How Businesses Should Transform in Response to Contraction and Insularity in the World
In the months since COVID-19 burst onto global consciousness, we’ve seen our lives changed in countless ways, great and small. There’s so much news about the pandemic and its effects that many people would prefer to tune it out and get on with their lives.
But business owners and leaders can’t afford that individual luxury. They have to stay in touch with the latest developments and figure out how to adjust. With so much going on, how can any company be assured of things eventually going back to normal? And if that’s unlikely, what can be done to adapt?
On some level, businesses have already been making changes to adjust. Local SEO has been viewed as more impactful because unless you cater specifically to consumers in China or India, you’re probably getting more value from website visitors closer to home.
Volatility in terms of international markets and labor can cause supply chains to contract. Cheap offshore wages might not be attractive enough to offset the risk of disruption. A business would benefit from greater stability by bringing its manufacturing and logistics back onshore.
However, on another front, it’s possible to maintain a global presence through the same technologies that enable remote work. If you can work from home, why not take advantage of a vast pool of international talent? And you can also accommodate a local employee’s desire to travel by allowing them to explore coworking spaces anywhere in the world.
More than anything, the current climate of change and uncertainty presents an opportunity for businesses to transform their structure. CEOs who take risks in reallocating their capital to growth drivers have historically been rewarded by seeing their companies gain from a downturn.
The world isn’t falling apart, but people are learning new ways of doing things. They are forming new habits. The new challenge is to figure out what those lasting shifts in demand are and innovate in response.
Clues from sport
Near the middle of March 2020, the world of sports recognized the need to change in the face of growing concern regarding the coronavirus. The four major leagues in American sport began to implement drastic measures to restrict access by non-essential personnel, and thus exposure. Shortly afterward, the NBA suspended its season indefinitely after players tested positive. In Europe, similar situations led to the suspension of play across football leagues. But after months of planning, the NBA was able to create a ‘bubble’ of play, organized in isolation at the Disney World facilities in Florida. Likewise, the UEFA Champions League was able to relocate and play out its remaining matches in empty stadia in Lisbon. Sports have always offered us insight into how we can do better in our lives. But this time, the lessons were practical for businesses. The success with which professional sports leagues were able to resume play in safety offers hope that a return to normal is possible. Yet the real takeaway is that operations can resume, but will have to be different. Disney World is not a regular NBA facility; the park’s normal operations were shut down, affording multiple teams much greater space to practice, compete, and live in. Likewise, Lisbon was chosen because of its world-class stadia and accommodations within a small radius, as well as Portugal’s effective control of the pandemic.Change in globalization
Many people think of globalization as a relatively recent phenomenon. But it’s been around for centuries. The Silk Road helped connect different countries in the known world. The age of exploration brought in goods from conquests made in places previously unknown or off-limits to the Western powers. Globalization has grown and evolved. And it will continue to do so. Modern times are merely witnessing another stage in this evolution. The current trend seems to be heading towards greater insularity. In recent years, we’ve seen growing political discontent and polarization across nations; it has extended to affect relations between different countries, giving rise to protectionism and trade wars. On the societal level, this has been mirrored by the influence of social media. We spend so much time on social media without realizing that it reinforces our tendency to gravitate towards those who are most similar to ourselves. While the pandemic has disrupted globalization as we know it, measures will undoubtedly be taken towards recovery. But these underlying trends will continue; they might even be accelerated. And like the world of sports has recently shown us, business can resume, but it won’t be ‘as usual.’Transforming in response
On some level, businesses have already been making changes to adjust. Local SEO has been viewed as more impactful because unless you cater specifically to consumers in China or India, you’re probably getting more value from website visitors closer to home.
Volatility in terms of international markets and labor can cause supply chains to contract. Cheap offshore wages might not be attractive enough to offset the risk of disruption. A business would benefit from greater stability by bringing its manufacturing and logistics back onshore.
However, on another front, it’s possible to maintain a global presence through the same technologies that enable remote work. If you can work from home, why not take advantage of a vast pool of international talent? And you can also accommodate a local employee’s desire to travel by allowing them to explore coworking spaces anywhere in the world.
More than anything, the current climate of change and uncertainty presents an opportunity for businesses to transform their structure. CEOs who take risks in reallocating their capital to growth drivers have historically been rewarded by seeing their companies gain from a downturn.
The world isn’t falling apart, but people are learning new ways of doing things. They are forming new habits. The new challenge is to figure out what those lasting shifts in demand are and innovate in response.