There are some lucky businesses out there who not only manage to survive, but also thrive during times of crisis.
How do they do it? What makes them different from those businesses that are forced to shut their doors?
New research spearheaded by the University of Queensland has shed some light on what sets some businesses apart from others. The secret? Having traits that allow them to take advantage of changed conditions quickly.
“Certain crises create unique opportunities for a select few companies by improving market demand, supply conditions, public attention and acceptance all at the same time,” said Associate Professor Frederik von Briel from UQ’s Business School.
“Crises that begin suddenly, have widespread impacts and last for a considerable period of time create the perfect storm for such extraordinary growth opportunities.”
Von Briel’s research found that some of the world’s most successful companies, from Disney to Airbnb, rose from obscurity to market leader during times of major societal instability.
“Crises are when normal societal functions often deteriorate,” von Briel said. “For most businesses this can mean financial struggles with higher costs and falling demand, but remarkably there are others that become what we call ‘extreme growth outliers’.”
According to von Briel, ‘growth outlier’ businesses generally generally share three common traits: flexibility, expansibility, and distributable resources that allowe them to scale up.
Flexibility
Organisations that thrive in crises are flexible; that is, they find substitutes for resources or assets they can no longer access, and/or repurpose and mobilise resources that are now cheaper or more available.
“During the COVID-19 pandemic, Uber successfully reallocated workforce resources from its ride-hailing business to its Uber Eats arm,” von Briel said. “It also expanded beyond restaurant deliveries by opening the platform to grocers and other third parties that had trouble reaching customers during lockdowns. This allowed Uber to record a 54 per cent year-over-year order growth.”
Expansibility
This means being able to replicate what a business does at low cost and with minimal effort.
Von Briel shared the case of Alibaba which thrived during the SARS virus hit parts of East and Southeast Asia. He said, “(Alibaba’s) business-to-business online platform could directly link procurement teams from abroad with Chinese goods manufacturers when the SARS crisis hit and travel was restricted. At the SARS peak, Alibaba added 4,000 new members and between 9,000 and 12,000 new listings daily.”
Distributability
Finally, companies that thrive during crises are able to easily reach customers with their offerings and/or absorb new supply regardless of where they are, the research found.
Von Briel said, “Standardised manufacturing processes, digital services and information goods are all examples of how organisations can foster distributability. During World War II, Birdseye Frozen Foods leveraged its patented quick-freezing process, low-temperature display units and insulated railroad cars to take advantage of a surge in demand for easy-to-prepare meals across the USA.”
Crises don’t have to be bad for your business
Von Briel concluded that societal crises can be viewed as opportunities – if you can take advantage of them.
“We tend to think in business that crises mean doom and gloom, but paradoxically they can enable organisations to make major leaps forward,” von Briel said. “By shifting the mindset from ‘how do we survive this’ to ‘how can we turn this moment into an opportunity’, business leaders could better position their organisation to rise from the ashes of a major crisis.”
