This post is sponsored by Philip Morris International
Businesses are grappling with great uncertainty as the global economy is in limbo. But when the dust settles, this moment will also spur innovation. New concepts will be created out of the needs demonstrated during this time, and some businesses that pivoted amid the crisis may find that they now have new business lines or a permanent strategy change on their hands.
That’s the lesson, at least, from history. It’s well documented that constraints and stress can force transformation and breed new ideas.
So, how will we see businesses transform as a result of COVID-19?
The crisis has underscored the importance of purpose for organizations, according to Boston Consulting Group CEO Rich Lesser and BCG Senior Partner Martin Reeves.
“Companies and countries have been made painfully aware of the fragility of the critical systems upon which they depend,” they wrote recently. “And crisis has created a need for companies and governments to demonstrate that their purpose and values are not just hollow words written in better times.”
Here are some examples from history that demonstrate how businesses were able to take a difficult time and transform it into opportunity.
The SARS epidemic and Alibaba
Alibaba, the multinational e-commerce and tech company based in China, was just two years old when SARS, a respiratory illness similar to COVID-19, disrupted daily life of thousands of citizens. With people preferring to stay home and out of public spaces, and going out for just the essentials, a savvy Alibaba team recognized an opportunity.
While Alibaba was primarily a business-to-business service, these employees who had been holed up together in an apartment during the worst days of the outbreak came up with the idea for Taobao, a direct-to-consumer e-commerce platform akin to Amazon that is now the most popular online marketplace in China. As the outbreak subsided, Chinese consumers who had experienced the convenience of online purchasing continued using the service and propelled it to global success.
The 2008 financial crisis and Airbnb
The fallout from the subprime mortgage crisis had a major impact across the United States over a decade ago. The economy slumped, and many college graduates struggled to find a job. These millennials would later be the subject of much public scrutiny, as they were forced to make choices such as moving back home with their parents as they looked for work.
As a result, people were eager to share assets such as a car or an extra room to generate income. That environment helped spur a new type of business that became known as the sharing economy. Having grasped this opportunity, companies such as Uber and Airbnb owe a substantial part of their success to the scarcity created by the financial crisis.
Airbnb just so happened to have launched in time to take advantage of that moment. Founded in 2007, it was just getting off the ground in San Francisco when the recession hit. The platform gave travelers a more affordable alternative to hotels, and today it hosts over 7 million listings around the world.
Today, Airbnb is facing another moment of constraint, as COVID-19 disrupts hospitality and travel businesses globally. Whether Airbnb can adapt and use its resources to turn this challenge into an opportunity remains to be seen. As for now, Airbnb introduced a program where hosts are offering healthcare staff and first responders places to stay that allow them to be close to their patients - and safely distanced from their own families.
GE Aviation and 9/11
General Electric has been around for 128 years, so the company has weathered its share of storms. After 9/11, GE Aviation saw its sales nosedive as many top airlines, its core customers, suffered. But GE knew that the commercial aviation industry had been growing prior to the attacks, and it continued to invest in the division. Its research and development budgets for 2001 and 2002 were $800 million and $900 million, respectively.
Those investments paid off. As the airline industry recovered, GE Aviation set itself up to be a powerful and valuable partner in reducing industry operating costs and introducing cutting-edge quality and process improvements. Later, then GE CEO Jeff Immelt would say, “The 9/11 experience was one of those moments that showed the true strength of the company.”
For further reading on how companies have turned moments of crisis into an opportunity, check out these resources:
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