Industries around the world have been shocked by the COVID-19 crisis. Businesses on all levels have been challenged to rapidly evolve their strategies in an attempt to stay afloat. The unprecedented circumstances aside, adapting to market changes is not a new concept in business. While the turbulent nature of a pandemic economy is sure to cause drastic shifts in global markets, similar disruptions have occurred throughout history and will continue to occur as technology advances, competition emerges and consumer trends or circumstances change.
Working in the creative industry, my agency has met these challenges with countless brands over the years. Through market research and competitive analysis, our team focuses on combining innovative thinking with data-driven solutions to reimagine brand strategy and promote growth.
We’ve found that brands that focus on implementing a flexible strategy are better able to respond quickly when faced with market disruption. To increase your longevity, ensure that your brand strategy prioritizes innovation. When faced with obstacles that are beyond your current capacity, a flexible brand strategy can allow you to persevere through transformation.
Meeting Market Demands
When market demands shift dramatically, whatever the cause, it can become crucial for brands to make monumental strategic changes to survive in the long run. A complete transformation of the business model is sometimes necessary to fulfill the new market demands. In the current climate, many businesses have had to make major operational adjustments to comply with social distancing requirements. Restaurants, for instance, have had to completely refocus and lean heavily on delivery and carryout services to stay open. Although for some, this may be a temporary shift but was necessary for the long-term success of the business.
In normal economic conditions, a brand may still need to consider transformation simply because their products or services no longer satisfy the needs of consumers. At its core, transformation is all about identifying the functions of the business that are no longer working or are lacking potential and then determining the most successful path forward for the brand. A dual transformation that fundamentally changes the brand’s form and substance can often prove to be the most effective strategy to affect lasting and meaningful change.
Issues such as environmental responsibility can have a significant impact on market demands. This concern has caused many companies to feel compelled, and sometimes even pressured, to adapt to be more environmentally friendly. In its time of financial struggle, Danish Oil and Natural Gas took advantage of this shift in the market to launch a complete business transformation, shifting from black to green energy. Having renamed itself and invested in offshore wind-power technologies, the company’s net profits have soared, and it is now the world’s largest offshore wind company. As you can see, by embracing a transformative strategy, a brand can be better prepared to make crucial business decisions.
Encountering challenges can spark the kind of innovative thinking that drives a brand toward new growth. The recent necessity of remote working, for example, has been a considerable adjustment for a lot of businesses. While some brands were equipped to make the transition without much interruption, it has presented a significant challenge for many. Businesses that provide services relying on in-person interaction have had to think creatively to adapt to the new demand for virtual service. For example, by using video conferencing software to offer virtual classes, yoga studios have been able to reach a wider audience. Although at first it may be an obstacle, changes in market demands can inspire brands to expand their reach.
Netflix is an excellent example of a modern business that has found success through transformation. The growth strategy consulting firm Innosight last year ranked Netflix as the top brand that executed a strategic transformation — based on its new growth, repositioning of the core business model and overall financial performance. In the last few years, Netflix went from being just a distributor of digital content to being a leading streaming service providing original content.
So what led Netflix to embark on this transformation? Recognizing the fierce competition unfolding between streaming platforms, Netflix strategically set its focus on becoming a “passion brand” that produces original, award-winning content. In doing so, Netflix was able to strengthen its value to consumers and set itself apart from its competition. Since prioritizing this initiative, Netflix’s revenue has roughly tripled and its stock compound annual growth rate has increased by over 50% annually. The company exemplifies how brands can pivot their business model to overcome market challenges.
Finding A New Strategy
Although it may not be feasible to prepare for every eventuality, adopting a more agile strategy can allow a brand to respond immediately to disruptions and implement necessary changes. A business model based on a sprint methodology, for example, can help accelerate a brand’s strategy by dividing a project into smaller and more achievable phases that can be completed quickly. This approach gives a brand greater flexibility to pivot its strategy and make transformations when faced with challenges.
Moving toward a more agile business plan begins with creating a culture of innovation. Encouraging creativity and forward-thinking within your brand allows everyone on your team to feel comfortable with experimenting and bringing new ideas to the table. This fluid strategy leaves room for you to try new techniques and explore the possibility of transformation. By tracking your progress over the course of a short sprint, you can analyze the outcomes of your changes and evaluate whether the initiative is worth pursuing.
A complete business transformation can be a daunting undertaking, but it can give brands the potential to discover new growth opportunities that may not have been possible under the previous business model. As markets continue to shift, it is paramount for brands to have the flexibility to evolve their strategies when necessary. Without this flexibility, brands may not be able to withstand challenges in the long run. Executing strategic transformation can give businesses the opportunity to thrive in the face of any market challenge.
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Author: Goran Paunovic, Forbes Councils Member