Crises and large-scale disruptions can challenge even the best business models. The COVID-19 pandemic has demonstrated this at a scale previously unseen. Businesses large and small have had to pivot, restructuring and redefining themselves to adapt to the conditions created by the pandemic.
Adopting a new business model is more involved than simply revising or iterating on a business plan. It requires leadership, agility, organizational change and a great deal of innovation.
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Is Pivoting Unique to Modern Business?
The ability to adapt a business model drives innovation. When companies realize their talent, assets and resources could better address a different market need or potential market niche, they pivot.
This change can be a shift from a product to service inspired by external factors. For example, advancements in technology and internet speeds allowed entertainment companies to shift from selling CDs, DVDs or downloads to subscription-based streaming services. Pivoting could also mean transitioning to a cloud-based software as a service (SAAS). This is not changing the service or product provided but developing new product delivery and (often) monetization structures.
Many startups' business models are also well-suited to pivoting when necessary. These models lend themselves to a certain degree of agility and fast-paced evolution. Many of today's best-known companies found success by moving away from an unsuccessful business model during the startup phase. Twitter and Facebook are examples.
How Are Businesses Adapting to the COVID-19 Crisis?
Many businesses have adapted their business plans, at least temporarily, to better align with current demand. Clothing manufacturers are making masks and other personal protective equipment. Restaurants are focusing on curbside pickup and delivery. Alcohol distilleries are producing hand sanitizer. Other companies are pivoting away from a wholesale model by expanding their online presence and direct sales.
Investigating how one's competitors have pivoted to new business models can provide excellent insight for leaders planning a pandemic overhaul.
How Should I Pivot My Business Model?
Think critically about your product or service, assets, customers, network of partners, supply chain and any other tangible resources. Consider how you can reallocate these resources to create new value in a product or service that people really need or want right now.
Also consider different delivery modes, such as restaurants shifting to curbside pickup. Look for new ways to monetize. Find innovative ways to collaborate on product or service offerings with partners. And, of course, listen to your customers.
In general, do what entrepreneurs do best: get creative. First, bring your entire team together (virtually) and brainstorm how you might pivot. Then, hash out what is realistic but be open to unconventional ideas. Then, test, assess and revise the approach. The new model doesn't need to be perfect from the get-go; it just needs to get you going in the right direction.
Some pandemic-induced pivots are just a means of temporary survival that you can reverse when things return to "normal." However, many businesses may find their adapted business models are more successful than their old models — and certainly more resilient to disruption. Even rapid, defensive shifts in response to crises can help businesses thrive and grow. If navigated well, changing your company's business model during the pandemic might provide the innovation you need for real, long-term success.
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