Beyond the pandemic: Disruption becomes transformation

Vaccine rollouts are now in full swing across multiple economies around the globe and there is a light at the end of a long, dark tunnel for companies to set their sights on.

A lot of unknowns remain. It isn’t clear yet what percentage of a population needs to be vaccinated for governments to reopen economies, or how long this will take. Nations are likely to have staggered recoveries, keeping business travel reduced for the foreseeable future.

But one thing looks certain: businesses will not resume as ‘normal’. Many companies will look very different on the other side. As a direct result of the pandemic, business models have been shaken up, amped up or refocused entirely.

Internal processes and operations are now alien compared with what they were just a few years ago.

Some industries have become stronger during the pandemic. Supply chains have become more robust due to panic buying. The gaming industry and ecommerce have boomed thanks to stay at home measures. Cloud giants have reaped the rewards of accelerated digital transformation projects.

Meanwhile, other sectors have been decimated, with travel and hospitality hit particularly hard.

Something all businesses have had in common is the urgent need to adapt, whether that includes meeting new demand, pivoting to an alternative business model or changing the way employees work. Often, this has involved embracing new digital tools.

Video apps such as Zoom and Microsoft Teams, along with collaboration softwares like Slack made it possible for many organisations to continue running despite much of the world around them being locked down. If the world of work had a catchphrase for 2020, it would undoubtedly be: “You’re on mute!”

While these threw a digital life raft to businesses, they also require a new operational approach.

In addition to switching to remote working, Finnish cybersecurity company F-Secure moved its sales meetings to a virtual format, switched its events online and delivered its consultancy services digitally. Team well-being events and team building exercises also moved to the online domain.

All this required IT infrastructure to be “ramped up” to handle the extra network strain, says Dean Porter, UK channel manager at F-Secure.

But the pandemic created a chance for F-Secure to take stock and increase how often it assesses its business processes.

“We now constantly review our business continuity in many different areas more often and this ensures that our business operations aren’t disrupted at any point,” says Porter.

“We also regularly survey our F-Secure Fellows [the term it uses to describe its employees] to identify areas of improvement for the remote work set-up as well as get a pulse on personnel well-being under the pandemic.”

F-Secure was able to continue doing business with some modest organisational shifts. After all, cybercrime did not go away during 2020.

For many organisations, the pandemic has triggered a complete overhaul of digital transformation projects. According to research recently conducted by Japanese multinational IT services firm Fujitsu, 64% of international business leaders are now prepared to scrap their current transformation plans and go back to the drawing board.

“In what has been the most challenging time for enterprises in recent history, it’s no surprise that most organisations are struggling to keep pace with market demands and customer expectations,” says Brad Mallard, CTO for digital technology services, North West Europe, Fujitsu.

“Whilst many have pivoted and changed the way they operate in response to immediate issues brought about by Covid-19, they now need to aggressively shift their focus – from reactively increasing resilience, to proactively building an adaptive organisation.”

So what about the companies whose very business model has been upended by Covid-19? For TravelPerk, a travel management company that automates expenses spending limits and travel policies for business travel, a more drastic adaptation was needed.

“We decided to transfer half of the sales team over to the customer care team so they had the manpower necessary to deal smoothly with the huge rise in the number of trip cancellations and customer inquiries on our booking platform,” says Avi Meir, CEO and co-founder of TravelPerk.

The travel tech startup has a commitment to a “7-star customer experience” – a big promise to keep when the bedrock of the business model – travel – is closed almost overnight.

But for Meir, refocusing headcount was essential: “We wanted to ensure that our customers knew that they’re a priority for us, and that they always get the information that they need when they need it.”

Like many businesses, TravelPerk has adapted to the pandemic with new product offerings. The company created TravelCare, a risk management solution that gives customers the latest travel data for “effective risk management across all business trips”.

“We recognised that people were going to need slick solutions to help them navigate travelling around the world pre- and post-Covid,” says Meir.

TravelPerk built this partly in-house but also made its first acquisition to adapt to the challenging new business environment, purchasing risk management startup Albatross in July last year.

Since launching in 2015, TravelPerk has raised $133.2m to fuel its growth. For many startups, venture capital funds have been essential to stay afloat.

But the venture capital firms backing startups such as TravelPerk have acutely felt the disruption to companies they have invested in. Clearbanc, a VC that specialises in offering equity-free investments in startups using AI-based lending predictions, was also forced to change its approach in response to the pandemic.

“It has been a tough year for our customers, many of them were just starting to see traction when the pandemic hit,” says Michele Romanow, president and co-founder of Clearbanc. “Our first reaction was to adapt with our customers, pivoting our approach to accommodate challenges facing founders and the ecommerce industry as a whole.”

Having an online presence during the pandemic has become a matter of survival for retail businesses. And for those with smaller online operations, scaling up ecommerce was key.

In response, Clearbanc has moved into the UK ecommerce market with a £500m war chest for small businesses. It has a data-driven approach, with a focus on boosting digital marketing. Startups connect their bank and social media ad accounts to Clearbanc’s API, which assesses return on investment (ROI) and revenue coming into the business. Based on this data, it decides whether to offer anything between £10,000 and £10m within 48 hours, taking a cut of revenue share to pay back the investment.

The VC also launched a new offering to front the cost of business owners purchasing inventory

“This alleviated some of the risks for founders, amidst the unpredictability of 2020,” says Romanow. “2020 encouraged us to refine our digital strategy to provide founders with real-time data insights on how much their company is worth and the steps they need to take to scale their business. Having such data-led counsel meant founders were able to invest efficiently and more effectively.”

The pandemic has been one big experiment for the world of work – particularly when it comes to remote working. Looking at the results so far, remote working is here to stay. Many companies look set to embrace a hybrid model where employees split their time between the home and the office.

Big Tech firms have been leading the way in this shift, with Google, Facebook, Microsoft and Twitter among those offering permanent remote work options post-pandemic.

Cloud storage company Dropbox said it will become a “virtual-first” company, opening optional drop-in offices called “Dropbox Studios”.

There are strategic advantages to a remote-first team beyond saving on office rents. It broadens the talent pool to anyone around the world with a computer and stable internet connection. Companies don’t need to worry about visas or work permits. And some studies suggest that productivity increases among remote work forces.

F-Secure’s Porter says that “remote work will be part of our new normal” thanks to the acceptance of video and collaboration tools.

This has made “cross-country and cross-function teamwork a lot more efficient”, he says. Virtual socialising events, such as virtual pubs and virtual walks, will be kept post-pandemic to “connect employees across countries and offices”.

Porter says that events will “never be the same as before” and that F-Secure will look to hold its flagship events as hybrids “where the virtual experience will play an important role”.

“Customers and clients have also adjusted to a more virtual delivery and are seeing the benefits of this,” he explains.

Last year, TravelPerk moved employees from its London, Barcelona, Berlin and Chicago offices to a “100%” remote working policy.

“I think we’ll stick to this,” says Meir. “We have recognised that people like it, the employees like it and it’s cheaper, because you don’t have to have as much office real estate. What’s more, people are generally more productive and happier, and they have a better balance between their personal and work life.”

‘Zoom fatigue’ may have left people craving face-to-face human interaction, but Clearbanc’s Romanow says the collective experience of 2020 has brought her colleagues “closer together”.

“Whilst I’m excited to bring teams back together physically in the future, I’ll be encouraging my teams to work in a location that suits them and helps them do their best work – because if this pandemic has shown us anything, it’s that you don’t need to be physically together to achieve great things together.”

The pandemic brought many business plans to a grinding halt in 2020, often coming at great financial cost. But amid the shelved projects, delayed product launches and event cancellations, there are lessons that have been learned by businesses.

F-Secure intends to focus more on scenario planning in future to ensure it is well positioned to respond to the next black swan event.

“Rethinking and re-defining the future of work is obviously a quite important project to establish a resilient organisation, whether that’s the current pandemic or any other big disruption,” says Porter.

“However, the pandemic also opened up new business opportunities in the form of digital transformation, which we are addressing with our services and products.”

While the future remains uncertain, Meir is confident that business will pick up again and that the pandemic has highlighted just how much we crave face-to-face interaction.

“One thing we do know is that while there’s been a dip in demand for travel during the pandemic, the fundamental human value people put on face-to-face interactions will never change,” he says.

“And that means that when it’s safe and legal to do so, people will start traveling again. Businesses will want to reconnect with their clients, colleagues will be eager to meet back up with colleagues, and everyone will be glad to see the back of Zoom.”

Meir is so confident in the post-pandemic bounce back that his company didn’t make a single employee redundant, something that other tech companies such as Airbnb and Uber were unable to avoid.

“Our plan is to emerge stronger out of the pandemic than we went into it, to be ready to meet the pent-up demand for travel that we’re all feeling,” he says.

While some old habits are likely to return post-pandemic, others forged in 2020 look well and truly out of the bottle. Ecommerce growth has accelerated by 10 years, says Clearbanc’s Romanow. From an investment point of view, this demonstrates the need to focus on online adverts to grow an ecommerce presence. From a broader perspective, it underscores how seemingly fixed consumer habits can change – and that businesses need to be ready to move with the changing tide.

“Before the pandemic, my mum would never purchase groceries online,” says Romanow. “She was worried about her blueberries being squished. Now, she loves how convenient grocery delivery is. It takes 30-60 days to form a new habit and it’s clear that there’s less of a generational gap in ecommerce as we’re shifting to new ways of living.”

In the wake of previous economic shocks, triumphant businesses emerged stronger than ever and new ones were built in the eye of the storm. Airbnb, Uber and Instagram were all forged in the furnace of the 2008 financial crisis.

Organisations today are looking at how they too can emerge stronger from the other side of the pandemic.

“The most difficult times can often be the best times to think long-term about your business,” says Meir.

“The impulse might be to go into hibernation and wait for the crisis to pass. But I believe that the best form of defence is offence, and there is plenty of proactive, forward-looking action we can take when times are tough, to set ourselves up for the best chance of success when the situation improves.”