups
According to a recent survey by NASSCOM, 70 per cent of startups in India have less than three months of cash liquidity in the banks, and 22 per cent may find it challenging to survive until the end of the year. In light of such disruptive statistics, it is critical for startups to adapt their offering rapidly to meet the evolving demands of the altered marketplace. The time has come to pivot—to change the business strategy without tinkering with its foundation.
For instance, Spotify, the global leader in digital streaming, was on an upward growth trajectory when COVID-19 blindsided it. Before the pandemic, its large customer base of free users had to listen to advertisements before the music played. However, when advertisers cut their budgets due to the pandemic, the Swedish startup made a lateral move. Spotify pivoted to offer original content in the form of podcast playlists by artists and signed exclusive podcast deals with celebrities like the Obamas. At a time when people are stuck in their homes, the company is catering to high user demand for podcasts across categories, such as news, pop culture and sports. Also, since it localises content, Spotify has announced 12 new non-fiction podcasts and content from radio channels, such as Radio City and Big FM for the Indian market.
As this example illustrates, sensing new opportunities in the midst of the disruption triggered by a crisis is the way forward for most startups. Since the pandemic has compelled startups of all stripes to reimagine their business model, entrepreneurs are scrambling to reapply their core expertise in unique ways. For example, Delhivery, a leading e-commerce logistics player that was into institutional deliveries before the pandemic, made the seamless transition to becoming a hyperlocal delivery player post-Lockdown 1 in India. The new business model resonates with how the company began operations as a hyperlocal food delivery startup in 2011. The pivot has benefited Delhivery as it delivered over 2.5 million orders of medicine and several thousand tonnes of other supplies such as grain, sanitisers, masks and grocery, achieving impressive pre-COVID numbers in June 2020.
Likewise, when the founders of Pharmarack, a plug-and-play healthcare platform for pharma makers, distributors and chemists, realised that the supply of medicines had plummeted on the eve of Lockdown 1, they rejigged the business model. The company started delivering medicines to chemists, doctors and patients who needed speciality drugs.
The way I see it, startup pivots during COVID-19 should be approached as an evolution in the business strategy that will help the company not just to survive the crisis but also thrive beyond it. Startups can effectively leverage digital transformation to create new business models to remain resilient and relevant. It is also essential for startups to leverage their understanding of the market and customers to enable a successful pivot to a new area of business. I urge startups to think big, go global, go digital and build on their capabilities through effective acquisition and consolidation.
COVID-19: A wake-up call to big business
According to a recent report by Gartner, 55 per cent of CEOs in the tech sector were caught unprepared for the economic downturn caused by COVID-19. It reflects the dire need for corporates to leverage their ‘agility’ to adapt to the new normal.
Fortunately, the era of COVID-19 has seen large established corporates like consumer goods giant Unilever pivot to cope with the new market reality. In response to changing consumer habits and to sustain long-term competitive growth, the conglomerate has pivoted to prioritise the household penetration of its brands in brand categories, such as packaged food, surface cleaners and personal hygiene products, over others such as skincare where the demand has fallen. Also, when the work-from-home model became a crucial feature across geographies, Unilever pivoted its manufacturing and supply chain operations to support the robust growth trends ably in its in-home food and refreshment portfolio.
Unilever’s approach to innovation in response to COVID-19 has been to reduce the complexity in its business operations and focus on brand repositioning to ensure its marketing messages are align with the new consumer habits.
Major players in the aviation sector have also been compelled to pivot due to the unique challenges posed by COVID-19. With lockdowns and travel restrictions becoming effective across geographies, American Airlines, Air Canada, Lufthansa and other global commercial carriers have pivoted their strategy by transporting freight for items, such as personal protective equipment. Further, retail brands such as Gap and Nike are leveraging their manufacturing capabilities to make masks, gowns and scrubs to create new value with the existing assets.
Thus, crises, especially the one we are experiencing now, are the perfect opportunity for businesses big and small to reassess their core capabilities and focus on innovation-led growth. In most cases, corporates that have failed to pivot and innovate amid COVID-19 are at the risk of stagnating and losing out on valuable opportunities to infuse new life into their business.
Corporates, while keeping the lights on is important, do keep your eyes also open as the markets are rapidly changing. Be open to move fast on innovation and do not rely on internal innovations alone. The larger question to ask is, are small pivots enough to survive the pandemic? Should corporates go back to the drawing board to build back stronger?
Treading carefully around pivots
Although ‘pivot’ has become a buzzword in the current times, it may not be for everyone in the innovation ecosystem. It is not a panacea to solve a company’s business problems. When companies—especially startups—rush to change their entire business model more out of anxiety than acting on any real need, they cause sudden upheavals in their operations. If startups follow the herd mentality to pivot, without carefully thinking through their decision, they are at risk of scaring away investors—and customers in the long run.
Therefore, ahead of rolling out a pivot, I urge all key stakeholders in the innovation ecosystem to reflect on the pitfalls such a pivot might cause to their business model. They need to take calculated risks and modify the strategic changes to the existing business model only as much is required to align with their larger organisational goals.
As recent developments on the global innovation landscape have shown, venture capitalists preferred backing those startups that seized new opportunities amid the pandemic. In other words, funding came easier to those who pivoted not just swiftly, but smartly, too.
For example, Vertex Ventures had pumped in $8.9 million into Malaysian startup StoreHub before the novel coronavirus struck and has continued to back the company. The startup’s cloud-based POS (point of sale) system helps restaurants and retailers digitise business. When COVID-19 was declared a pandemic, the startup adapted its product overnight to enable food delivery, catering to the needs of today’s largely home-bound customer base.
The global investor community is also busy identifying other new trends to support ground-breaking innovation by startups. If the current momentum of investors empowering startups is sustained, the post-COVID-19 investment landscape will be more resilient than ever.
Preparing for a post-pandemic scenario
Every crisis is an opportunity to leapfrog into a future that will protect long-term business continuity. In the area of higher education, it is becoming increasingly clear that a blended model of learning will be the key trend that is here to stay beyond COVID-19. Unprecedented digital transformation will allow schools and universities to pivot seamlessly through the current crisis and develop a robust online infrastructure to complement its brick-and-mortar capabilities.
The pandemic has also made everyone acknowledge the role of policymakers to spark robust on-ground innovation. Governments everywhere have engaged with citizens by adopting digital tools to share timely updates on COVID-19. For example, the Indian government has developed the ‘Arogya Setu’ app to lead the country’s battle against COVID-19. The government has also has launched a training module named ‘Integrated Government Online training’ (iGOT) under the aegis of the Ministry of Human Resource Development’s DIKSHA platform. It takes care of the training needs of the frontline workers and enables them to efficiently tackle the myriad challenges posed by the pandemic.
Since the world is facing a joint health and economic crisis, governments should take bold initiatives to help their respective countries to come out of the crisis as rapidly as possible. It is not the time to be timid about innovation.
The opportunity is ripe to weed out inefficiencies, bring in stronger foundations and embrace an entrepreneurial mindset and culture in organisations. It would pay for all key stakeholders to keep their eyes and ears open all the time, as rapid, dynamic change is the new normal.
One thing is clear: COVID-19 has taught us that no stakeholder in the innovation ecosystem should be second-guessing themselves in a crisis. Now, more than ever, there is an urgent need for collaboration among governments, startups, corporates and academia to accelerate innovation and mitigate the risk and impact of the global health crisis.
We have the opportunity to collectively shape the “new normal”, or the world, as we see it. By pivoting to be relevant amid the changes around us, we are shaping the new world economy, one pivot at a time.
-Ravi Narayan, CEO, T-Hub
NOTE: This article was originally published in Economic Times on October 03, 2020 in The Economic Times with the title Pivot is Not Just a Startup Word Anymore.
