Get Inspired: 5 Businesses Innovating in Hard Times
Six months into the year 2020, and it's a fact that we have already adapted to the 'new-normal' standard of living across the world. Businesses, big and small, have woefully taken the hit amidst this global pandemic, leaving employers and business owners frustratedly trying to figure out when stability will return, and many employees stranded with no jobs and some with no benefits. Various companies in all industries have been weighing the options of cutting back on extra costs, extra staff, and taking a step back from innovation-led growth. The US-based management consulting firm, McKinsey & Company, has conducted a survey and held subsequent interviews on the current global state in the marketplace. Based on their findings, they have passed a hypothesis stating that executives are taking the back-seat on innovation-related initiatives, ‘once the world has stabilised, the core business is secure, and the path forward is clearer’ they believe businesses will then resume their innovation-driven growth.
Indeed, the Covid-19 pandemic has overturned nearly every aspect of life. This ranges from a personal element regarding how people live and manage their work, to the professional, that is, how companies have evolved their interactions with their customer base alongside how their customers choose and purchase their services and products. These are hard times, but that doesn’t mean everything has gone downhill. In fact, believe it or not, some businesses have actually blossomed unexpectedly as Covid-19 has facilitated their growth. There is hope yet!
We all can agree that this isn’t the first time our world has faced such an unpropitious crisis. Unexpected events, such as economic recessions and global pandemics, undoubtedly possess the ability to entirely change the trajectory of governmental bodies, state economies, and, most importantly, businesses. Our ancestors have indeed witnessed similar events such as the Black Death in the 1300s, which broke the long-ingrained feudal system in Europe and replaced it with a more modern employment contract. About three centuries later, we faced a deep economic recession as a result of the 100-year war between England and France, which actually kick-started one of the most significant innovation drives, that exceptionally improved the quality of agrarian productivity.
Fast forward to more recent circumstances, the SARS pandemic of 2002-2004 catalysed the transient growth of a then-small e-commerce company 'Ali Baba', helping it establish itself as a key retailer on the forefront in Asia. This growth was impeccably fueled by anxiety around travelling and human contact, quite a similar phenomenon to experiences today during the Covid-19 pandemic. Another event in history that uprooted the stability of this world was the financial crisis of 2008 which massively produced its own disruptive side effects. At the same time, some were able to adapt and profit from these circumstances, for example companies such as Airbnb and Uber increased dramatically in popularity across the western sphere as the crisis meant a reduction in income for many, forcing people to share their assets and luxuries in the form of carpooled rides and spare rooms to make up for the deficit.
Covid-19 has yet again proven how drastic shifts in the marketplace occur when sudden change looms upon the industry. We've already witnessed early signs of a shift in how consumers and businesses behave. The introduction of widespread full-time remote working has become the new business norm, thus keeping business afloat. Working remotely, however, was not an option in all industries and sectors such as the aviation industry have suffered. In the initial months of the pandemic, there was also a drastic disruption of global supply chains, with retail stores running out of ibuprofen, dry goods and the unforgettable toilet paper en masse.
Some of these changes have already sent multiple businesses into a state of collapse, with several companies declaring bankruptcy, shutting down numerous branches globally, and liquidating all assets. Some short-term responses to the crises will revert to normal levels once Covid-19 is contained as businesses try to earnestly normalise the situation. However, some of these shifts will power through, creating a long-term digital disruption that has already started shaping businesses differently, for decades to come.
Of course, not every company in the UK is capable of going beyond the line, cutting extra costs and working remotely to survive. The distribution of financial loans under the Coronavirus Business Interruption Loan Scheme (CBILS) alongside the Bounce Back Loan Scheme (BBLS) has extensively helped keep numerous businesses afloat. Data released by the British Business Bank has shown that the proportion of these overall loans in each of the nine English regions and three Devolved Nations, successfully matched their respective share of the UK business population closely.
Both schemes were introduced to provide financial support to businesses, especially smaller businesses, across the UK that were steadily losing revenue as well as had their cash flow and sales disrupted, due to Covid-19. According to Keith Morgan, Chief Executive Officer of the British Business Bank, a key objective for the British Business Bank was primarily to identify and help reduce regional imbalances in access to finance, especially for the smaller businesses spread across the UK.
As stated by the Small Business Minister Paul Scully these schemes introduced by the government-owned British Business Bank, have definitely provided "some much-needed breathing space for businesses" while they dealt with, and still are dealing with, the challenges posed by Covid-19. The data released has shown how this support from the Government has managed to help firms right across Britain, by now "enabling thousands to bounce back in a safe, Covid-secure manner.”
There is no doubt that Covid-19 has sprung uncertainty upon the business world, despite this phenomenon, these business loans continue to regulate a sense of stability in the world, keeping big and small businesses afloat. However, it is important to remember that financial stability is not the only element required during such times; there are a lot of processes involved in keeping a business at the forefront of their field, especially in this ever-changing market. Here are examples of how five successful businesses have done just that, innovated in these challenging times to keep their business afloat.
BrewDog has cleverly swooped in by using its resources to help with the large hand sanitiser deficit in the marketplace. By strategically transforming its distillery in a bid to assist with the shortage of hand sanitisers and also by creating a new distillery for giveaways to those in need, they’ve not only created a wider opportunity for jobs but have also expanded their production and sales. Since starting this, they have been 'blown away by the number of requests from those at the front line who have (or will soon) run short of sanitiser'. BrewDog has delivered free cases to various health institutions such as Aberdeen Royal Infirmary's Intensive Care Unit and is working with NHS Grampian. They have also agreed to distribute their products amongst key workers across the UK, plus are also working with the NHS and numerous charities.
A company with exponential growth that we cannot ignore is none other than Amazon. Amazon UK has created 5,000 new full and part-time positions alongside delivery jobs across the UK, to meet their ever-growing demand. They have also introduced a range of new measures at its warehouses and have given workers a pay rise.
The shifting trends due to the coronavirus crisis and lockdowns have caused many High Street shops to have temporarily closed, thus prompting massive growth in online shopping. This has hugely benefited online giants and retailers across the globe, such as Amazon. The latest retail sales figures showed that UK online sales in July were 50% higher than the estimated pre-pandemic levels in February. Online sales as a portion of all UK retail sales hit a record high of 30% in May, before falling back to 28% in July.
Amazon's UK country manager Doug Gurr announced that the company had taken a stride towards innovating their procedures, by making 150 procedural changes emphasising upon the health and safety of its teams and also under guidance from the World Health Organisation (WHO). These changes include the increasing the frequency and intensity of cleaning at its sites, adjusting its practices so that employees can observe social distancing measures, providing temperature checks, as well as introducing the mandatory use of PPE in the form of masks and gloves.
Not only has the retailer itself benefitted from the pandemic, but so have its employees as Amazon has given its staff a 20% pay rise, adding a further £2 per hour on top of its current starting rate of £10.50 for the London area and £9.50 for the rest of the UK.
The most addictive activity, almost everyone has been consumed by during lockdown is that of online shopping! This has significantly impacted the growth of online fashion retailer giants such as Boohoo, based in the UK.
For various retailers, their global supply chains had proved to be assets in other, merrier times. This was because they managed to give them the opportunity to source clothes cheaply and swiftly, something that is not a possibility anymore as they now are confronted with the issue of orders coming from the other side of the world. Under these circumstances, several retailers are now struggling to find customers.
Fast fashion retailer Boohoo has managed to overcome these challenges by taking steps to acclimate themselves to the supposed new normal. The question is, if people are not venturing outside their front doors any more, what kinds of clothes would they need to lounge around in their living rooms? That's right, loungewear. A Boohoo spokesperson reported to BBC that "People aren't buying going-out items, but they are buying homewear - hoodies, joggers, tracksuit bottoms,". They also mentioned that "Sales of tops have gone up in particular, with everyone wanting to look smart on Zoom calls".
As a result of Covid-19, the firm has seen a rise in sales during the month of April, at a time when rivals have reported a tragic collapse in demand. Boohoo, with its user-friendly online presence, has triumphed over its competitors such as fashion giant Primark, who has reportedly made incredible losses, due to not having an online presence.
Another critical player amidst the Covid-19 pandemic is the conferencing application Zoom. Messaging and conferencing applications have been the unsung heroes of this lockdown, and this video conferencing tool has been an extremely popular brand during this lockdown as use of the firm's software jumped 30-fold in April. The firm counted more than 300 million daily participants in virtual meetings and numbers of paying customers have more than tripled at their peak.
Due to the coronavirus pandemic, millions of individuals around the world were forced to work, learn and socialise remotely. In April the company’s stock increased by 120% over the year. This climactic uptake has the potential to reshape the company's structure completely and simultaneously change its pathway, making it a key contender in the global marketplace.
Zoom said it has expected sales as high as $1.8bn (£1.4bn) this year - roughly double what it forecast in March. Chief executive Eric Yuan reportedly told investors that "It's a huge opportunity".
Another key player when it comes to innovating during Covid-19 is the pharmaceutical industry. AstraZeneca has moved to advance its ongoing response; to address the unprecedented challenges of Covid-19. They have collaborated with numerous countries alongside multilateral organisations to assist with the planning of the production of the vaccine currently being curated by the University of Oxford. Their aim is to make this vaccine widely accessible around the world in an equitable manner.
AstraZeneca has moved to advance its ongoing response; to address these difficult challenges of Covid-19. They have collaborated with numerous countries alongside multilateral organisations to assist with the plausible production of the vaccine that is currently still in the process of being tested by the University of Oxford. To date, they have also now concluded its first agreement for approximately 400 million doses and has secured total manufacturing capacity for one billion doses so far and will begin first deliveries in September 2020. AstraZeneca aims to conclude further agreements supported by various parallel supply chains, which will move to expand their capacity further over the next months to ensure the delivery of a globally accessible vaccine.
The Company’s comprehensive and proactive response to the pandemic also included the rapid mobilisation of AstraZeneca’s global research efforts to discover coronavirus-neutralising antibodies. This is to ensure the prevention and treatment of the progression of Covid-19, with the goal of reaching clinical trials as soon as possible. Additionally, the company has swiftly moved into the testing phase of new as well as existing medication that can plausibly treat the infection, including those such as CALAVI and ACCORD trials underway for Calquence (acalabrutinib) and DARE-19 trial for Farxiga (dapagliflozin) conducted using Covid-19 positive patients.
It is necessary to establish a critical fact; the business world is speedily shifting its focus towards the growth of e-commerce. According to data findings from IBM's U.S. Retail Index, this pandemic has expedited the shift away from physical stores to online-digital shopping by an estimated five years. Department stores, as a result, have seen significant declines. In the first fraction of 2020, department store sales, as well as those from other “non-essential” retailers, dropped by 25%. This proceeded to a 75% decline in the second quarter.
The IBM report indicates that department stores are expected to decline by over 60% for the full year, resulting in the development of e-commerce; as e-commerce projects grow by an approximation of 20% in 2020. This exponential growth in e-commerce due to the pandemic has set the bar high for what is now considered baseline growth. According to the Q2 2020 report from the U.S. Census Bureau, U.S. retail e-commerce reached $211.5 billion, up 31.8% from the first quarter, and 44.5% year-over-year. E-commerce also accounted for 16.1% of total retail sales in Q2, up from 11.8% in the first quarter of 2020.
The main questions that IBM's report has aimed to answer vary. The first would be, how much of this pandemic-fueled online spending is a temporary shift, and the second being to what extent has it impacted longer-term forecasts? The answer, at least in the form of this estimation, is that this pandemic has pushed various industries ahead by approximately five years. The shift away from shopping at physical stores to online stores was already underway before the pandemic, but now we've managed to jump ahead in time, plausibly to the point we may have been at without this global crisis.
A key notion that should be established amongst organisations is that innovation, now more than ever, is not a choice. Regardless of the relative emphasis and order, McKinsey & Company has listed the crucial Eight Essentials of Innovation, which have helped leading innovators for years, to increase growth more than double the total returns to shareholders compared to laggards. These will continue to be critical aspects in navigating through this crisis and emerging from it, even stronger. To put it simply, it's the survival of the fittest.