Prepare Your Business Now for the Next Major Disruption: In the more than one year since Covid-19 shut down the global economy, we have seen how this pandemic has upended the way we all live and do business. And, the warnings of Bill Gates and others notwithstanding, most people seem to view Covid-19, and the associated economic shutdown it ushered in, as a largely unforeseen — and unforeseeable — event. As a consequence, virtually no business on earth had even remotely prepared for the breadth and magnitude of its impact.
With the rapid scaling up of vaccine distribution and delivery, there are signs that there is light at the end of the tunnel. Indeed, people these days are increasingly optimistic that life will go back to normal (or at least a new normal in which mask-wearing, distancing, and hand-washing are more common) and Covid-19 will be one of those things we look back on as nothing more than a bump in the road on the way to continued economic growth and prosperity.
The problem with this view isn’t that it’s wrong. In fact, it may well be true that Covid-19 couldn’t have been predicted, at least not with regard to exactly when it would first appear and the extent of its impact. It may also be true that it will, like all bad dreams, soon be forgotten so that we can all return to business-as-usual. Rather, the problem with this view is that it ignores the one (and most important) lesson we should take away from this pandemic; namely, that Covid-19 isn’t the first, nor will it be the last, major shock to the global economy. And, while we cannot predict what the next shock will be, when it will hit, whom it will affect, or how badly it will affect them, we can take steps to insulate our businesses to that inevitability before it’s too late. In what follows, I outline five ways that all business owners can prepare now for the next major disruption so that they can more easily weather the storm.
1. Always be scanning
Because it is nearly impossible to predict where the next major disruption will come from, you will need to look broadly for signs of change. While there is no exhaustive list of factors to consider, the PESTLE (Political, Economic, Social, Technological, Legal, Environmental) framework offers a good starting point. As you scan trends in each of these areas, be aware that disruptions generally affect different firms differently. Some disruptions are system-wide, affecting virtually all businesses (such as those associated with economic recessions), while others are more local, affecting only those businesses in certain industries (such as those associated with changes in buying patterns) and/or regions (such as those associated with natural disasters). As one example, cryptocurrency is a relatively recent technological innovation that is increasingly impacting global markets. A fringe medium of economic exchange just a few years ago, it has officially gone mainstream, with Coinbase, a cryptocurrency exchange platform, going public earlier this year. If cryptocurrency’s trend toward becoming a widely accepted form of payment continues, it has the potential to radically reshape federal monetary policy, reduce reliance on traditional financial institutions, stimulate complementary technologies, and democratize finance. Whether cybercurrency will be the next major disruption (or even a disruption at all) is anyone’s guess, but given its wide-ranging implications, it is the type of harbinger that should at the very least be on your radar (and not just if you are in banking or a related industry).
2. Invest in R&D
Even if business is booming, that is just a reflection of a temporary product-market fit. And — spoiler alert — chances are that your product or service isn’t a perfect fit for the market now and it certainly won’t be tomorrow. Therefore, get ahead of the inevitable changes in the market (big and small) by constantly researching and experimenting with ways to improve that fit. While this won’t look the same for a landscaping company as it will for a biotech company, both can still benefit from investments in new ideas and new technologies that can improve the scale, scope, efficiency, and effectiveness of their products and services. Positioning your business as an R&D-centric business has two benefits. First, the ideas generated from this process may improve your current offerings, but more importantly, can become useful when a disruption does upend the status quo. Armed with the intellectual capital you have created in this process, your business will be better able to adapt to new bases of competition (i.e., new products, new services, new features, etc.) and compete against new businesses who aren’t beholden to the old ways of doing things. Second, if institutionalized into the culture of your business, an R&D focus encourages all employees to adopt a forward-looking perspective that will better equip and motivate them to respond to radical change.
3. Constantly reevaluate your business model
In addition to acting like your product or service isn’t perfect, you should also act like your business model isn’t perfect either. A business model is less about what your company sells and more about how your company produces it, gets it in the hands of customers, and earns a profit from selling it. Given the choices you have made around these issues today, consider how readily your business could adapt if one or more of those choices proves irrelevant due to a disruption tomorrow. For example, Covid-19 has caused tens of thousands of retail outlets and restaurants to close, not because they could not reach customers in ways other than at brick-and-mortar locations, but because they chose not to look beyond that age-old model until it was too late. Of course, this does not mean that an online presence is necessarily the answer. In fact, cyber attacks on our internet infrastructure are increasingly common and so it is not beyond reason to assume that one will, at some point in the future, result in a major disruption to global commerce. The takeaway then is to continually evaluate how and why your business does things the way that it does and, in turn, to experiment with alternatives. Only by doing so will your business model be flexible enough to adapt when faced with disruption. If you wait until the disruption hits to experiment, your business will likely not survive the shock.
4. Don’t wait until it’s too late to start caring about your employees
When times get tough, entrepreneurs often focus on the survival of the business. After all, the business is their baby and they want to see it live to a ripe old age. While this emotional attachment is completely normal based on what we know about the psychology of entrepreneurs, it is important to keep in mind that the business doesn’t have kids to feed, college to pay for, elderly parents to support, and bills to pay. But, its employees do. In the middle of a crisis when resources are scarce, it’s hard, if not impossible, to justify saving jobs over saving the business, especially in the absence of federal support, such as the Paycheck Protection Program. So, plan for crisis when resources are plentiful by investing in your employees so that they are better able to withstand the lean times that will come with disruption.
5. It’s okay to be scared
If you think you’re overreacting to disruptions that have yet to appear on the horizon, you’re not. In fact, overreacting when times are good is probably not far off from where you want to be. This doesn’t mean running around like your hair is on fire screaming that the sky is falling. What it does mean is making sure your team understands that, even if things are going well in the short term, times will get tough, so everyone should prepare for that inevitability by being on the lookout for signs of the next apocalypse.
Ultimately, no one can know what the future holds. But, you can take steps today to prepare yourself for an uncertain future. The more alert you are, the more you experiment with possible solutions to possible futures, and the more you invest now in those who depend on your business and on whom your business depends, the better positioned your business will be to survive during the inevitable hard times to come … whenever that may be.