5 Lessons from Business Leaders during Uncertain Times
The Covid-19 pandemic unleashed suffering on a global scale not seen in our lifetimes. As if waves of sicknesses and death were not bad enough, businesses everywhere were rocked to the core, resulting in job loss and economic hardship. And it’s not over. But amid the turmoil, some businesses fought hard to emerge from 2020 as strong or even stronger than they were before the pandemic changed everything. Here are their stories, and the lessons we may learn from them.
1 Take Care of Your People: Raising Cane’s Chicken Fingers Rallies through a Hard Times
Todd Graves saw the storm coming. Graves, the co-founder and CEO of fast-food chain Raising Caine’s Chicken Fingers, followed the spread of Covid-19 in China before the virus was news in the United States. He read about lockdowns happening to contain the virus. He quickly grasped the potential impact of Covid-19 on his business. So he and his management team went into crisis mode even though there was no crisis to react to yet.
The executive team canceled a scheduled management retreat to celebrate its five-year plan and started to change how the chain operated. Raising Caine’s quickly implemented CDC guidelines for social distancing and placed an “uber-intense focus” on sanitizing every location, as discussed in QSR magazine. Managers were trained on how to conduct team meetings in socially distanced fashioned so that operations would not be disrupted. Fortunately, most Raising Caine’s locations have drive-through service. So the company changed the focus of its marketing to put a full-court press on its enhanced safety measures and its drive-through service.
Almost all Raising Cane’s 500 locations stayed open and did a thriving business. Thirty-three non-drive-thru locations temporarily closed, but Graves kept employees in closed locations busy sewing masks and supplying local hospitals amid a mask shortage.
Raising Cane’s purchased sewing machines and supplies for the group. Two teams worked in shifts to comply with the company’s social distancing procedures. They created more than 600 masks in their first week and upped production to 100 a day. The mask sewing initiative gave employees in closed restaurants a sense of purpose as they gave back to the community. And beyond those efforts, Raising Cane’s launched fund raisers to help frontline workers in hospitals putting their lives on the line to fight the pandemic.
All the while, Graves refused to furlough or lay off any of the 23,000 workers.
“Our mantra then was no crew member left behind,” Graves told QSR. “I wanted the team that went into this pandemic to be the team we come out with. And so we’re going to work like heck to get through it.”
Initially, the chain suffered a hit as the pandemic upended our lives. Sales were down as much as 30 percent. But by late April, they had returned to pre-pandemic levels even as other restaurants struggled — a stunning turnaround.
This was a story we all needed to hear in the early days. Raising Cane’s gave us hope and put its people first.
2. Sense and Respond: Amazon, Target, and Walmart Ascend to Greater Heights
Some businesses prospered during the pandemic. You know three of their names: Amazon, Target, Walmart. All of them crushed their quarterly earnings announcements throughout 2020 and enjoyed all-time valuations on the stock market.
Why?
All three of them benefitted from the rise of the stay-at-home economy, in which people increasingly bought what they wanted from their sofas. Amazon already had a lock on ecommerce, and both Target and Walmart wielded an advantage with their curbside pick-up capabilities. People who preferred to order groceries, clothing, and housewares from their homes, then pick them up without leaving their cars, chose Target and Walmart. As a result:
- Target’s curbside pickup service sales jumped by more than 700% during its fiscal second quarter.
- Walmart’s eCommerce business jumped 97 percent year over year, partly because the popularity of curbside pick-up services.
- Amazon just kept powering through, showing 37% year-over-year growth for the third quarter ended September 30, 2020.
Were they in the right place at the right time? No. They prospered because they know how to sense and respond.
Target and Walmart had been steadily building ecommerce services and curbside pickup over the past few years. They both saw the rise of a mobile consumer who preferred the immediacy of driving to the store but didn’t have time to go inside to make their purchase. When the pandemic made many people frightened to shop inside stores, curbside pickup served Target and Walmart well.
Amazon, building off its already strong ecommerce operation, had made a major investment in its own delivery capability, including its own air cargo fleet. The move triggered a war with FedEx and raised questions about whether Amazon had overreached. But as retailers struggle with maxed out supply chains in the 2020, Amazon seizing control of its own destiny now looks smart and forward-thinking.
In addition, by building out its cloud computing service, Amazon Web Services, Amazon positioned itself well when stay-at-home living in 2020 caused a surged in online usage. Amazon Web Services is the backbone for digital platforms ranging from Facebook to Netflix — a $10 billion business.
Amazon, Target, and Walmart aren’t standing still. Amazon continues to expand in to industries as diverse as advertising and healthcare — both leveraging Amazon’s ability to mine its own customer data to deliver personalized services and products. Target is doubling down on its in-store experience by opening Ulta beauty stores within a number of Target locations, anticipating a return to more in-store shopping in 2021. Walmart is also stepping up its own healthcare services and recently announced the launch of a fintech startup.
Leaders always think ahead — during good times and hard times.
3 Act with Purpose: Netflix Invests in Racial Justice
Netflix put its money where its mouth is.
As the world erupted with protest over racial inequality in 2020, businesses sought to have a voice. Many responded with gestures of support on social media. Others took action, and Netflix was one of them. In early June, Netflix CEO Reed Hastings announced that he was donating $120 million to support scholarships at Black colleges and universities. On June 30, Netflix announced it was allocating up to $100 million of its cash holdings into financial institutions and organizations that directly support Black communities in the United States. As reported in The New York Times, the action would help Black-owned lenders inject more capital into Black-owned businesses.
It turns out Netflix had been planning the capital reallocation since April. The New York Times reports that the company’s decision makers were influenced by book “The Color of Money: Black Banks and the Racial Wealth Gap,” by Mehrsa Baradaran, a law professor at the University of California, Irvine.
Netflix’s financial commitment reflects the company’s culture in other ways. For example, Netflix’s marketing arm Strong Black Lead, is committed to hiring people of color and supporting their voices. (Read more about Strong Black Lead here.)
Netflix’s actions point to a bigger role that businesses have to be purposeful, a major news theme of 2020. Corporate accountability to society really took hold as the Covid-19 pandemic spread. In March, According to a recent Kantar study of the public’s attitudes about COVID-19, more than three-quarters (77 percent) of people surveyed said they wanted to see brands talk about how they’re helpful in the new everyday life. And 77 percent wanted to see brands to inform consumers about their efforts to face the situation. Meanwhile 62 percent of people around the world surveyed by Edelman said that their country would not make it through this crisis without brands playing a critical role in addressing the challenges. Then, in June, the conversation turned toward race. An Edelman survey revealed a widespread public outcry for businesses to take a lead tackling racial inequality. Sixty percent of Americans surveyed by Edelman said that businesses must speak out publicly against racial injustice. Sixty percent said that brands need to use their marketing dollars to advocate for racial equality and to educate the public on the issue.
But businesses were not always sure how to take a stand. After Nike published an ad condemning racism, economist Scott Galloway took the company to task for over-emphasizing a message over taking action. He called on more businesses to focus on deeds, not words. Netflix was all about both words and actions.
4 Be Nimble: Airbnb Rebounds
Airbnb was on the brink of collapse. Under CEO Brian Chesky, the company had built one of the most storied brands in the digital age by creating a network of property owners willing to rent homes to travelers. Airbnb had become so successful that it was threatening the established lodging industry without owning a single hotel. It’s no exaggeration to say that Airbnb helped invent the modern-day sharing economy, in which people profit by sharing their assets for a fee. But Airbnb was like traditional lodging industry in one important aspect: Airbnb and its network of entrepreneurs needed people to travel and book lodging. And as the pandemic took hold, travel had practically ground to a halt. Overnight, bookings plunged. By mid-March, Airbnb saw $1.5 billion in bookings vanish.
Airbnb’s stellar trajectory was halted. A planned initial public offering was out of the question. Chesky laid off a quarter of his staff, slashed expenses, and sought capital to keep the business afloat. Things did not look good as the weeks went by. Even as people emerged from lockdowns, traveling was not popular.
Or was it?
In fact, Airbnb’s data scientists noticed something happening: people emerging from lockdowns were traveling. But their preferences had changed. Instead of looking to fly to cities and stay in tony urban locations — a mainstay of Airbnb’s revenue — travelers were looking to rent homes in smaller locations within 200 miles of their homes. People were ready to get out of their homes and travel. But they wanted to rent entire homes instead of sharing them with other people (and risk contracting the Covid-19 virus), and they wanted to drive, not fly. So as reported in The Wall Street Journal, the company quickly changed. Airbnb redesigned its website and app so that its algorithm would showcase travelers interesting locations such as cabins.
Incredibly enough, by July guests were booked stays at the rate they were just before the pandemic crushed the travel industry. By December, Airbnb had recovered so fully that it launched a successful IPO after all.
“People are now discovering small towns, small communities,” Chesky said. “They’re discovering national parks, falling in love with the outdoors, and realizing they can go to all sorts of other places. This is an irreversible trend.”
And Airbnb was ready to capitalize on that trend.
Airbnb needed to do a lot more than reposition itself to short term travelers in order to survive the tumult of 2020, but listening to its customer data and adapting were essential. In 2021, Airbnb says it appeals to a new type of traveler — people redefining their staycations, traveling in small pods of families and friends, or visiting different towns with an intent to relocate permanently. You can be sure Airbnb is adapting to them, too.
5 Be Bold: Disney Saves Its Future
It’s quite possible that “pivot” is the most overused word in 2020, used to any business that adapted during the pandemic. But Disney really did pivot its business, and may well have saved it.
It has been painful to watch the COVID-19 pandemic crush Disney’s fabled parks and resorts. In September, Disney announced it would lay off 28,000 employees across its parks, experiences and consumer products segments. Disney blamed prolonged closures and capacity limits at open parks for the layoffs.
On November 12, Disney reported its first annual loss in 40 years, and declining attendance at its parks had a lot to do with that decline. Disney said that the pandemic cost it $7.4 billion in operating income in the fiscal year, and $6.9 billion of that loss came from theme parks and experiences division.
But by November, Disney had already made a very important move to change course. On October 12, Disney reorganized its media and entertainment divisions in order to focus on streaming content, namely its wildly successful Disney+ platform. Kareem Daniel, the former president of consumer products, games and publishing, would now oversee the new media and entertainment distribution group, responsible for content distribution, ad sales, and Disney+.
In an announcement, Disney said that its “creative engines will focus on developing and producing original content for the Company’s streaming services” — meaning that Disney’s creative teams, ranging from Pixar to Lucasfilm, will be all-in to support streaming, focusing on Disney+, Hulu, and ESPN+, all streaming brands owned by Disney. Meanwhile, a newly created Media and Entertainment Distribution group under Daniel would be responsible for monetizing and distributing that content.
Disney didn’t wait for its restructuring to change the way it operates, either. In September, Disney bypassed movie theaters in the United States and released its feature film Mulan on Disney+ (while distributing the movie in theaters internationally). Mulan received mixed reviews and lackluster box office receipts globally. But as Kay McGuire of Screen Rant discussed in an analysis of Mulan’s financial results, Disney+ was a lifeline for Mulan.
And on December 25, Disney skipped theaters and released Pixar’s animated movie Soul on Disney+.
These were big-time moves, but they did not emerge from left field. In 2019, Disney had already laid the groundwork for its newfound focus on digital content — first, by taking ownership of the popular Hulu streaming service, and then by launching Disney+. Hulu gave Disney an instant streaming audience of 28 million (at the time) and a prestigious content library with popular titles including The Handmaid’s Tale. Disney+ gave Disney an arm to unleash its powerful library of content, including the coveted Marvel franchise, as well as new titles such as the wildly popular The Mandalorian, which tapped into the eternal appeal of Star Wars.
Little did Disney know that a global pandemic would trigger a massive shift in people’s entertainment options, from going to the movies to streaming them. By the end of the 2020, Disney+ subscribers had grown to 86.8 million, and Hulu paid subscribers had grown to 36.6 million.
And the financial results reflect the increase in subscribers. In its earnings announcement, Disney said that its Direct-to-Consumer and International division, which includes streaming, had generated $4.85 billion in revenue, up 41 percent year over year.
Disney knows where its near-term future is: streaming. And so it doubled down. And its stock value, incredibly enough, increased even as its theme parks continued to struggle.
Disney demonstrated an eternal truth about industry leaders: when times are tough, the make bold moves. Disney’s digital-content first approach was reflected elsewhere in the entertainment world, too, most notably when Warner Brothers said it would release its entire slate of movies on the HBO Max streaming platform as well as in movie theaters.
These are hard times. Businesses that want to survive them can learn from Disney.
Looking at 2021
In 2021, we see glimmers of hope for a sustained rebound from the ravages of the pandemic. The travel industry as a whole is showing some signs of life. The live events business, crushed by the pandemic, could return as early as the fall of 2021. Much uncertainty and hardship remains. But new stories will be told and lessons learned. Stay tuned.
