Two years ago, writing on these pages, we discussed the reinvention of business strategy. We remarked that conventional forms of strategic thinking were becoming redundant “in a world in which the slow and the predictable have surrendered to the swift and the uncertain”.
Amid the devastating and still-unfolding consequences of COVID-19, this issue has been thrown into sharp and extremely uncomfortable focus. The swiftness and uncertainty of today’s events might be described as in many ways unparalleled.
Traditionally, as we observed, businesses planned for the future by analysing strengths, weaknesses, opportunities and threats. But now the future has arrived with the most jarring abruptness – and it’s a future that the vast majority of companies never envisaged.
As a result, for small businesses in particular, the way ahead suddenly no longer revolves around a meticulous analysis of pros, cons, rewards and risks. Instead it boils down to determining as quickly as possible how to survive, recover from and acclimatise to an extraordinary and all-pervading market shock.
For many, ultimately, this is a matter of understanding where their value really lies. Will salvation be found in the power of a brand? Are assets likely to come to the rescue? We would argue that the most effective weapons, not least during a period of exceptional churn and change, are a company’s core competences and dynamic capabilities.
Agility in the face of disruption
What are the factors likely to distinguish those that make it through the crisis from those that fall victim to it? Since we’re interested in small businesses, let’s contemplate the potential responses of football clubs; in particular, the relatively modest clubs that exist beyond the realm of six-figure wages and nine-figure transfer fees.
Like almost every sport, football has been hit hard by the measures introduced to contain and combat COVID-19. The game itself will endure, but the overwhelming likelihood is that many clubs won’t.
Some could do nothing, thereby placing themselves in grave danger of collapse, while others could hunker down and bid to ride out the storm, perhaps relying on cutbacks or bailouts or a combination of the two. Neither of these approaches demonstrates an especially firm grasp – if any at all – of the importance of core competencies and dynamic capabilities, so where might we find evidence of the desired outlook?
In fact, even the pre-pandemic history of the beautiful game is dotted with examples of such thinking. Take carbon-neutral Forest Green Rovers, now routinely billed as “the most sustainable football club in Britain, probably the world” only a decade after teetering on the brink of financial ruin; or Brazil’s Madureira Esporte Clube, whose shirt sales have skyrocketed since an image of Che Guevara was added to the team’s kit to commemorate a tour of Cuba.
Although an element of luck might occasionally be involved, such dramatic turnarounds generally stem from institutional agility in the face of disruption. They illustrate what can happen when an open-minded, fleet-footed organisation is willing to reflect on what it already does well and, crucially, what it might do differently.
Support for the long term
Even during lockdown, business schools can help new and growing companies cultivate this kind of perspective. At Nottingham University Business School’s Haydn Green Institute for Innovation and Entrepreneurship, for example, our Entrepreneurs in Residence have been assisting the many nascent firms associated with our Ingenuity Lab.
Our recent Creativity in Crisis podcast shows what can be achieved. We communicated advice and shared best practice around issues such as adaptation, financial management and maintaining commercial relationships – all concerns that the ongoing impacts of COVID-19 have uniquely crystallised.
We believe that skills and knowledge, like the core competences and dynamic capabilities that they can underpin, are for the long term. It’s worth noting that the same can’t be said of unprecedented government intervention, which, though in many respects commendable, begs the uncomfortable question of what might happen when the apparent magicking of money out of thin air comes to a jolting end.
Business is an inherently Darwinian affair, and the harsh truth is that many companies are doomed to fail. There are serious risks attached to the propping up of zombie enterprises whose taxpayer-funded support, however long it lasts, might eventually obstruct the development of more productive replacements.
Sadly, such businesses will inevitably blunder into another crisis soon enough. Moreover, left to their own devices, they will fail. By stark contrast, those companies that try to comprehend what it really takes to remain relevant in a swift and uncertain world should greatly – and deservedly – enhance their capacity to survive and thrive.
Simon Mosey is a Professor of Entrepreneurship and Innovation and director of Nottingham University Business School’s Haydn Green Institute for Innovation and Entrepreneurship (HGIIE). David Falzani MBE is an Honorary Professor at HGIIE and president of the Sainsbury Management Fellowship.