Trial By Fire: Are You Ready to Adapt in a Crisis?

by Pranav Ramesh
June 09, 2021
Trial By Fire: Are You Ready to Adapt in a Crisis?

Lockdown.

One fateful word that spelled the end for many thriving businesses around the world. The thing about a crisis is that it’s unpredictable, malleable, and ruthless. While numbers are still emerging, experts forecast that the economic downturn in the U.S. alone cost nearly $4 trillion. One report suggests that nearly 100,000 businesses have gone under as a result of the pandemic and the ensuing lockdown. And the damage is not limited to small businesses alone. Major retailers and service providers such as JC Penny, Gold’s Gym, and Hertz, have filed for bankruptcy this past year. Without a doubt, the pandemic has brought on a socio-economic crisis unlike any we have witnessed this century.

Despite these circumstances, however, other companies have managed to not only stay afloat but expand their businesses. Companies that were able to adapt to the abrupt change in circumstances and pivot to a new direction. The vacation rental provider AirBnB was agile enough to change its structural and operational processes to match the new reality. Clothing brand ASOS innovated continuously in the middle of the crisis.

History is full of examples of businesses who knew to be adaptable in a crisis and therefore survived. GM, Boeing, Apple, even the Rockefellers, have all faced and overcome major crises in their time. All such businesses share three key qualities—they studied and adapted to a changing landscape, they acted on their learnings, and they never stopped innovating.

Shift your mindset

When a major industry-wide crisis rolls over an organization, dramatic changes happen both internally and externally. Your company, clients, employees, and vendors will all be finding their own way to deal with the situation and you need to take stock to see what options are still available to you. If the crisis is large enough, like the pandemic we are currently facing, it may be time for you to take stock of the landscape as a whole. The rules of industry that existed when you started your company may no longer apply. Is your business model still viable? Are your customers and clients still capable, or willing, to work with you? Are your employees capable of working under the new circumstances?

Without a shift in mindset and a reassessment of the situation, your company cannot move in a new direction. Agility is key, as is ideating on the move and building an organization that can pivot to change quickly.

Airbnb transforms itself

A year into the pandemic Airbnb’s business was diving headlong towards rock bottom. By confining all potential travelers to their homes, COVID had brought the travel and tourism industry to a screeching halt. Airbnb’s revenue fell by 72% and quarterly losses were recorded at over $500 million. The company was forced to lay off a quarter of its workforce just to keep the lights on. For a business that depended entirely on travel, there couldn’t have been a bigger disaster.

Thankfully, Airbnb’s CEO Brian Chesky and his team kept a cool head and managed to steer the company away from the brink. They studied the lay of the land and realized that they had to make substantiate changes to their business model in order to survive.

First, they changed AirBnB’s focus from short-stay and tourism-related hospitality to home rentals. Chesky had realized early on that, “Travel as we knew it is over. It doesn’t mean travel is over, just the travel we knew is over, and it’s never coming back.”

They transformed their business model from short-stay to long-term rentals, of 28 days or more, and focused on serving customers looking to rent homes for extended periods.

Second, they took a look at customer needs and introduced flexible booking