A time of great innovation is loading. Where will it find you?
A year ago, I discussed Pret a Manger on this page. The super-successful London sandwich chain serving office workers, with more than Sh 100 billion in annual sales, had just been whacked hard by the coronavirus.
It suffered its lowest footfall on record and had to make a third of its employees redundant. As offices hollowed out, Pret’s customers disappeared from all its prime locations. Its business model, one that had served it so well for years, crumbled in months. It needed a massive emergency loan just to stay afloat.
And yet, I declared here that I thought Pret would be just fine. Twelve months later, what’s the verdict? Well, its shareholders have just pumped in additional funding to help the chain double in size. It aims to recruit 3,000 more staff and open many more stores. This, after suffering a year in which its sales more than halved!
How has this happened, and why was I (reasonably) sure it would? Because Pret has a history of both smart innovation and superb execution. A pandemic doesn’t wipe that out. It merely requires a rapid reset in the business model. As Pret’s CEO declared last year: we used to follow the skyscrapers; now we will follow the people.
And so I expected Pret to follow the market to where people need their food, rather than where they work. It has been agile enough to do this. It is offering a range of supermarket products and delivery-only items; it has opened up in regional towns and new countries; it is offering a coffee subscription service. Digitally originated sales now account for 40 per cent of revenue. Much of the projected growth will come from moving to a franchise model, rather than own stores—because Pret is investing in people and software now, rather than in bricks and locations.
But please note that no amount of fancy pivoting works if you don’t have this fundamental strength: that your customers have strong bonds with you. In the restaurant trade, that means they have to love the taste of your food, first and foremost; and they have to have additional layers of appreciation for your service.
Who will not bounce back from the pandemic? Those whose customers had only weak, transactional attachments to their offerings. I know this to be true as a customer: throughout the crisis I tried to make sure I supported those retailers, restaurateurs and suppliers I did not want to see go out of business. I’m sure you did, too. Relationships matter in business, and relationships are based on trust in each other, value received and given, and emotionally positive interactions. If those things are missing in your business, then no one will help you get through tough times.
The wider lesson is two-fold: invest heavily in the fundamentals of your business (the attractiveness of your offering); and be ready to dance afresh. Stay agile. In these unpredictable times, any number of pitfalls and pratfalls await you. If you are stuck in your traditional ways, I fear this epoch will unseat you.
The most far-reaching waves of innovation often follow global crises, and some of the most exciting companies are born in troubled times. COVID-19 led to a fascinating experiment run at speed, when billions changed the way they move, work and consume. Those who will thrive as we emerge from this most testing time will be those who have observed their customers most deeply, and made an educated guess on which consumption patterns have changed permanently, and which were only a temporary adjustment.
Remote working. Rebooting of office space. Home entertainment. Home delivery. Local sufficiency. Online learning. Healthcare capacity. Seamless digital payments. Cybersecurity. Data management. Digital user experiences. AND: a return to good old-fashioned human gathering and mingling. All of those things are going to boom big, and they will lead to a wave of new investments and new skillsets.
Some of those will be phantom trends; others will be permanent ones. No one can predict those details for you; all anyone can do is make educated guesses. Are you sitting with your teams to make those guesses? Are you studying the shifting sands in your industry? Are you getting ready to try new things in new ways?
Every business of substance I know is doing exactly that. The aim is to be the leader of the new normal (whatever shape that might take), rather than the ones with rigid joints groaning to change shape.
Unfortunately, business history also suggests that most players are (a) caught napping when trouble strikes; (b) lost in short-term tactical adjustments rather than long-term strategic ones; (c) unable to actually execute any rethinks and resets. They lack both the imagination and the necessary relationships with their employees, customers and shareholders.
Don’t let that be you.
(Sunday Nation, 10 October 2021)