The business world just leapt five years into the future. Lockdown and social distancing have created a digitally enabled Homebody Economy as people spend more time at home: Working from home, learning from home, and generally living at home. This shift in consumer behaviors has driven a 110% increase in online grocery shopping between March and April, a 4,347% increase in national telehealth claims in March, and massive disruption to education models as much of the world moved to online learning. Many other industries were impacted too—retail, travel, entertainment, the list goes on.
Businesses that had already invested heavily in their digital infrastructure, and carefully thought through the consumer experience, are reaping the benefits. Many other organizations are scrambling to evolve, with some finding it nearly impossible to pivot as their traditional assets (from vast, beautiful, and expensive college campuses to the massive floating cities that are modern cruise ships) have become anchors. Survival for those with capital-heavy anchors will depend on how quickly they can adjust their offerings. Playing it safe, by holding course through the storm in hopes that calmer seas await, is likely a dangerous strategy for many companies, as competitors find creative ways to gain market share.
Organizations that are heavily constrained by assets that have become anchors need to step back and consider how they should evolve their offerings and pivot their businesses to capitalize on the shift in consumer behaviors. For some, breaking free from anchors can be done through divestment or a shift in business model, while for others, bankruptcy itself can provide an opportunity to break free and set a new course. Whatever the specific situation, we believe there are five key questions that need to be carefully considered as organizations focus on how to be competitive tomorrow:
1) What value do you provide to your customers? With an emphasis on understanding your value, not your core products. Consider a greeting card company: The value of the offering isn’t the card—it’s helping people express their feelings and stay connected. Or consider restaurants: The value isn’t the food; it’s providing diners a break from cooking, being a place to celebrate a special event, or saving people time during a hectic day.
2) How will people want to access that value in the future? Given the major shifts in consumer behaviors and the Homebody Economy, this may be about convenience, safety, saving people time, and meeting them where they are now: Home.
3) What assets can be used effectively, and which have actually become anchors? Coming back to our greeting card company: Printing and physical retail distribution are major anchors, whereas strong creative communication skills remain a key asset.
4) What are the options and challenges for pivoting? What needs to be added? What should be discontinued? What are the capital implications?
5) Where are the opportunities to accelerate change? Survival in today’s world requires rapid adaptation. How can change be accelerated? What is the right prioritization of actions? How can you draw up and execute an appropriate plan for implementing them?
Asking the questions above, and answering them honestly, should provoke organizations to think more clearly about how they might pivot in the next normal. If you haven’t considered how your assets might have become anchors, now’s the time to get thinking.