Organizations should make use of its resources by applying the “4A Model” to – 1) Assess their potential and the readiness of their capital, technology and people; 2) Alleviate impacts to extend the life of their business by adjusting their expenses and finding backup sources of funds; 3) Adjust their products and services to meet customers’ demand and use data to study customers in order to survive a crisis; and 4) Augment their strengths by investing in technology, hiring capable personnel and expanding customer bases. The 4A Model is an effective remedy for businesses to survive the new wave of COVID-19.
The latest novel coronavirus outbreak in Thailand is raising grave concern. Since the new wave started in late March, it has delayed the recovery of the Thai economy and small and large businesses have lost income opportunities. Without any adjustment to minimize negative impacts, businesses can be less competitive against rivals after the crisis. Therefore, organizations must take careful steps in their operations. They must know when they should take a break and plan the improvement of their systems as their business is facing high risks of suffering the impacts of the crisis. Then they can resume their investment with their greater potential when situations start to improve.
1. Assess Potential and Readiness
The first step that businesses should take for their survival is to quickly assess their potential and readiness in 3 areas to find out if they can survive the crisis that they are facing with their existing resources.
- Capital – Firstly, organizations must assess their cash runway or the length of time in which they can continue operating without revenue. They must also examine their monthly costs (burn rate) in both the best-case scenario and the worst-case one to set the cut-off at which they will adjust their business strategies which can be downsizing, finding additional funds etc.
- Technology – Organizations must immediately assess the potential of their existing technologies and then adopt new ones to create operational flexibility and cut operating costs. For example, organizations can use cloud computing or Software-as-a-Service to considerably cut costs in comparison with investment in on-premise software and hardware. Apart from saving costs, this also helps organizations avoid difficulties in the installation and maintenance of systems. Importantly it creates convenient working conditions because systems are connected to the internet and users can work anywhere and anytime.
- People – Organizations should evaluate the competency and skills of their personnel to ensure that their human resources can support the long-term growth of their business. Organizations should upskill and reskill their personnel who can then handle competition after the crisis. For example, personnel should have creative and innovative skills, analytical skills and adjustment skills and should be ready to learn new things. With the human resources development, personnel will increase not only their capabilities but also their attachment and loyalty to their organization.
2. Impacts to Extend the Life of Business
The reduction of operating costs to keep cash for as long as possible is a key solution for businesses to survive a crisis. Organizations will have more cash to better alleviate impacts. They should do this while looking for new sources of capital to cope with unexpected situations.
- Cost Resilience – Organizations must immediately cut unnecessary costs. It is important for organizations to change their fixed costs, which are mostly long-term costs and do not generate revenue, into the variable costs which will not happen unless there is revenue. By this means, organizations will have more chances to survive. For example, organizations can outsource specialists to supervise projects to reduce the employment of permanent staff. They can find business partners to cut operating costs at some stages of operations. Organizations can even apply cloud computing or Software-as-a-Service (SaaS) to cut technology-related costs.
- Sources of Financing – Businesses should look for new sources of financing or participate in the projects that financial institutions implement to cushion negative impacts including soft loans and small business loans. Also, businesses should consider their worst-case scenario to work out effective strategies to protect themselves.
3. Adjust Business to Survive Crises
COVID-19 changes the behaviors of consumers and decreases purchasing power. Therefore, businesses must make adjustments to guarantee that customers will continue to choose their products and services. Businesses must use data science to identify the potential and major groups of customers. This can increase the chances of success for their business and marketing communications plans.
- Demand Alignment – In a crisis, customers change their spending behaviors, have weaker purchasing power and look for the products and services that are well worth their money. Therefore, businesses must adjust to retain their revenue opportunities. For example, product prices can be reduced to attract customers and prompt them to buy at once. Also, marketing campaigns can be organized to inform customers of the new products or services that better meet their demand.
- Data Analytics – Using big data, businesses can improve their strategies. They can analyze target groups and effectively plan marketing budgets especially for different groups. With data analytics, businesses can identify the target groups of customers with purchasing power, forecast their sales accurately and develop the products that truly meet the demand of customers.
4. Augment Operational Strengths
When a crisis improves and purchasing power starts to be restored, the businesses that have enough capital and operational potential should invest in technologies, necessary infrastructures and highly capable human resources to gain competitive advantage faster than rivals. Business organizations should also augment their strengths by looking for new sources of revenues. They can target new groups of customers and the groups that already have demand for the like of their products and services but are loyal to the brands of competitors. Businesses can present the ‘selling points’ that will win these groups of customers. The businesses that are not ready to invest in all the mentioned areas simultaneously may first invest in the area that will best boost their potential and then gradually expand their investment to the rest parts to strengthen their operations.
- Customer Extension – Apart from retaining an old customer base which is likely to be a permanent source of revenues, businesses also have to find new customers by presenting unique products, services and privileges through the marketing communications channels that are effective and reach target groups of customers directly such as personalized marketing and email marketing. Business organizations must increase their market shares by attracting new users and convincing the customers of competitors to buy their products and services instead.
- Reinvestment – Businesses with high potential should quickly invest in necessary infrastructures and technologies to increase advantages, value and competitiveness after a crisis. Businesses with rather limited potential may first invest in what can best enhance their efficiency. The good of investment at this moment is that its opportunity cost is lower than investment in a normal situation.
- Workforce Planning – Businesses should plan their reorganization by increasing quality personnel who will be ready to work with their highest efficiency and agility right after a situation improves. Therefore, organizations should plan to recruit high-quality personnel to do the tasks that suit them. This will be a main engine to create their sustainable growth. There should also be plans to expand the capabilities of employees in various fields.
A key to overcome crises is readiness to successfully adjust to changes. By this means, businesses will be able to solve challenges and feel a minimal impact. Besides, businesses should make use of or take opportunities from the New S-Curve for their promising future because in every crisis lies opportunity. If businesses are able to learn and find solutions, they will certainly see the opportunities that will be their way out amid a crisis.
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