The Corona Disruption: Adaptation is the Key to Survival
By Nicholas Folger, Theresa Treffers, and Isabell M. Welpe
The COVID-19 crisis has changed our lives tremendously overnight. It has impacted the way we live as a society, how we educate our children, and how businesses operate. Even though we experience this disruption in our lives as unique, historically, disruptions of businesses and whole industries are not uncommon. We have seen disruptions in the industrial revolution in the early 20th century and in the digital revolution that started with the commercialization of the internet in the early 1990s. Yet, the disruption of a vast amount of industries during this pandemic is something we have not experienced since World War II. Some industries, such as tourism and hospitality, sports, child care, and the whole education industry, have been hit particularly strong by this pandemic and had to transform from an almost exclusively analog to a digital industry within a few weeks. We see similar disruptions in almost all other industries, which is depicted in the fact that between 39% and 54% of all companies (depending on the federal state) in Germany applied for short-time work in April 2020, without knowing when they can go back to business as usual. Although the state has loosened several lockdown rules in June 2020, we have yet to see how the economic repercussions of this pandemic develop. It is, however, likely that Germany, and the rest of the world, will enter a recession, which will put many organizations into survival mode.
Adaptability – the key to survival for any company
Before this pandemic, strategic questions for many businesses revolved around how to further grow and expand existing business models and profits by winning more customers and by cooperating with other partners. Now during this pandemic, the most important strategic question for most businesses is focused on how to survive. As in all crises and change situations, the most important ability for organizations is their ability to adapt to the new circumstances, by adjusting their business models, organizational processes, structures, and leadership skills. We know from past organization research, that adaptability, which is closely connected to organizational resilience, i.e., the ability of organizations to survive and even prosper in challenging, unstable, and uncertain conditions, is the key to organizational longevity, even in times of crises. In this article, we outline some ways how leaders and managers of businesses can successfully adapt in times of crises and show some real-world examples from the past and from today. We show how the dynamic capabilities to sense opportunities and threats early on, to seize business opportunities even if it means cannibalizing one’s core business, and the ability to transform to remain relevant, are the most important strategic abilities needed to endure the crisis. Furthermore, we will examine how economic crises in the past have also opened up economic opportunities, how organizations are currently adapting in the COVID-19 crisis, and how they might be advised to prepare for the next (pandemic) crisis.
Prof. Dr. Isabell M. Welpe holds the Chair for Strategy and Organization at TUM School of Management. Dr. Theresa Treffers is post-doc researcher at the chair and Associate Professor in Entrepreneurship at Seeburg Castle University, Austria. Nicholas Folger is currently a PhD candidate at the Chair for Strategy and Organization at TUM School of Management.
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