The pandemic has compelled one and all to think digital and innovate in order to survive and thrive.
The 1966 World Cup saw Brazilian soccer reach a new low as the team was eliminated in the first round itself. Many wondered if the golden period of Brazilian soccer was over. Four years later, Brazil won again with such grace and style that the 1970 team is universally acknowledged as the best soccer team ever to take the pitch.
Similarly, post-Covid pandemic, to come back stronger, companies need to reimagine their business models to sustain and grow. Those who elevate their game will be better off and far more ready to confront the challenges and opportunities of the next normal than those who do not.
The extent of impact has been deep
India’s economy had already been suffering from a slowdown pre-Covid. As per a recent report by UNESCAP, India is estimated to record economic growth of 7% in 2021-22 (below the 2019 level), over a contraction of 7.7% witnessed in the previous fiscal.
But the new Covid wave is raising questions over the possibility to achieve even this estimate. Almost 80% of Indian companies witnessed cash flow difficulties, impacting repayments, interest & taxes and over 50% of companies faced operational issues. Earnings of the Indian MSME sector were impacted by 20-50%. Facebook's Global State of Small Business Report highlighted that about 45% of the MSMEs in India reported a decrease in employment, and the closure rates of SMBs in February 21 rose to 32% compared to 24% in October 20.
The silver lining: Businesses designing a leaner, stronger and innovative approach
The coronavirus pandemic has brought several predicaments to the Indian economy and the business ecosystem. Everything has changed in the post-Covid-19 era – the way we work, virtual meetings and events, operating with enhanced precautions and restrictions. But, despite all these constraints, there is hope at the end of the tunnel – many businesses, sectors, and industries have turned the coronavirus crisis into an opportunity. It has compelled one and all to think digital and innovate in order to survive and thrive.
They are several encouraging examples of how businesses adapted to the situation:
• Several ride-hailing business suffered significantly due to the lockdown. While the big boys like Uber and Ola have deep pockets to survive, some of the newer businesses like Yulu, Rapido and DriveU have to think of survival. They quickly pivoted their model to make either food, grocery or medicine deliveries. For instance, Rapido joined hands with the likes of BigBasket and Big Bazaar to deliver essential items to people at their doorstep.
• Fitness startup Curefit, which had 130+ centers pre-Covid, pivoted to a digital model by introducing live classes by Cult trainers. This offered the convenience to work out anytime, anywhere, at a cost far less than the offline services.
• The manufacturing sector was deeply impacted – causing disruption in production, supply chains and resulting in increased costs, a large part of their cost being fixed. They responded with phased re-opening of operations, working in shifts, solid SOPs on social distancing and sanitation, rationalizing labour and sourcing contract labour closer to the manufacturing operations. Eventually, the manufacturing sector will increase automation and move to smaller, localised operations to diversify risk.
Adversity is the mother of innovation and our best teacher. As businesses emerge out of the pandemic and re-orient themselves, the “boys will separate from the men”, and the best will survive and thrive.
(The author is executive vice-president, Wadhwani Catalyst Fund at Wadhwani Foundation. Views expressed are personal and do not necessarily reflect those of Outlook Magazine)