COVID-19: Disrupting the Disruptor
By: Rajiv Tevtiya
Tags: Covid 19, Start Up, Opportunities In India, Change, Business

Photo by Gabriel Sanchez on Unsplash

COVID-19: Disrupting the Disruptor

So Covid-19 is here. And now reality is sinking in? Its not here for a short term! Enough research and debates on it already! There is a new normal been accepted. There WILL be a new normal.

Economic activities are shut and at a bare minimal level, financial packages are out. Massive job losses, companies are in trouble, be it a start-up or established one. People are locked in their houses. Things have been disrupted to the level that they will never return to what it used to be earlier. What will be the outcome of all this finally?

Be it a classical teaching of Bhagwat Geeta which states energy can’t be destroyed and can’t be created and it is just a change of one form to another. Or be it Newton’s third law of motion, every action has an equal and opposite reaction. So if today COVID-19 is destroying economies on one hand and businesses are coming under stress there must be an equal opportunity to create new businesses and transform economies or transform ourselves as an individual to achieve that equilibrium back. This is going to change the world order. We will see never before seen disruption at the levels of a country, established businesses, start-ups and at an individual level. Realization of wants vs needs is setting in. Post COVID-19 social distancing will put in new needs and large number of wants will get postponed for a long time or change permanently.

At Country Level Supply Chain Disruption:

China is one of the fastest and now world’s 2nd largest economy. In last 2 decades they have become factory of the world. Things will start changing slowly but surely post Covid-19. While there is a debate on how breakout of COVID-19 happened in China but there certainly is an anger against it. Was it an accident in Wuhan lab or in wet market (illegal wildlife trade) or deliberate! It has shaken up the beliefs at all levels. Political establishment is already putting a blame game on China and there is a huge grudge. It won’t depend on which political party or ideologies are governing the country and it won’t be just election rhetoric. Nationalism was anyways on a high and China’s non-transparent regime has only added fuel to the fire here in COVID-19. Leaders across the world have deep anguish against China as most of them believe it hasn’t played fair here.

Few countries have already started encouraging to build a no-China-way of business. Consumers will demand non China products. So China which disrupted the world by becoming the world factory will face daunting task of all global forces working against them, not overtly but covertly to begin with. Opportunities for countries like India and other south east Asian countries to capture the imagination of the world business leaders were never as strong as it is today. Can they become DISRUPTOR? Only time will tell!

Established Businesses:

Till now for them China was the solution for all their manufacturing problems. It can’t remain the same going forward. They have to reimagine this completely and de-risk the same. Here is an huge opportunity for large corporation based out of India to work on building that part of supply chain. Govt also needs to play its role swiftly. Countries which are trust worthy, democratic, strong institutional system and strong domestic demand will benefit if their regimes act on the same to welcome global corporations.

However this disruption will put companies which were running on wafer thin cash reserves in a very challenging position. Even if they survive they need to solve the China angle as lot of them were deeply dependent on China. The way consumer preference is shifting towards sustainable products and how it is manufactured, in a same way people will prefer and look for locally manufactured products or in friendly and transparent countries. Companies which will capture on this phenomenon will come out to be the disruptors. It is a BIG opportunity for manufacturing companies to scale their operation to meet global demand.

Start-ups:

There will be a wave of start-ups at least by 5x of multiples. This will give venture guys a cherry picking opportunity about whom to back, a buyers market. My take is that in start-ups which can demonstrate strong product market fit and ability to sustain will be the winner if they can also show scale possibilities. Cash guzzling business model will be a thing of past. COVID-19 is not going to one of the affairs but a cycle for significant period of time or until we find a vaccine or a treatment. This jump in start-up numbers will happen for multiple reasons.

Subdued job market and lack of opportunities in job market will lead to “what I want to do” myself phenomena among young guys to jump entrepreneurship band wagon. This will not just give birth to scalable and game changing start-ups but also to self sustainable new businesses which will solve hyper local issues. Young minds today are very creative and innovative. COVID-19 is a push for the guys who are sitting on the fence. Local problem, local solution and product oriented start-ups wave will be seen like never before. These young minds will take the baton in their own hands to create these opportunities to disrupt Indian market.

In a similar fashion certain sharing economy companies like UBER, OLA and co-working space will come under pressure. Personal Service at home by Urban Clap will come under a huge threat as hygiene and need to have complete understanding of service person will be a key challenge. Consumer won’t be looking at cheaper solutions but safe solutions instead. Similarly personal services space which had a very high fixed cost will be under pressure as they can’t service those many clients due to new norms. All this will lead to new business models around health and hygiene.

One of the massive changes which will happen is on food habits. Health will become the top priority. Your own immune system is the only thing which can fight COVID-19. This will wake-up those people who use to be eating without looking at health impact till now. So your fast food industry has to reinvent itself. 30% to 35% of the restaurants might never come back again. Health Food delivered at home with full assurance will be a key. Dine-in with social distancing and supporting cost structures will need to evolve new business models.

Agri start-ups which can find their product market fit will flourish in the changed scenarios. Here opportunities in developing world are just starting up. Agri has to be looked at not as one sector but aggregation of many.

People and consumer will drive for disruption:

All kind of people will get disrupted by this COVID-19 shake-up. Their way of life will change. Be it professional or personal life, it won’t be the same again. Belief and value system will go through a change. This belief and value system shake-up will disrupt not just individuals but also deeply impact business. Ultimately businesses will stay as long as they share common values, belief within the culture and society. Fulfilling a need in a way which creates satisfaction among communities and achieve common purpose will flourish. Business need to align their values to overall value system of the society.