For some companies, recently relaxed social distancing rules signal an opportunity to reopen and emerge from survival mode. But getting back on track may require some out-of-the-box thinking. Some established companies may want to consider adopting the fail-fast-fail-often ethos championed by startups.
Some companies found early success with nimble pivoting — a common practice among startups — in the beginning stages of the pandemic. Sonat Hart, co-founder of spirits purveyor Koval Distillery in Chicago, pivoted her whiskey-producing operation to formulate hand sanitizer after noticing it was in short supply.
"In challenging times," Hart says, "there is nothing more important than being nimble: being open to a pivot, actively seeking out ways to innovate and change to meet the demands of the moment.”
Companies looking to grow into recovery mode during an uncertain landscape may want to consider similar principles, such as thinking differently about risk, prioritizing speed over perfection, and quickly adapting to customer and market changes.
1. Embrace risk like a startup.
Startup-style agility usually requires an increased appetite for risk — the exact thing many business leaders are conditioned to avoid. A strategic embrace of risk, however, can unlock opportunities for optimized products and new revenue streams.
Startups emphasize speed to market with a minimum viable product — or MVP — and iterate on the product based on customer feedback. If they fail, they quickly learn what they can and try something else, giving them another chance at success.
Established companies may no longer have the luxury of taking their time and being set in their ways, says Tom Walker, CEO of seed stage venture capital firm Rev1 Ventures. (Disclosure: Tom Walker has previously contributed to American Express.)
"You have to become nimble on features, price, delivery, everything," Walker says. "Established companies may be competing with a company that is one-tenth [their] size. Companies must learn to pivot. As soon as the customer is not liking something, you have to move on.
"New products don't have to be perfect; they just have to meet enough customer needs to be sold," he continues. "Then, with customer feedback and experience in hand, established companies can leverage their resources to keep ahead of the competition."
2. Work on a shoestring budget.
For a startup, being frugal is essential because they have limited capital to invest. Established businesses would do well to get in that same mindset.
Figure out how much capital will be needed until your new product or service turns a profit. Estimate what your sales and expenses will be, and then revise the forecast by cutting sales by half and doubling expenses. This will give a more realistic picture of what could happen.
In addition, keep fixed overhead low and direct variable expenses toward only those things that produce revenue. Keep inventory to a minimum and don’t hire staff to deliver the service until there are paying customers.
3. Use the resources you already have (and outsource everything else).
The next step is to match any assets that your company currently has (e.g. skills, data, relationships) with your customers' needs. Success does not rely on the creativity of the idea, but rather on the execution by the people on your team. All team members need to be very flexible and wear many hats to get the job done.
As the CEO, pretend that you're launching a startup. How should the company be structured? What are the tasks that need to be completed and what types of skills or people are required to complete those tasks?
Once you have that in mind, look at your current staff and determine if anyone matches what you need. If they don't currently exist within your company, you may need to use independent contractors.
4. Let customer input inform new products and services.
What your customers needed earlier this year may not be what they want now. With most customers practicing social distancing, what are they interested in purchasing now that you can provide? Reach out to your existing customers and ask, "'If you could wave a magic wand and make your life easier, what's one challenge you have right now that you'd love to go away?'" suggests Keith Schacht, CEO of educational platform Mystery.org. (That said, you don't have to only limit the answers to the market segments your company is currently serving.)
When you get your answers, explore what you currently have (or can easily acquire) that can provide customers with what they need. This is exactly what Koval Distillery did when they changed their production line from whiskey to hand sanitizer.
5. Ramp up market testing and pivot based on the results.
Start experimenting to see what works and what doesn't. Test small initiatives continuously and make changes based on what you have learned in the process. Startups conduct back-to-back small tests of products and service rollouts, and make changes based on the results.
Scott Case, CEO of business travel company Upside, got hit very badly when the country shut down. He had built an outstanding sales team and did not want to lose them. So he came up with an idea: "What if I could rent out my entire sales team and not lay them off?" he wondered.
Case pivoted from business travel to sales team outsourcing by testing out the idea with companies he had an established, trusting relationship with. After a favorable review, the sales team then built a capabilities document and started pitching themselves to a list of companies in industries that were still booming, like telemedicine, teleconferencing and medical supplies.
They spoke to 30 companies and successfully picked up two clients with this model. Now Case still has his sales team on his payroll, ready to go when business travel resumes, with the cost offset by their new clients.
5. Network to build connections.
"Networking is everything" for startups, says Andrea Loubier, CEO of email platform Mailbird. And it should be for established businesses, too.
"The reason that startups see networking as such a critical activity is that they never know which connection they make will lead them to a new customer opportunity or resource," Loubier explains. "Established companies need to pursue all networking opportunities even if they do not seem directly related to what they are trying to accomplish right now."
This article is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. It should not be regarded as comprehensive or a substitute for professional advice.