Currently, cross-border crises, such as pandemics, involve preparedness, response, and recovery at a local, national, and global level. Response tactics vary, trying to reduce the consequences and remain open to business for the most extended period possible at standards that allow economic growth and capital generation to continue. The COVID-19 pandemic has highlighted the trend in many companies to develop and use new business models that could potentially impact their favor. However, this approach can fail even in the best cases; it has also shown how flawed elections can be counterproductive for companies that are unprepared or struggling to maintain complete economic stability.
The pandemic disease challenged every organization in 2020. It tested all the resources of the organizations’ workflows and has completely changed their planning processes. However, by autumn, most of the executives had already managed to maintain control of the case. A worldwide survey of 297 business executives conducted by MIT Technology Review Insights indicates that companies remain willing to invest in innovative ideas to revitalize their organizations. Since the inception of COVID- 19, companies have been busy designing strategic business plans for 2021. Among them: comprehensive adjustments to their technology platform and core business models to help them succeed.
Most executives are optimistic about the future of their organizations. Few remain to postpone any change for the next 18 months or put everything on hold until things change. Overall, 47% expect their company to prosper in 2021, 36% expect their companies to transform, and only 12% prepare for a bleak year of survival. The outcome of 2021 varies to some degree according to the size of the organizations. Huge companies remain more open to transformation; however, small and medium-sized businesses aim to prosper.
For larger companies, coping with the case in the short term by making modest adjustments, such as renegotiating supply chain contracts, has implied a reclassification of production processes, displacing workers according to the current needs of the companies. However, these changes had their peak in different areas as a retailer, where it was immediately discovered ways to keep business booming as stores closed, by strengthening their forms of e-commerce and making it easier for consumers to buy online, or organize contactless pickups at the store. By 2021, 80% of the organizations surveyed remain planning to deliver substantial strategic steps, such as acquisitions, divestitures, new business models, and widespread automation. On the other hand, 39% made a “big step” in 2020. In certain cases, 14% in general, the primordial idealization is underway. However, they do not remain scheduled to be deployed in the next 36 months.
Today, it’s simple to paint everything under the pandemic environment. Still, the current crisis exacerbates existing drawbacks, accelerating recent trends and requiring more involvement across the company to get things done. For example, it typically takes about ten years to develop a vaccine, said Marc Horn, life sciences monitoring leader at Millipore Sigma, which supplies products used by biopharmaceutical organizations to build potentials for the coronavirus vaccine. Horn’s job is to support the organization’s financial choices and operational and strategic execution. Given the crisis, the world was trying to develop a vaccine in a year, leading Millipore Sigma to streamline the process outside the laboratory. The organization had to think about how it could contribute to its healthcare consumers and provide the financial means to make and deliver those changes faster than usual. “And that means for us, internally, that we must have a constant relationship with the departments, however especially with the supply chain and human resources to implement new ways of working.” Some of the giant steps midsize companies remain involved with technology; for example, half plan to increase investments in technology, and over a third are adopting extra cloud services. Larger companies with monumental steps planned for 2021 also have their sights on technology: They are likely to invest heavily in technology or move more of their business to the cloud.
Planning new business models
The new business spaces have adopted or even created new business models. Sometimes companies have no other choice, like cinemas and the hotel industry. Capable organizations are constantly trying to find new ways to make money; In the survey, 4 out of 5 companies with plans for 2021 continue to evaluate new business models. There are many ways to do this: price cuts, changes in the sales process, and new markets remain at the top of the list. While these possibilities are significant for companies across the globe and of all sizes, there are a few highlights. For the most prominent companies, the most attractive business model changes drive price reduction projects.
Less than half of the organizations that seek “survival” in 2021 will take any significant step in the next 36 months, new or ongoing; more than half of them remain to complete the projects they started previously from the pandemic disease. For companies barely surviving, the giant steps have been put on hold indefinitely. Once they consider adjustments to their business model, the possibilities primarily help them contain prices. This also varies according to the industry, a clear example, “Manufacturing organizations have the potential to be slower to adopt new technologies,” commented John Barcus, vice president of Oracle’s suite of tactics, or they are hampered by the innovator’s dilemma: walking the divide between serving the current needs of consumers and investing in technology that meets their future needs. Many manufacturing organizations did the same for several years.
Overcome the obstacles
Every project has barriers to success. It was expected that the biggest problem in offering monumental steps to organizational grade is the budget. Other concerns integrate stability questions, hazard and regulatory compliance, and the lack of practical applications and processes. For any large project, obtaining financing requires the participation of the entire executive department. This causes the financial executive to be the center of the process and the individual who organizes the most relevant changes. However, financing is not such a significant impediment for giant companies with more financial resources. In the survey, only 29% of organizations with more than $1 billion in revenue cited a reduced or frozen budget as the number one downside to making a significant change; however, 44% of medium-sized companies are retained for financial reasons. On the other hand, larger companies remain concerned about regulatory compliance and stability and lack capacities to carry out their projects. According to a PwC survey, including a history of pandemic disease, 3 in 4 CFOs were concerned that a lack of skills could cripple their ability to thrive.
Of course, constant uncertainty sparks a brighter hazard management culture, especially for international companies embarking on colossal change. For example, in the last four years, some of the escalating trade wars and tariffs have put some degree of danger to supply chains. That has impacted many industries, including high-tech organizations that often outsource construction, said Mike Saslavsky, Oracle’s senior director of high-tech industry tactics. These dangers prompted organizations to reconsider where their parts and the elements of those parts are made and consider the likelihood of choosing locations closer to their consumers.
Collaborations within the company for investments and modifications to business models can increase market share. Business executives must work with financial executives, who in parallel work with their supply chain managers to understand where the vulnerabilities are and where the changes make sense: As with new product lines, exemplifying, subscription services or applications virtual. Cloud technology is making it easier to achieve these goals and is driving business growth. They produced that the 4 out of 5 business leaders who remain taking giant steps made it very clear in the survey. Technology can help plan and model for change; shift business models, resources, and ingenuity towards the next possibility of increase; and achieve new streams of income that work quickly.
Undoubtedly, the growing innovation and creation of new business models have significantly impacted the unique ways the global economy is generalized; that is, each business model requires a different process. Consequently, the results will be different. Expected and will fully benefit emerging companies. Nowadays, innovative business models are born frequently. New industries replace crumbling ones; for the latter, it is vital to reconsider business models as variable processes that constantly change over time. Still, that result is a working tool that allows identifying and introducing innovations in the business plan over time, clarifying the true value proposition of a company and its sustainability.
MIT Technology Review, “Nuevos modelos de negocios, Grandes oportunidades”, 2021.