In webinars on COVID19 strategies for businesses and startups, panelists are often asked to compare and contrast our current situation vis-a-vis past crises, with questions like, “What lessons can be learned from previous financial crises? How is this crisis different?”
While this certainly has predictable economic effects, and there is much to be learned from the past, this current crisis is fundamentally different in its nature. Its nature as a fundamental threat to our physical well-being make its impact far more widespread than any financial crises. Even among viruses, its virulity and our globalised world have made its spread more rapid and intense than previous epidemics in this century.
Because of its unique nature and the scale of its impact, the crisis is overturning commonly held assumptions and expectations we have held about life, work, and our society in one fell swoop. One example is that this virus-induced crisis has been and will continue to be far more commonplace and dangerous that we’d like to believe. Because of this shift in perspective, healthcare systems can be expected to change over the next few years, as governments try to prepare for future outbreaks.
For tech startups, the relatively rapid growth of the last ten years or so, carried along by the public market’s record bull run, was an outlier rather than a norm. Now founders are faced with changes that they aren’t adequately equipped (in terms of resources) to handle. Assumptions and perspectives on the market need to change.
Being comfortable being a fish out of water
It was in Adam Grant’s TED talk on the “Surprising habits of original thinkers” that I encountered the term “vujade.” As he defined it, vujade is “when you look at something you’ve seen many times before and all of a sudden see it with fresh eyes.” And if there’s any time to be original, it’s during this crisis — when the problems we are facing demand new approaches.
It’s one thing to realize that things are changing. It’s another to adjust one’s perception to these changes. Embracing this vujade mindset allows one to be comfortable being a fish out of water. While being a fish out of water isn’t the most ideal state, it’s one that is necessary to ride out the radically changing norms. Below are some of the upended assumptions and perspectives on digitalisation, supply chain, and growth relevant to tech startups, and what can be done to embrace vujade in these cases.
Go digital to keep up
Digitalisation will no longer be an alternative, but a norm for business, as it permeates nearly every aspect of operating in a COVID19 world, from video conferencing to digital storefronts. Even after lockdown measures are lifted and a vaccine becomes widely accessible, the efficiencies (or even delight, in the case of gaming and entertainment platforms) realized from being forced to spend time online may be enough to retain users.
It will be easier to drive adoption as more people will have experience using online platforms. But setting up a significant moat with a digital solution will lose its novelty or value. Even traditional businesses with physical goods or in-person services are venturing into shifting transactions and specific processes online, as in the case of dark stores for retail or even telemedicine for clinics.
It doesn’t mean that the role of platform companies as outsiders looking in will be rendered unnecessary as industries are forced to undergo change inside out. On the contrary, there’s more room for platform companies to enable digital transformation, but it will take more than just setting up a marketplace or Uber-izing an industry.
Battle for the superior online experience
Disruption will no longer be about simply bringing people online, but making these online experiences more refined and curated. With more exposure to various online platforms, consumers and even businesses will have more defined and smarter preferences when it comes to what they want and need from a digital solution.
While the usual route is to take on cash-driven price wars to compete over users, we’ve seen from the larger players in Southeast Asia that this is not sustainable, nor does it assure the longevity of any user on the platform.
The competition will purely have to be on how well the customer is able to use the product, and whether or not it meets their expectations. This will be crucial especially in the short-term as customers will be stingier given the cash crunch many are undergoing.
This competition on experience may result in the deeper personalization of user experiences. Depending on how inefficient the distribution of these services have proven to be as a result of COVID19, platforms will seek to leverage on technology like AI and machine learning to better curate the user experience and focus on specific user needs. In Vietnam’s trucking industry, even before COVID19, LOGIVAN had already introduced AI models and algorithms to better curate shipper offers for truckers in the spot market.
While this approach to curate solutions specific to markets and users is important in operating in a region like Southeast Asia, the challenge with personalization is to still maintain a level of standardization across the platform that users can come to expect.
Operate in smaller and smaller circles
While the online experience will continue to eat up most of our day-to-day activities, many of the gears that allow these online experiences to happen at scale will remain offline. These include manufacturing, logistics, and service industries (eg food delivery).
But because of the varying responses of countries to COVID19, these industries may be operating differently and separately across markets even in the medium-term. The diversification of the global supply chain, already set in motion by the China-US trade war, will be accelerated. More manufacturing hubs will be set up to serve local market demand, as in Vietnam or Thailand. Service industries will have to come up with localized standards depending on the government response in each market they operate in.
The world will certainly continue to grow smaller with the internet economy, but smaller and smaller circles of operations will be set up within markets. This will be necessary to sustain the flow of goods as countries go on-and-off lockdowns and implement varied mitigation strategies in the foreseeable future.
Data as building blocks
In order to effectively operate under these new norms — which themselves are changing rapidly — businesses will need data, not just as a resource, but an integral part of the business operation and culture. From the new oil refined for business growth, data will now be the building blocks of the digital economy’s highways.
Because platforms will be competing on the superiority of their user experience (ie how well do you know your customers?) and markets will be localizing, setting up information flows into the company’s operation to stay on top of shifting consumer needs and market developments will be important. For many industries the data and information is already online, and it becomes a matter of setting up platforms to acquire, process, and communicate that data faster.
Having this kind of data-driven approach to running the business requires not only data, but discipline. Indonesian fintech AwanTunai’s Dino Setiawan shares that this mindset towards data needs the discipline to be transparent, even internally, about what is working and what is not working. Information is only as useful as it is interpreted.
Going back to building (and no, it’s not just about building products)
Over the last decade, especially in Southeast Asia, cash has been chasing after growth. Secure cash, then you could build (or arguably in most cases, subsidize) what you need to grow. This cash-driven growth has resulted in cases of megarounds and high valuations on top off models dependent largely on subsidies.
With COVID19, as the cash moving around dwindles down, the thought process is reversing. The crisis may have called for businesses to be lean and do some serious house repairs, but it is also calling tech startups back to building. Given the shifts in competition, data, and globalisation, companies also need to revisit the kinds of systems and infrastructure that will be needed to face a post-COVID19 world.
It’s an opportune time to focus on developing products better suited to the changing market and test them with customers who are actually looking for these products given their situations have changed. It doesn’t have to be entirely new development — it can be new ways of packaging and distributing existing products and services.
But building is not just confined to programming and engineering products. Given how tech companies in Southeast Asia have some level of offline component or network, maintaining business relationships and listening to people on the ground is important for the building to be effective.
Building can also be about culture — for some companies that have been through tumultuous internal issues, this is an opportunity to review values and routines that have defined the organization, whether these are necessary or efficient and whether they can be improved.
Building can also be centered around repairing and replacing exists elements in the organization — for example, replacing internal communication channels with more efficient ways of sharing information realtime.
At the end of the day, this kind of growth makes for companies that are better in touch with the value they create and deliver rather than valuations that are continually subject to the ebb and flow of the market.