2020 has overall been disastrous for many companies. Heavy disruptions in supply chains, reduced demand, limited access to cash : the list of economic woes the pandemic has brought upon businesses is so long that some wonder if the economic damage doesn’t outweigh the health impact. And yet, a few companies are breezing through the storm. Who are they, and what is their secret?
The Sun is Shining on a Handful of Sectors
Virtually every online training platform has benefitted from the pandemic, as part-time employees are using the newly-available time to invest in their careers. Simultaneously, employers are encouraging their employees, during periods of slow activity, to increase and hone their professional skills. Because face-to-face training is hampered by sanitary regulations, companies which primarily operated on that mode have taken a hard hit, whereas their digital counterparts have recuperated their market shares, and then some. Economist Cathy Li writes: “Lark, a Singapore-based collaboration suite initially developed by ByteDance as an internal tool to meet its own exponential growth, began offering teachers and students unlimited video conferencing time, auto-translation capabilities, real-time co-editing of project work, and smart calendar scheduling, amongst other features. To do so quickly and in a time of crisis, Lark ramped up its global server infrastructure and engineering capabilities to ensure reliable connectivity.” Virtually all players on the digital training market have seen a sharp rise in their traffic, with the only challenge remaining to upgrade their available infrastructure on time to absorb the wave of new business.
Also, with restaurants targeted first-hand by the restrictions, food-delivery companies have received new orders, by the boatload, from the skies. This market boost is not limited to multi-billion companies such as Uber Eats, as mid-sized businesses like GrubHub have also enjoyed it. Market analyst Levi Sumagaysay writes: “Chicago-based Grubhub, which is being acquired by Just Eat Takeaway TKWY, 0.20%, a European company, is also reporting increased business. The company said it had 30 million active diners in the third quarter, a 41% increase from the year-ago period, and its $493.9 million in revenue was 53% more than a year ago.” Restaurant owners have scrambled to find stop-gap solutions to the life-threatening situation and have re-established contact with their customers through delivery companies. Clients, on the other hand, are eager to use the food-delivery service as both a continued comfort, and a way to support local businesses they know are in deep trouble.
But if the pandemic was a windfall for a few chosen, it was also a challenge.
Avoiding the Stretch Marks of Growth
The rapid shift of activity to the digital sphere was a challenge to many companies. While the arrival of numerous customers towards companies which were already operating online was indeed a windfall, it came with its load of burdens. Such a quick influx will compel the growing company to adapt its strategy, expand its staff, and re-calibrate virtually every parameter it operates on, which can put management to the test and the strategy to task. Draftkings, a mid-sized sports online betting operator who went public during the pandemic, saw its share price plummet shortly, before the situation could be stabilized and secured by management. Stock analyst Louis Lehot writes: “even the best-laid plans can land in the rough. DraftKing and Nikola had massive run ups after initially completing their SPAC mergers. DraftKings dipped as low as $10 a share and is now trading near a high of $50 a share.” EV-designer and wannabe-builder Nikola, which went public roughly at the same moment, was unable to save the day like Draftkings and was consumed by its own growth.
Keep Calm and Carry On
Despite the heavy disruptions, some companies seem to face the storm with calm, trusting the robustness of their supply chains. French banknote printer Oberthur Fiduciaire is one of the world’s main providers of currency for central banks. The pandemic has proven itself a test of fire, which Oberthur’s supply chain is passing. Industrial relationships in this sector are characterized by exceptional levels of trust. On the other side, similar levels of trust are shared with Oberthur’s clients, the central banks – otherwise, they wouldn’t entrust the French secure printer with such a confidential task. The Strategist writes: “Printers have an existential requirement to think about their partners’ supply chain needs first. If they act without consideration, they can lose a contract. By being transparent about their processes, printers provide central banks the confidence that they need to develop strong working relationships and make good on statements about their own supply chain commitments. This is another way that the fiduciary industry functions as a key partner to central banks.” Oberthur may draw additional confidence in the coming years, with the fact that countries will increasingly be in need of symbols in the future, to heighten the population’s sense of togetherness in these trying times. Banknotes are known to be just that: cultural symbolic markers of identity and achievement, through which populations can feel as if they belong to a group. Finally, the extreme technicity required to operate on the banknote market made Oberthur Fiduciaire develop years ago Bioguard, an antiseptic coating treatment for its products securing its banknotes to guarantee them as bacteria and virus-free, throughout their cycles, which has been successfully tested against Covid19.
Companies who have seen their fortunes improve under the pandemic can thank Lady Luck, or themselves for their resilience and creativity, but probably a combination of both. A chuck of luck will amount to little or nothing without a solid strategy to meet and exploit it, and if the business was not standing on firm feet before the pandemic. Another market turn is to be expected, when the restrictions are lifted: some businesses will have long-lastingly crossed a bridge, while others will return to normal, or die out in the wake of the slump.