Global consulting agency McKinsey says business has to think and act across five horizons as it works towards the “next normal” it will encounter if, and when, the battle against the global Covid-19 pandemic has been won.

The first two of those horizons, resolve and resilience, involve identifying the challenge of surviving the disruption wrought by Covid-19 and adapting to it. For some 80% of New Zealand businesses, that has meant moving the workforce home, conducting internal communications online and through apps such as Zoom and Skype, and working out how to keep commerce ticking over through tightly controlled lockdowns. Today the country comes out of level 3 lockdown and emerges into level 2, and into McKinsey’s third horizon, “return”, which sees businesses plan their return to scale – if that is possible. Re-imagination and reform are the final stages. They require imagining “how institutions should reinvent” for not only the new reality of Covid-19, but also a recession, which Morgan Stanley is picking will see the world economy contract anywhere from between 1.9% and 5% in 2020. If the GFC is any guide, the next normal will be, at the least, a smaller, more nimble, and increasingly remote workforce.

Global media platform Twitter is one that will be forever remote, with an announcement yesterday that its 4000-strong workforce can work from home in perpetuity. Others are not just changing how they work but how they exist in the marketplace. Some of the world’s biggest companies have already reconfigured themselves for the challenge, including PepsiCo, one of the world’s largest food and beverage makers and distributors, which has launched its first ever direct-to-consumer offering: websites offering bundles of snack foods for between $US30-50 that comprise a mixture of products from across the company’s vast repertoire including those from the Gatorade, Quaker, and Tropicana brands among others. Whole Foods and others have transformed some retail centres into “dark stores” or order fulfilment centres, while other fruit and vege grocers have developed drive through options.

General Motors will now use some of its mothballed self-drive cars to deliver food to food banks, while Renault New Zealand has developed a virtual showroom service it intends to keep, allowing customers to ‘visit’ a car from their house, with a Renault employee filming and explaining the car features live. Gyms and fitness players, including New Zealand’s Les Mills, have opened or expanded a whole new line of business in ‘on-demand’ classes and challenges delivered to people’s living rooms, which are expected to comprise a growing proportion of their overall future business.

Repurposing production lines
Across the world, a number of food, drink, and cosmetic manufacturing plants have pivoted to providing hand sanitiser to both essential workers and the open market, especially in the early days of the pandemic when sales of the product skyrocketed.
Motueka’s Pete’s Natural is one that got aboard the hand sanitiser train – but one that also intends to keep the product as part of its portfolio into the future, based on what it is picking as ongoing interest in the product in the post Covid-19, germphobic world. Marleen and Pete Suy have been in business for more than 30 years – a decade of that making lemonade and other drinks – and their range is sold mainly through cafés, bakeries, and other small eateries as well as some through supermarkets.

That business dropped off overnight when lockdown came into force, Marleen says, with some truckloads in the process of being dropped off turned back en route as a result of the speed of change.

“We were then doing about 2-3% of the sales we had been doing so we looked at what was needed – and decided to look into making sanitiser,” she says. “Immediately we got our six staff members on the phone calling around to see if we could get our hands on alcohol, glycerine, and bottles – which of course everyone in the world was also trying to source.” Marleen experienced price gouging in real time, with 5L of alcohol that would normally cost $30-40 commanding as much as $150, while she was on the phone to one supplier, and $200 just minutes later from another. But the company persisted, originally feeding the sanitiser into containers with a bottle normally used to feed calves. They’ve now bought a proper filling machine and have the labelling sorted, and say depending on demand, which has so far been strong, they intend the product to comprise as much as a third of sales in the post-Covid environment. “It’s hard to know what will happen but we believe there will be a market,” she says.

Technology hacks
Jaydene Buckley and her husband Sean are ex-police officers who, from New Zealand, run a global network of investigators who do work for the UN, WHO, other NGOs and corporate clients unearthing fraud, counter-terrorism, sexual harrassment, and other damaging behaviours as well as a range of other consultancy work. Buckley says the company’s name, OSACO, is “the very unsexy acronym for oversight and compliance” and refers to the company’s work not just in conducting investigations but also reviewing a company’s systems and operations and pointing out where problems can arise, particularly in the large NGOs with which they often work.

Because of the company’s global network, it had discerned a problem emerging with Covid-19 back in December and had swiftly moved its training modules online, while also reorienting its investigation service to be delivered online as well.

Face to face is better, Jaydene Buckley says, but the days of extensive, endless travel for businesses such as hers are all but over. “It’s not just an ongoing caution around transmission that creates this change but recession – while there is still funding and aid that goes to many of the organisations we work with there will be less – and they will need to be more accountable, so there will be all sorts of cuts including travel budgets,” she says. “This is the new norm.”

A digital solution was also adopted by Two Hundred Doors, an Auckland-based company employing 23 and distributing product and education to about 60 beauty therapy groups across New Zealand. The company is the main distributor of the global Dermalogica brand in the country. Seeing that its therapist clients had lost in-store sales to online purchasing, the company doubled its “affiliate commission” on its local Dermalogica website, allowing customers to nominate their local therapist for a commission from the sale. That feature will remain, especially as the industry rebuilds after the lockdowns, along with “virtual skin consultations” through the online customer service team on the same website, using video conferencing and a professional skin therapist tool called Face Mapping to assist with the consultation.

“The professional skin therapy channel is what our business was built upon, and many of the small business owners have been partners with us for over 10 years,” says Natasha Bourke, CEO of Two Hundred Doors.

“With many not equipped to retail online, we wanted to do everything we could to support them digitally, so doubling the commission paid on product sold through our website was one of the first things we implemented. “This means they now make the same profit on a web sale that they would usually make in-store, but without the overheads or investment in stock. We are also covering shipping, loyalty programme points, and promotions.” Bourke says while initially the initiative was a lifeline, it would keep going “as we foresee many businesses taking a while to bounce back.”

Technlogy plus
Some companies that were already using technology to disrupt existing sectors used lockdown as an opportunity to test run how they would grow in its aftermath. This was the case of Wellington’s Mevo, Australasia’s first one-way car share that uses an app to rent out private vehicles. The company had been growing, on average, 10% month-on-month for more than a year before Covid-19 hit.

Forced to close during level 4 despite its protests – Mevo says it counts many essential workers within its membership – the company has focused on providing hospitality delivery drivers on the road during level 3, as well as building its wider customer base up again. But the lockdown has allowed the company to test run international expansion.

“For us, Covid-19 has provided a unique opportunity for a dress rehearsal of working as an international and digital first team,” Mevo CEO Erik Zydervelt says. “Pre-lockdown, the team was tight and spent a lot of time physically together. We are at the stage of building our first operating city. We think of it as a prototype for what will be multiplied around the globe as multi-city, multi-country product.” Zydervelt says in the “very near future” the company will cross continents, and a technology-first culture that’s been embedded during Covid-19 will be developed as the company scales up. “We are pretty pleased to have had this opportunity to organically make the transition. I think it has set us up well, so when we are hiring a lot of new people, the culture is already established and embedded.”

Software company Unleashed says change has not only come to its own culture but to its clients’, and the lockdown period has shown it must be mindful of both. A New Zealand company with a base in Bristol, England, Unleashed provides supply, production, inventory, and sales software to clients across the manufacturing, wholesale and distribution sectors. The company traditional services business-to-business companies, but those companies lost their sales overnight in lockdown. They had to quickly pivot to selling to people at home via direct-to consumer online stores and try and recover sales through that channel.

COO Lisa Miles-Heal says while it remains to be seen whether the trend of traditional manufacturers and distributors selling across multiple channels will continue, the safe assumption is the previous model, under which Unleashed and its customers operated, will have to change.

“The crisis has shown the importance of fully embracing a digital environment – tools, ways of working, and commerce,” she says. “A lesson we have seen across thousands of businesses is how crucial diversification is, across supply chains, customers, and sales channels, in order to help manage risk when turbulent times hit.” Miles-Heal says a lesson for the company is that every country reacted differently to the crisis, and that will prompt it to more carefully target its communications and support in the new environment. “Crucially, your in-market teams need to be contributing strongly to any responses.”

By Dita De Boni (/author/dita-de-boni)
Senior journalist
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