During the recession following the 2008 financial meltdown, Travis Kalenick and Garrett Camp launched Uber, creating an enormous new category of on-demand transportation. Stewart Butterfield built Slack and a new category of virtual workplace collaboration.
Venmo, Instagram, Pinterest, WhatsApp – all were founded amid that recession.
The economic cliff we’re going over today is making 2008 look like a bunny slope. And it comes bundled with the worst human catastrophe in generations. The way we live and work is going to change faster than any of us have experienced. If you’re running a business, the only certainty is that whatever problem you’re solving today – whatever category you’re in – will be different in six months.
Of course that’s harrowing. But whether you have an ongoing business or are building a new one, this is not a time to be paralyzed. You have a choice: stick to business as usual and pray you stay relevant...or think through how the world will change and what new problems will need to be solved.
Sequoia, one of Silicon Valley's top venture firms, told its portfolio companies: “We suggest you question every assumption about your business.” The firm went on: “In some ways, business mirrors biology. As Darwin surmised, those who survive ‘are not the strongest or the most intelligent, but the most adaptable to change.’”
So, if your old concept is over, what would you do now?
Well, here’s one thing NOT to do: don’t run after the obvious. As we say in category design, it’s tougher to enter a category some other company has already established and claw for market share than to find a new category to define and develop.
So, for instance, we can all guess that teleconferencing will stick and become a huge business – but Zoom is that category’s winner now, already positioned to exploit the trend. Unless you can offer a truly different approach to the problem of how to meet virtually, you’ll always be playing by Zoom’s rules – and that’s a bad position to be in.
Similarly, yes, streaming TV services will probably come out of this bigger than ever – but are you going to take on Netflix?
Instead, look at what’s likely to be different when this is over through the lens of what you do now and what you know about the markets you serve.
Then ask: what new problem will consumers or businesses have that they need solved? If you can answer that, you will see an opportunity to create a new category of product or service.
What’s likely to change? The best anyone can do is speculate. But consider some of the possibilities:
- No doubt U.S. healthcare will change radically. This crisis will drive debate about universal healthcare and adoption of virtual healthcare. Everyone from the government to consumers will be willing to try new solutions now that the inadequacies of the old healthcare system have come into sharp relief. That will open up enormous new problems to solve – i.e., new categories to create.
- New opportunities will open in education, now that colleges have canceled entire semesters and finished classes online. Families are questioning why they’d spend $50,000 or more a year for a traditional college education when it can be done via video for a fraction of that cost.
- If finances get devastated by a coronavirus recession, needs will change for individuals. Banking, credit, loans – all will look like new problems that need new solutions.
- If we all hunker down for months, whatever was left of physical retail will get wiped out and will have to start anew. If you could reinvent physical retail from scratch, what new categories of business might you discover?
- What happens if all the people fleeing major cities decide not to go back? A whole generation has moved toward cities. The next generation may decide to stay away from them. How does that change what people want and need?
- The impact of this crisis on supply chains will be profound as borders close and nations go into protective positions. “All of these supply chains are changing,” Shulamit Kahn, economics professor at Boston University, told Yahoo Finance. “We’ll be sourcing materials more from our own countries.” The implications will reverberate through every kind of business and create new problems to be solved.
There’s a more meta problem a company could solve: how to help other companies react quickly to change. So many companies will need to ascertain the impact of the coronavirus and react to it. That will create new categories of business to speed up product development and address new needs faster than competitors.
Ultimately, these are enormously unpredictable times. But that’s an even more compelling reason to rethink your business and your category – to blow up your strategy and look at it fresh. Yes, hunker down, make sure your employees are safe, do what is right – but then take the time to think through the new opportunities ahead. (And like everyone else, we’ve had to rethink how we do things. Now we’re doing virtual category design workshops on Zoom.)
“I think the next generation of amazing companies will be invested as we come out of this,” Mark Cuban, billionaire entrepreneur and owner of the Dallas Mavericks, told Yahoo. “Someone will have a unique and compelling vision of what the world on the other side can look like that will make us all wonder, ‘Why didn’t I think of that?’