PIVOTING TIME for your business? (Part – I)

The times in business are tough. Even before the lockdown happened last year due to Covid-19, the competition was intense and cut-throat. As a result the margins have shrunk dramatically for the last five years or so. The lockdown last year and again this year has further compounded the problems for a business owner. There is hardly any income, yet the daily expenses, salaries, bills, bank interest, and various taxes are still to be paid.

My brother Ankur forwarded a video of one Ganesh Prasad of ThinkSchool titled – ‘This is how Jeff Bezos’ Amazon beats your competition legitimately’. This video is by far one of the best I have seen in recent times. The beauty about this video is that it is short (11 minutes), very simple to understand and to take action accordingly.

Here is a summary for those who haven’t yet clicked on the link –

1.     Recession is the best time to start a business! That’s what – GE, Disney, Netflix and Airbnb did

2.     If you are already in business, this is the best time to beat your competition

3.     Business evolves through stages – Eg: Ice Industry

a.     Ice 1.0 – Early 1900’s. Ice was bought from Alps in winters and distributed

b.     Ice 2.0 – In 1930’s ice was started to be manufactured in factories

c.     Ice 3.0 – In 1960’s fridge or refrigerator was invented and factory was no longer needed

4.     None of the Ice 1.0 companies survived in Ice 2.0; and none of them were existent in Ice 3.0. All this inspite of them being first mover in the field. The reason – they failed to realize the pivoting time in their businesses and didn’t move on

5.     PIVOTTING time is the beginning of the paradigm shift in business, which is caused by one of the following – political reform like trade wars; an economical reform like demonetization; an environmental reform like new laws; legal reform like new policies; technological reform like FB, Instagram; or a social reform like pandemic

6.     The beauty of the PIVOT is – the customer doesn’t change, the need for product doesn’t change, the demand doesn’t change and neither does the supply change,

7.     The only thing that changes is – THE MEDIUM OF SUPPLY! Eg: Demonetization. People still bought what they bought. But the medium of payment (supply) changed from cash to digital

8.     There are only two ways to look at this paradigm shift – see as a threat or as an opportunity

9.     If you are not able to spot an opportunity in the change, it will became a threat by default

10. How do you spot the opportunity in this paradigm shift? Your company will be in either of these four segments –

a.     You have a Perfect product and supply chain – Eg: sanitizer industry in the current times

b.     The product is perfect, but the supply chain needs to change – Eg: evolution of drama industry. Drama is still loved, but the mode has changed. From the supply being on stage, it has moved to YouTube and podcasts

c.      The supply chain is perfect, but product needs to change – Eg: Indian textile industry. Since business was low, few selected ones used the same setup to make PPE kits instead of clothes and are minting money

d.     Need to change both – the product and the supply chain – Eg: Indian Tobacco Company (ITC) diversified from tobacco manufacturing into FMCG goods, Hotels, Packaging, Paperboards and Agribusiness

To sum up, Ganesh says that there are three things a good businessman should do –

1.     Always look for changing business dynamics and the pivot

2.     Once you realize a pivot, look at what you need to change in your business depending on the kind of reform that is happening (Point 5)

3.     After you are the beneficiary of the pivot, keep looking for the next pivot. It is not too far!

I will write about my journey in business for last 15 years including the PIVOT that happened in the next blog ……. (Part – II)

#Pivot #Business #Competition #Covid-19 #cut-throat #margins #lockdown