How a drag queen made me re-evaluate Covid-19 response strategies
Never have I felt the core tenet of neoclassical economics ring truer than in this current chaos — that changing supply and demand shifts equilibrium.
Market supply in some industries has ground to a halt. Where businesses have managed to pivot effectively, it has gone through the roof, and we have seen consumer needs refocus in unexpected directions (ref. toilet paper shortage).
Firms need to quickly understand the risks and opportunities driven by fluid supply and demand dynamics, many of which will endure beyond the crisis.
The huge effects of these shifts can be exemplified by even the most simplistic business models. Consider Tarek (@tarekkhwiss), my local dance teacher, part-time drag queen and someone who has adapted inspiring quickly to Covid-19. He used to teach a few classes a week in a studio. Within a handful of weeks of the outbreak, he had taught his routines globally online, judged a dance competition in Brazil via FaceTime and leveraged the social media “challenge trend” to start a viral TikTok dance, increasing his exposure.
His business model has transformed. Having once simply received cash for in person dance classes, he now posts tutorials from his living room. This has the knock of effect of lowering operating costs, removing the cap on the number of “attendees” and allowing the implementation of a tiered online subscription model. Old IP (tutorials), previously redundant once taught locally, can now be continuously resold globally online. Simply put, although his usual channel of work has dried up, his pivot has transformed the cash flows of his business.
His key competitors have been affected by this shift. Although he is competing with the supply of online classes from dance teachers worldwide, he has entered new markets. He is now a substitute for a fun home online workout. If we were in the early 2000s, his classes would be competing with a Wii Fit and a Dance Matt (can someone younger than me please insert the modern-day equivalent…). His passion for promoting self-love in class, often quoting his tagline “Be you, be free, be fabulous!”, makes him a competitor for some wellbeing apps, whilst his online class subscriptions could be given as a gift or be seen as an alternative to an entertainment platform like Netflix.
Hidden pockets of demand for his services have been highlighted by his change in business model — his Instagram story reposts have been peppered with people stating they never would have been brave enough to attend a workshop in person. Similarly, old clients will have failed to convert to the new format.
In sum, Covid-19 shifts have changed the business model, competitor landscape and composition of demand for one of the most simplistic businesses out there. Imagine how it could be changing yours…
What should you do?
I strongly encourage business leaders to evaluate the demand and supply changes affecting them using the below statements as guidance.
1. EVALUATE. Businesses need to understand how COVID is affecting demand and supply within their market.
Are there any changes in consumer needs and lifestyles affecting demand composition? How do you prioritise these market needs? How can you quickly and easily validate these changing needs? Have firms entered or left your market? Are these changes in demand and supply persistent?
2. PLAN. Businesses need clear strategies for how they will respond to both immediate and persistent changing market needs.
How can you develop your offering to best address market needs? What changes in demand do you need to invest in meeting for the long term? Does pivoting mean you are competing in new markets? How well placed are you to compete?
3. EXECUTE. Businesses need to respond the demand changes as quickly and as cost effectively as possible — cash is king during a crisis and markets are changing fast.
How can you test your pivoted offering before launching to ensure you investment will be a success? Can you form any partnerships to enter a new market cheaply and easily? How will you use social listening to help optimise launch messaging and timing?
Sia Partners’ Growth and Innovation team are focused on ensuring firms thrive and survive during Covid-19 by helping them understanding how they may be being disrupted and how best to respond. The team is specialised in innovating firms at speed by applying a no-nonsense, outcomes focused approach to problems.
We want to help as many firms as possible through this crisis. If you would like some informal advice or a friendly sounding board to bounce ideas off, please do get in touch at lucinda.goldklang@sia-partners.com.
My next article showcases the best pivots in the market and key learnings you can apply to your own strategy. It can be found here.
