While businesses are often not designed for drastic change, the uncertainty brought by the COVID-19 pandemic is leaving them with no choice but to shift gears. But where to? By Scott Lemon.
In 1999, ‘pivot’ was not a corporate buzzword; it was an iconic line from the sitcom Friends. The scene was simple: three friends struggling to get a couch up a narrow staircase, with a frustrated Ross incessantly screaming the famous line: “Pivot!”
Fast forward to 2020 and you’re as likely to hear businesses talking about pivoting as you are to see a Friends pivot meme. The onset of COVID-19 has forced organisations out of their comfort zones to explore ventures they never thought of exploring, and quickly change business practices that would otherwise have taken years to implement. In a short span of time, we’ve seen restaurants become ghost kitchens, a vodka maker create carbon-negative hand sanitisers, and a paper-recycling company turn to recycled plastics to make face shields.
Would leaders and executives have had the courage to shift the same way if there wasn’t a pandemic? Maybe not.
Most businesses are not designed to change. At least not drastically. Businesses are typically designed to exploit their current business model and maximise it until they can. Their systems and processes are set up to achieve repeatability, quality control, risk mitigation, compliance, customer loyalty and other factors that contributed to past successes. Change rarely fits in.
However, the world outside the business doesn’t stand still and wait for five and 10-year plans to shape up. It changes constantly in response to new technology, macro-economic forces, geopolitical forces, consumer expectations, and a once-in-a-century biological threat. There’s no other choice but to shift gears. But how can business leaders make sure they are pivoting in the right direction?
Budget cuts and changes in priorities are common in times of crisis like COVID-19. It is understandable for companies to instinctively focus on staying afloat and keep their financial stability in check to survive. But profit isn’t everything.
According to the World Economic Forum, we need to achieve the symbiosis of people, planet and profit to build a more resilient, sustainable future. Financial growth and plans for a sustainable future must go hand in hand. Natura CEO Roberto Marques put it simply: “We can’t run a business in a dead planet.”
Ørsted, Denmark’s largest energy company, realised this early on. Amid the global financial crisis in 2007, it transformed its entire fossil fuel business to renewable energy and shifted to a more sustainable business model, earning them the title of the most sustainable company in the world.
Although customer loyalty underpins business, it also holds it back. While consumers expect reliability and consistency from brands they support, they also expect them to innovate and offer something new.
When the pandemic hit, sales at sustainable restaurant company Homegrown fell from having 50-100 daily orders to two or three. Instead of simply tweaking their business, they invested in making permanent changes in their services and moved to the surging grocery delivery space. To differentiate themselves from established corporations, they focused on sustainable pantry staples from local producers and farms, not easily found in grocery stores.
According to Homegrown CEO Brad Gillis, business owners need to realise that COVID-19 has caused permanent shifts in customer behaviour: “We need to start thinking about meeting our customers where they’re at, and not expecting that they’ll come to you.”
A recent global survey reveals that people want real change, for the world and their personal lives. Some 86% of adults said they want the world to significantly change and become more sustainable and equitable after the pandemic. They don’t want to go back to the way things were. To pivot successfully, businesses must understand what people want and need. It’s no longer just the end product that people are concerned about. It’s knowing and having faith in the entire process, what the product is made of, and how it was produced.
“Consumers and employees are now acutely aware of how their lives can change overnight and how supply chains directly affect them,” says Abbie Morris, co-founder of Compare Ethics, a platform that connects consumers with verified sustainable products. Sales from its site increased by 150% in June 2020 compared with the previous month, suggesting consumers are now paying closer attention to supply chains.
Nevertheless, there’s still work to be done. Take the humble pallet, for example. Like plastics, pallets are actually deemed an essential piece of equipment for many businesses, yet there has been little to no consideration given to how this critical element pivots to a more sustainable model. Out of approximately 140m pallets in Australia, 88% are made of native timber, making it a major culprit in the deforestation crisis. What if manufacturers pivoted to a more sustainable, recyclable pallet, such as Re>pal, manufactured locally to customer demands, and powered by renewable energy?
It would be easy to say that building a recycled pallet industry isn’t a global priority. But last year, if an article had appeared decrying a world shortage of ventilators in the face of a possible pandemic, would governments have jumped to pay attention? Whether we expect industries and economies to ‘pivot’, ‘veer’ or do a complete U-turn, it’s not the action that matters, it’s the vision and the will.
The ability or extent to which organisations can pivot depends on the investment they had made in resilience, and the mindset of their leaders and people. A sense of purpose among employees has proven an effective driver of change within a business. According to McKinsey, people who feel they are contributing to something bigger than themselves are likely to perform well and help the company to pivot successfully. It pays to know our ‘whys’.
Perhaps, despite the havoc the pandemic has inflicted, something good can come of it. Of course, this does not take away from the loss and suffering that has occurred. However, if such a wake-up call allows world leaders, big corporations, and all of humanity to pay attention and refocus on what’s truly important, then it can only be considered a good thing.
Business needs to provide room for change and give itself space to move and make adjustments when situations call for it. So, when our backs are pressed against a wall, we do what we need to do? We pivot.
Scott Lemon is a Lead Consultant – Digital Modelling at Aurecon.