When I completed my MBA program, I was fully informed about accounting, finance, marketing, logistics, and various other aspects of commerce that any young business student needs. The one concept that we studied that I think has been the most important factor in success I have seen throughout my career is the ability for managers and businesses to adapt to change. In retrospect, I wish this would have been a class unto itself when I was still in school.
Today, the ability to adapt to change in a rapidly evolving business climate is even more important than it was back then, and this is still easier said than done. Yes, it is important to provide business students with the ability to manage money and to market products/services. These fields have been well-defined for decades. However, being able to adapt to change is a more nebulous skill, that is not always easily taught nor intuitive. It is human nature to get comfortable in a job or with a business. We tend to think that with all of the controls and protocol which good businesspeople put in place to mitigate risk, the major risk we have to worry about are dips in economic cycles. The COVID-19 crisis should be teaching the business world that catastrophic, unforeseen events can occur which quickly threaten the very existence of businesses.
The ability to adapt can be as simple as changing hours to better suit the clientele’s evolving shopping preferences, to totally changing the business model in order to survive. This also includes planning ahead for disruptions, and having protocol in place when, and not if, these happen. Most of my colleagues are regularly holding Zoom meetings instead of meeting in person. While many people are getting sick of seeing talking heads on a screen, I have found this system effective, especially when “meeting” with people internationally in places such as Mexico. Imagine how much systems such as this will come to replace business travel that may not be deemed essential, domestically and internationally, as firms are going to want to keep their employees safe. Will Zoom etiquette and hacks become part of the business curriculum in institutions of higher education?
And not just larger companies or those doing business internationally will be forced to adapt or face the consequences. Nowadays, even “mom and pop” businesses have to be ready for events occurring halfway around the world that can affect them. A crisis-within-a crisis that is currently occurring is that several automotive manufacturers are running desperately low on production inputs. This is occurring because of the situation in Juarez, where the automotive component producers (maquiladoras) have just begun resuming their production – most at only 25 percent capacity. In turn, this affects U.S.-based suppliers to the maquiladoras, many of which are located on the U.S. Mexico border and are supplying steel, packaging, wire, and plastic injection components. They then have to downsize not only their employment base, but also the work provided by their local providers, including cleaning, landscaping, drinking water, and pallet suppliers. Many of these are smaller firms that are caught in the middle of this crisis-within-a-crisis and must adapt or diversify to survive.
One good example of adapting that I have seen has been auto dealers quickly setting up a response to the crisis by offering sales by phone, internet, and social media. In Mexico, the Mexican Association of Automotive Distributors reports that the quick response resulted in brisk sales of vehicles in that country in May. One has to wonder if the process of going physically to a dealership, testing several models, and hassling with the sales team over a final price might be less and less the way that clientele in this industry want to conduct business.
From a global standpoint, the way that manufacturing, logistics, and getting products/services to the consumer could change the way companies do business in several ways. First, will be the decision of many companies to carry extra inventory, even in good economic times, to mitigate supply chain risk. Second, will be the streamlining of any steps taken between the production of a product and its final delivery to the consumer, in order to minimize the number of times it is touched or handled. Plant and supply chain managers are going to have to review every step of the process diligently.
Change, even the change we are going through that brings on severe stress and challenges, can make companies that are prepared to adapt stronger in the long run.