With the Pfizer-BioNTech, Moderna, and Johnson & Johnson vaccines for COVID-19 receiving Emergency Use Authorizations from the US Food and Drug Administration, one might be tempted to think, wishfully, that the period of uncertainty is ending and that things will soon be back to "business as usual." However, as history indicates, the next crisis is in all probability just around the corner.
Crises have an uneven and asymmetric impact on companies, with some emerging as winners, some showing scars, and some even perishing. For example, the pandemic has hit physical outlets such as Gold’s Gym, 24 Hour Fitness, AMC Theatres, Factory Furniture Outlet, and Neiman Marcus harder than it has hit some of their competitors, particularly those that primarily operate online, including Amazon, Netflix, Peloton, and Wayfair.
Companies that win or even just survive often have, or have had, to pivot their business models to adapt to a new, changed environment. As we described in a previous article, pivoting is defined as a "structured course correction" of a business model. It essentially entails a deliberate shift in the main strategic components of the business model: the customer, the company, and the competition (the "3Cs"). (For more, read "Pivoting in a Time of Crisis.")
However, transforming organizations so that they’re able to respond quickly to a crisis cannot always be done when they’re already in the midst of one. An effective and rapid response needs planning, operating models, and capabilities that unlock accelerated innovation, particularly around a company’s "4Ps": product, price, place (i.e., channels of distribution), and promotion. Organizations will be well served by closely examining where they are with these processes to ensure they are crisis ready. As Black Panther’s Shuri, arguably the smartest character in the Marvel Cinematic Universe, puts it, "Just because something works doesn’t mean it can’t be improved."
Innovation No. 1: Product
Crises can lead to unpredictable and massive changes in demand for products. The demand for entire industries—airline, cruise, and hotel among them—evaporated overnight during the early stages of the COVID-19 pandemic, while that for cleaning products, masks, and home delivery skyrocketed.
This could be attributed to the aggregated short-term reaction of consumers to a changed environment. As the cloud of uncertainty cleared and initial panic eased, a new steady state emerged. As we can see in the data on Google searches for the terms vacation and disinfectant through 2020 in the chart below, vacation initially dropped and then picked up, while disinfectant moved decisively in the opposite directions.