Plenty of companies are now shifting their focus. It’s remarkable how many entrepreneurs are already building a new Low Touch Economy to get our society back up and running. You could cluster these changes in a couple of buckets:
Companies make temporary business adjustments to fight the ongoing health crisis.
- E.g. Fashion, packaging companies, alcohol producers that are providing masks, gowns or sanitizers. Often these new product lines are provided at costs or at minimal profit margins.
- Once the urgent health need is gone, many will drop these products again from their portfolio.
- From a business strategy point of view, these innovations are the least interesting to track.
Companies fighting for survival: new products/services and new clients.
- In specific industries, demand just dropped close to zero. Companies in this space have to be creative. A full business model redesign might be considered.
- The most manageable switches are those who can keep more or less their existing product, keep their client base but only have to rethink their distribution channel and how they interact with their customers. But just this can be a massive challenge. A yoga teacher can switch rather easily to virtual classes while setting up a new B2B supply chain to serve clients via e-commerce is a whole other ball game.
- Unfortunately, some organizations need to start from scratch. Hopefully, they can keep some of their assets (e.g. their core team or a key license or …). But they need to switch to a new product and new client segment. Many companies in hospitality, event business or travel industry are in this space.
Companies looking into new emerging needs.
- Certain companies are very opportunistic and tap into new emerging needs. While their current business model remains more or less unaffected, they just spot an additional client problem that they can solve. The Low Touch Economy will need new logistic solutions, better cleaning/hygiene solutions, new communication tools, etc. There is unseen landgrab today for additional market share.
Large corporates with significant cash buffers have a little bit more time to rethink what their role will be in the Low Touch Economy. Due to their diverse portfolios, they rarely need to do a full reset. But cutting certain business lines and building new service models might be required. Read more on how to innovate during a recession.
list of examples
⚠️ Google Sheets: Business model shifts due to Covid-19
In the shared google sheet below, we listed already several organizations that altered their business model in some way. Feel free to add your examples. How are other companies adjusting to this new reality? Today, you mainly see the smaller companies changing course, but soon large companies will follow.