History has recorded that hard times have always inspired people to innovate and for entrepreneurs to create new opportunities. The crisis unleashed by Covid-19 put pressure on all the economies with imagination and creativity playing a fundamental role in the reinvention of business models around the world.
“The pandemic confronted us with realities that in some cases had always been there but we had been ignoring. In other cases, they arose as a consequence of the changes that had to be made to adapt ourselves suddenly to a new way of living and working”, acknowledges Oscar Bobadilla, Managing Partner of RSM Colombia.
Some of the changes will be temporary and it is not yet clear how long this temporary period will last. Other changes are more permanent and we will need to take definite actions to redefine the way we have been working; from making adjustments to business models; the development of new products and services; improving business processes; and embracing the technology that supports them.
“It will then be necessary to understand how customer needs are going to change. When helping organisations anticipate these types of changes, we regularly use creative processes such as design thinking that allows us to identify the needs, opportunities, challenges, problems and pains that businesses face. From there we move on to define the characteristics required for the solution in order to later build prototypes, which are then validated by our clients”, explains Bobadilla.
Many of these new solutions will be aimed at improving operational efficiency through digitalisation, whether by designing solutions supported by adjacent capabilities or completely innovative new alternatives.
To achieve a successful reinvention, it is necessary to "change the chip" and be willing to recognise the imperative need to transform and adapt. For this we can apply the concepts of adaptive planning, recalling the famous phrase of Charles Darwin “It is not the strongest of the species, nor is it the most intelligent that survives. It is the one that best adapts to change”. The following are some examples of how businesses have adapted to survive.
Rescue your hotel
According to the World Travel and Tourism Council, the impact of the health emergency on the hospitality industry in Latin America would be of $ 131,000 billion in loss with a 57% drop in international travelers and 7.4 million jobs lost. Against this background, this economic sector knows that the option is to transform to survive.
"To reinvent your company, it is necessary to close your eyes, and when you open them again, look at your business as if it were the first time," recommends Ana Lozano, Consultant and Financial Director of the Hotel St. Regis in Mexico City. With this premise, the Hotel Association of Mexico City, the Center for Research, Innovation and Development (CIID) University Extension of CESSA University and RSM Mexico joined forces when the pandemic broke out to offer the Rescue your hotel workshop. “These businesses had a revenue drop of more than 90% and almost none had an administrative and financial structure for this scenario. With simple steps, it was possible to create strategies and changes that gave birth to several transformation processes that were surprising”, says Alberto Figueroa Lorrabaquio, from the Executive Office of RSM Mexico.
These main steps were:
- Creativity - looking for new ways of doing business, using technology and new emerging business niches that could be operated
- Maintaining healthy finances, strict control of cash flow, eliminating expenses and non-priority investments (that do not generate profits)
- Negotiate with employees and make them participate in the strategies asking for their collaboration so that they could see where cost reduction and savings could be made
- Negotiate and restructure debts with creditors and suppliers and seek new sources of financing, revision of service provision contracts to adjust them to the new reality
- Analyze the pros and cons of implementing the changes.
From a luxury hotel to renting shared rooms with all the amenities
Mexico City has a young professional population that seeks to live close to their place of work or studies to avoid wasting time in traffic and generate less pollution. At the same time, although they have a moderate income, they want to live in an environment with good services and connectivity. Not should we lose sight of the fact that during the first months of the pandemic many companies reduced their employees' salaries by between 25 and 50%. Thus, this luxury hotel chose to offer rooms and shared rooms, in which each tenant pays an average rent of $ 400- $ 500 per month, enabling use of all the common areas that the hotel offers such as gardens, pool, lounges, gyms and so on. Thus, they saw young couples arrive, friends, some retirees, among others.
From hospitality to senior citizen care
Another novel transformation was that of a traditional hotel that was located in front of a hospital where Covid-19 patients were treated, mostly the elderly. When the clinic rooms were not enough, many patients chose to rent a room in this hotel to maintain the quarantine and be close to medical services if necessary. Over time, the hotel owners decided to seek permits to qualify as a nursing home by making simple reforms to the structure of the property, offering a specialised menu and hiring basic medical services for their clients. Business has gone so well that currently a famous care home franchise has offered to purchase the property.
From hotel to professional laundry.
Faced with the inability to receive guests and organise events, the halls of a downtown hotel were converted into large areas for laundry and disinfection of clothing for hospitals and general public. A reception, washing, ironing and home delivery process was established in which all hotel staff were involved, regardless of the areas to which they belonged before the pandemic.
The awakening of entrepreneurship in Guatemala
Guatemala is a small country in Latin America where things are changing. According to estimated data from its National Institute of Statistics, it has 16.2 million inhabitants of which 40.7% are economically active and 25.3% inactive. The pre Covid-19 era placed the government and corporations as the main sources of work. “The pandemic shook us awakening from this unexpected change-induced lethargy. The closure of many businesses, the suspension of employment contracts, the downward macroeconomic projections and upward contagions were the catalyst for many ventures and the search for new opportunities to survive. Necessity was, in effect, the mother of creativity and local ingenuity”, reflects Luis Arturo Orellana, technology consulting Partner of RSM Guatemala.
Soon the streets of the country were filled with small delivery ventures competing with unicorns like UberEats and Glovo. Garment factories became essential when they began to produce face masks and protective suits for the medical and sanitary forces of the country and even neighboring countries. Sanitation and deep cleaning services emerged to meet institutional and household needs. The offer of meals at home multiplied, and not only food, but any transportable good was made available at home.
Although the health and economic crisis caused by Covid-19 is not over yet, most countries are already walking into a new normal and many lessons have been learned about survival and better yet, resilience. “This is the time to support small businesses and help them consolidate their position in the market. There is a saying, "Troubled river, fishermen gain ..." and in fact this "troubled river" was the door for many good things to emerge. Now that the waters seem to be calmer, how can we sustain the profit of these fishermen (and the social benefit they produce)? Well, we can help them to systematise their processes, implement information systems, understand their fiscal and regulatory environment, prepare to scale their services, identify and properly manage their risks and finances”, adds Orellana.
Local entrepreneurship is definitely in place and enterprise will always find a way. For any business that needs support to reimagine a new way forward, please get in touch