Reintent or Reinvent? Performance in Post-Pandemic scenarios

“Never let a crisis go to waste”

Paul Romer

“Wei ji” is the Chinese ideogram for both danger and opportunity. Those two opposites stand together to invite to find ways to turn one into another.

At the turn of this new year, it becomes clear that our world will have to live with the pandemic for at least a good part of 2021.

Markets will continue a “W, swinging up as vaccination progresses and unavoidable new lockdowns and restrictions drag down and push back the return to normal.

Recalculation and rethinking will dictate the pace for most of 2021 as new twists and turns change the short and mid-term forecast as they did during the two first waves during 2020.

Larger long-term effects such as the consequences of massive, global-scale financial stimulus, inflation, structural unemployment, “creative destruction” and industries’ reinvention are still hypothetical, too early to define.

What do we already now?

We now know that there are winners -the Zooms and Amazons of the world- and losers -business models highly dependent on social contact in close, indoor quarters-. Lockdowns -total or partial-have already impacted businesses and value chains to the point of survival.

Governments, business and communities face critical decisions: what should we do? Desist? Resist? What are the options?

It’s time to create some new models to navigate the new realities. Here are some that our Societal Performance Global Network developed working on international and regional town halls under the theme PERFORMING UNDER PANDEMICS in the Sonora-Arizona mega region:

During these events government, businesses and value chains from Sonora, Mexico and Arizona, USA used a set of new concepts and tools to develop projects that are now in full implementation in the areas of health, tourism, manufacturing, logistics and food industries.

We learned multiple and valuable lessons from these experiences and the Phase 2 and 3 that turned shared initiatives into specific projects currently in implementation.

The Performance Improvement Institute and its mega region chapter, PII Sonora-Arizona developed a series of tools for strategic thinking under the new COVID-era scenarios we will be facing during 2021 that will be presented during the coming Phase 2 of our Performance under Pandemics 2021 program.

This is a quick sample of what participants in Performance under Pandemics 2021 will apply:

Strategic positioning

Facing a world with the COVID restriction and impact, two factors become critical for strategic thinking:

(1) What is the most likely time to fully recover for your current market? 2021? 2022?

(2) What is the level of legacy costs and the flexibility/adaptability of your current business model?

Based on those two variables we can analyze the positioning of our organization or value chain:

Organizations with low legacy costs, high adaptability and immediate market recovery are already experiencing a boom -upper left quadrant-, while others with high legacy costs, more rigid business models and markets taking one or two years to recover -in the “red district” of the lower left quadrant- might face bust or “resist or desist” options. Several others might fall in the “red zone” requiring reinvention to avoid going out of business permanently.

Let’s look at some examples of how it works:

Rethinking business models, practices

A pandemic is a global event, with long-term consequences in the way we behave as individuals, societies, our priorities and the way we conduct business. All these factors -behavior, values, business models- have to be re-evaluated from scratch.

One typical mistake we have seen over and over in organizations and industries reeling from the impact of lockdowns, business interruption, zero revenue and legacy costs piling up debt is what we can call a “knee-jerk reflex” response. This is typically focusing on “returning” or “keeping” the existing and proven ways or models.

There is no marketing solution to a pandemic, because a pandemic is not a perception problem, but an objective restriction one. And time cannot be underestimated with happy thinking.

The best approach to a global pandemic crisis is starting from scratch, assuming the worst-case scenario as the default setting, because in this kind of situation all swans tend to be black.

How about thinking about how to deal with black swans instead of waiting for the white ones?

How about thinking about how to take advantage of the new circumstances, and looking for ways to thrive out of black sawn events?

Resist, Desist, Reintent or reinvent?

Confronted with a sudden interruption of normal life and business every individual, government and organization must evaluate whether to resist -focus on damage control and hunkering down in the existing ways-, desist -let go and cut losses-, reintent-focus on resuming, resizing, rescaling the old model- or reinvent -focus on changing products, services, processes, value chains-.

In all cases, a key first step is starting from the new: a new client experience, a new client, new behaviors of former clients, and dealing with the threat: avoiding (circumventing, “boxing” it) or embracing it (“judoing” it, using it as a source of new motivations and possible opportunities). Choose wisely your martial art.

Reorganize value chains

Value chains are suddenly broken. That might not necessarily be a bad thing. “Breaking chains” can be liberating. It can also be the only way to avoid legacy traps.

The key is to reexamine partners, locations, processes and reorganize shorter, stronger, more flexible chains with a “plan B” and a “plan C” in mind looking for the weaknesses and strengths of different options for different scenarios.

Plan for post-vaccine scenarios

How is it going to look coming at the other end of a COVID tunnel? What can be done today for a year or two? Remember C.K. Prahalad advice and questions about Competing for the Future: what is our business going to be in five, ten years from now in this new post-pandemic scenario?

What are the opportunities we should pursue? New products, services, business models?

Practical cases

Let’s look at some leading cases of performance under pandemics:

CarBnb

AirBnb was a leading candidate to the chopping block: heavily dependent on tourism, airlines, it seemed poised for a long downturn as both of its primary revenue streams dried up.

Brian Chesky though otherwise. After disaster stroke, he remembered that this was not the first time his initial idea foundered. AirBnb after all, meant “air beds” for low budget, short-time visitors attending conferences. It didn’t work until Chesky and his partners found out that the strength of their model was neither beds nor conferences but “matchmaking” short-term owners and clients using existing and underutilized real estate.

Looking at the weak streams of demand under lockdowns, they found out that there was actually a strong demand for local, short-term rent of sanitized, well-managed single occupant residences. People wanted now more than ever to get out of lockdowns but in a safe place.

And that’s how AirBnb turned into “CarBnb”: rentals within driving range, with sanitary care and good management, minimal or not social contact. All things that -with a little twist- AirBnb excelled at.

Hospitel

Hotels and hospitality are poster cases for doom and gloom. Travel restrictions, sanitary risks turned multi-room real estate into a DOA at the beginning of the lockdowns. The first response -after denial, of course- was “resist” or “desist”: taking PPP loans, furloughing personnel and liquidating assets.

There were, however, some signs of possible reinvention. Once again, clients came knocking at the door -literally- looking for safe spaces for high-risk groups. In Buenos Aires, the City rented downtown hotels for low-income or homeless living on the streets or in crammed tenements and informal settlements known as “villas”.

In Sonora, Mexico, hoteliers started to work in the concept of turning hotels into safe residences for over 65 and retirees in need of safe spaces to wait for vaccination (or have it) and with good wi-fi and online access to stay in touch with family and with immediate access to medical help and monitoring. Enters “Hospitel”.

Baseball and football stadiums with large parking lots became prime property for vaccination and testing are other examples.

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RV Hotels

During the lockdown, while hotels and motels occupancy rates drooped dramatically, sales and rent of RVs skyrocketed eightfold over their usual levels. The urge for vacations and leaving home lockdowns was higher than ever, but airlines and renting beds were another no-no.

The clash of those two needs sparkled innovation: how about taking our own rooms and beds with us in a (short) road trip to a nice beach or resort far from the madding crowds with family?

Renting RVs was a natural option. Turning motels and parking lots into RV hotels was the next step. New value chains with new partners emerged.

Delivery + “facon”

Entry level service jobs such as waiters, maids and store clerks became the first line of lockdown casualties.

Those living in low-income, informal settlements such as Barrio 31 in Buenos Aires making a living from gig jobs in those areas found in a desperate situation.

Once again, necessity was mother of (re) invention, with a little help from a city economic development program: enters RECOVECO (“hole in the wall” in Argentinean slang)

RECOVECO combined an online platform where those making food or providing services could offer their products with at home work and turning unemployed into delivery.

World Central Kitchen

Restaurants and food services jobs were other prime candidates to casualties. Those trying to “resist” turned to “reinvent” their operations turning to outdoor dining and delivery to stay afloat.

Chef Jose Andres of Buli fame came with a new approach, learned from his humanitarian work in Puerto Rico after hurricane X destroyed the food chain, creating a food shortage for hundreds of thousands looking for a warm, healthy meal.

World Central Kitchen took the idea of a food bank in Washington DC to a global scale, using the logistics learned in Puerto Rico emergency and the skills of unemployed or furloughed chefs and trained kitchen crews to provide hundreds of thousands of daily meals to those in need.

WCK model proved particularly helpful during the 2020-2021 COVID pandemic, where WCK was able to deliver food to large numbers during the lockdowns while supporting jobs for furloughed or unemployed restaurant crews as well as their supply chains in a self-sustaining model.