As the uncertainty heightens around the COVID-19 pandemic, MTM continues to update on the lasting impact it will have on society, entertainment, and business. We have published on how creativity, sports, education, and gaming have shifted during the pandemic, as well as providing weekly isolation tips for stay-at-home living. This week, we look at businesses that have adapted to the virus, pivoting their core activities, and in the process developing a growth mindset crucial to succeed.
Pivoting – a sudden shift in commercial strategy – has become a trendy and desirable approach for companies. Silicon Valley culture is built around great pivots; examples provided by the Harvard Business Review include Groupon beginning as a platform for collective action, and Twitter growing out of a podcast start-up, Odeo.
Strategic pivots often provide entrepreneurs with early, cheap options to adapt, facilitated by small teams, low sunk costs, agile working methods, and a start-up resilience to failure. However, as we explore this week, companies pivoting during the COVID-19 crisis are leveraging their scale. Initially incentivised by public service over commercial gain, we explore how these businesses will benefit from the innovative mindset required to adapt a business model at short notice, flourishing in the 2020s and beyond.
COVID companies and capabilities
The companies that have assisted in the coronavirus outbreak, and in the process made sweeping changes to their business models, are varied. Perfume-makers including Givenchy and Christian Dior have switched production to hand sanitisers, as have the French luxury goods brand LVMH behind Louis Vuitton, and alcohol giants Absolut Vodka and Brewdog – offering “Brewgel”. Retailers, including Burberry and Zara, have sourced material to make masks and hospital gowns in the effort to fight coronavirus, and Nivea has started production of medical-grade disinfectants, offering to deliver 500 tonnes to medical facilities and public services.
Automobile companies have mobilised en masse with Tesla offering to manufacture and deliver ventilators to countries suffering from shortages amid the coronavirus pandemic, Vauxhall stating it can 3D-print ventilator parts in its Ellesmere Port Plant, and other car companies, including Rolls-Royce, Jaguar Land Rover, General Motors, and Ford are exploring how to help.
The core link between these companies is not their agility or adaptability: it is their size. Most are billion-dollar companies; household names with large global footprints, complex supply chains and substantial production costs. They are the ones that will incur the largest losses as the economy slides into a recession and global GDP continues to take a hammering during the universal lockdown. One would expect decision making to be business-critical, over innovative and adaptable.
This innovative approach may be costly in the short-term as firms pivot to direct R&D to non-essential product lines and potentially cannibalise profit streams. However, in addition to the public good provided, this mindset will eventually be profitable. We are in a highly disruptive age of digital transformation; direct-to-consumer start-ups such as Dollar Shave Club or Glossier have acquired market share from established legacy businesses, the largest entertainment companies are digital natives, and transport is directed through mobile apps. Almost all industries are having to adapt to the increasing rise of artificial intelligence (AI) powered machines and insights.
To ensure these companies remain relevant and generate staggering revenues, holding an innovative mentality – proving the ability to pivot in a time of crisis – is invaluable. Carol Dweck, Professor of Psychology at Stanford University, calls this a “growth mindset” compared to a “fixed mindset”. It is a mindset that embraces challenges rather than avoids them; sees effort as the path to mastery; and persists in the face of setbacks.
This is crucial to drive growth. Stephen Childs, Vice President at Panasonic Automotive, speaks of the “need to shift workers’ more traditional mindsets to encourage creativity and new ideas… often times, fear of failure or lack of risk-taking prevents people from getting creative”. In addition, Harvard Business Review looks at how “those with a growth mindset tend to achieve more than those with a fixed mindset”. Most famous in implementing this philosophy is Satya Nadella, CEO Microsoft, who adopted Carol Dweck’s thinking and changed Microsoft’s mindset from a “know-it-all” to a “learn-it-all” mentality.
Companies urgently pivoting their strategy, production lines, and distribution centres to facilitate the current pandemic are clear examples of a growth mindset – learning new techniques to embrace the greatest challenge the modern world has faced since the Second World War. This will ensure that the next obstacle – likely a localised problem facing their specific industry rather than a global pandemic – will appear smaller and more manageable. It is a mindset that enables these businesses to respond with agility to the obstacles of a post-COVID society.