The pandemic has taught painful lessons in the past year. While restrictions are easing, experts believe that things can still change and that we should be ready to respond to these changes. But what makes small businesses ready to respond to these disruptions? What do these covid-pivot success stories have in common—and what can we learn from them?
In this video, I discuss an academic study that sheds light on what makes businesses successful in responding to crises. I also provide examples of Australian companies that have succeeded in pivoting their business during the pandemic to highlight the results of this study.
Despite disruptions caused by the pandemic, we’ve seen many businesses that have survived and have thrived during the pandemic. Examples include Canva, the design platform, that reported an increase in valuation to $15 billion after doubling revenues in 2020. Carman’s Kitchen, an Australian brand of handmade muesli, experienced a 350% increase in production in 2020. MTB Direct, an online-only retailer of mountain bikes and parts, expanded operations and launched in New Zealand in 2020. These are just three examples of companies that have thrived during the pandemic year and continue to thrive today.
The important question in, what do these pandemic business success stories have in common?
The important question in, what do these pandemic business success stories have in common. If we follow a study on Indonesia cottage industry businesses, the answer is that the people who lead these companies have the growth mindset, are proactive, and innovate when and where they can. In this study that aimed to understand what influences good business performance during a crisis, the authors found that entrepreneurship orientation is measured by the entrepreneur’s business expertise, proactiveness, innovation-orientation, and inclination to take calculated risks, significantly drives business performance.
The study suggests that business acumen leads to good business decisions, which leads to good business performance. That seems obvious, but the study looked deeper into the kind of decisions that business owners make. What are these business decisions that affect performance? The key decisions are those that involve value innovation—these are decisions that lead to business processes improvement and product development. It works in two ways:
The first kind of value innovation is the innovation of products and services. The idea is that a better product and service will serve customers better. When pandemic restrictions were imposed, many businesses were forced to pivot. They had to find ways to deliver their products and services, such as restaurants and cafes that needed to shut their dining rooms and pivot to a takeaway model immediately. Others had to put up an online store so that they can continue to take in orders and serve customers.
Wats on Events, a turnkey bar management solutions company that services external events had to quickly pivot once government restrictions shut down the large-scale events they typically serviced. In the first month, they discovered that they had a warehouse full of liquor that was meant for their clients. Since they have a liquor license, they were able to sell crates of liquor initially through their Instagram account. It took only an hour for the company to sell all their liquor, which inspired their pivot: an online liquor delivery service called Boozi.
The second kind of value innovation is the innovation in business processes, which allows the business to operate better and churn better products and services to provide better value. Many businesses that survived the pandemic pivoted not only by developing or introducing new products but also by improving their processes to cut costs and improve product delivery.
One example is Para Mobility, producers of patient lifting and moving equipment. The pandemic restricted the company’s logistical operations, which led its management team to pivot by keeping things simple. They chose the clients that they served and focused their efforts on servicing the clients who truly needed their products. They also took the opportunity to focus on removing pain points in their team culture by closing gaps in their business processes and systems. As a result, they broke records in customer satisfaction, quality assurance scores, and speed of delivery to customers.
I mentioned Carman’s Kitchen earlier and how changes in people’s lifestyles became a boon for their business. One of the things that the company worked on was improving the working environment for their employees, particularly parents of children, who were given a stipend to spend on anything that will keep their young children occupied while they work. They also improved their processes by shifting product straight from its production line, bypassing its warehouse facility altogether, which resulted in time and cost efficiencies.
What does this mean for small businesses? The study surveyed very small, even micro businesses in Indonesia. What the study found was that despite a pandemic disrupting their economy, these microbusinesses not only survived but thrived during the pandemic by innovating, which was initiated and driven by their entrepreneurial business owners.
The next normal for businesses means that business owners need to continue innovating. The business lesson taught by the pandemic is that we cannot be complacent—when things change, they can change very quickly. We need to learn how to respond quickly and recognise opportunities when we see one.