Reinvent the buffet — don't let it eat your strategy

This article was first published on L.A. Biz. Journal on June 4th, 2020.

“How do we reconcile recovery planning with our pre-pandemic strategy?” is a question I hear often these days. While some sectors have been hit harder than others, I believe that executives across the board should be looking for ways to reinvent.

Recovery is how you hedge a risk; growth is all about how you imagine

Souplantation closing permanently demonstrates the hard hit food services businesses have taken. That’s understandable: Diners are wary of mass contamination from high-touch surfaces. But if consumer behavior has changed, does that mean consumers don’t want buffets anymore? Or would they still like the buffet experience, but in a manner that could offer less exposure? These are the questions executives should be asking.

In some cases, change was needed even before COVID-19 hit, and the pandemic provided a shove in one direction or another. For a long time, I have been talking and writing about how every business is a technology, data and platform business that needs imaginative leadership.

The retail industry as a whole has seen mass consolidations and closures — and not just because of COVID-19. Often, a lack of adaptability is to blame. So for stores that were already on the decline, it’s not surprising that COVID-19 has had such a strong effect.

I believe retail will continue to reveal the forefront of consumer expectations. It’s all about how companies adapt, reinvent and deliver. For example, to compete with the growing e-commerce prowess of Amazon and Walmart, Target recently acquired technology assets from the same-day delivery service Deliv.

The entertainment industry is another sector at a crossroads. Consider Netflix, which may as well have built its business model in anticipation of a pandemic. In 1998, Netflix started doing online DVD rentals, and it released on-demand video streaming in 2007. Apple, on the other hand, got a bit trapped by device strategy. Steve Jobs introduced Apple TV in 2007. But it was unclear for some time whether the device would be a steaming platform or if it was meant to enhance home internet of things applications.

Fast forward to 2020, and the streaming buffet is alive and well with Disney+, Hulu, YouTube Premium, Netflix, Amazon Prime Video and Apple TV+. While streaming services have likely seen an increase in viewers because of the COVID-19 outbreak, some TV networks have taken a hit. For example, live sports came to a grinding halt — and so did sponsorship revenue.

Big tech’s entry into healthcare is changing both access and research and challenging traditional players. Apple has the Apple Watch; Walmart has opened primary care centers; and Amazon has made a foray into telehealth. These companies have far more reach and holistic data on consumers than the average healthcare company. So when you combine that with their innovation on interfaces, the result is a service that is reimagined. In addition to these big companies, there are many other startups innovating to reimagine healthcare services.

We can’t talk about hard-hit industries without covering hospitality and airlines. Both are dependent industries, meaning that they depend on physical presence, capacity and tourism demand. Hitting revenue goals while reducing capacity in restaurants to preserve social distancing is on many managers’ minds. We could start to see rationalization of properties through sell-offs or acquisitions. Destination hotels could also start to create local-based offerings.

Airlines mostly have themselves to blame for their financial woes. Using their profits to buy back their own shares has clear implications in a downturn. It is clear that it will be a long while before the volume of travelers returns to the pre-pandemic level. Recovery is how you hedge a risk; growth is all about how you imagine. Frontier Airlines bet, incorrectly, that customers would pay to keep the middle seats open on flights, while other airlines considered it common sense. How will they keep their buffet going?

So, how do we approach reinventing the buffet?

1. Keep in mind that customer needs and customer behaviors are two different things. I will feel a need to sit down for an experience meal at a restaurant, but my behavior — how I go about doing that — has changed. So it is critical to build your strategy around the need first and then apply the behavior aspect.

2. Complete stakeholder views matter. In a classical strategy, we would go with “where you play” and “how you win.” To build recovery-based growth, it’s better to start with understanding the expectations of stakeholders. These must include employees and communities.

3. Validate your pre-COVID strategy with customer needs, behaviors and stakeholder expectations. If you can’t win with everyone involved, you aren’t even playing the game.

4. Don’t be a single-industry thinker, and don’t make it a single-industry play. No company has ever reinvented itself by behaving like a single-industry company. Learn quickly. Take inspiration from ideas from other industries, and bring them to your customers. In this process, you’ll also discover new customer segments.

5. Critically examine your leadership deck at all levels. Leaders who lack imagination pose the greatest threat to your future. Companies fail when leaders can’t imagine a future that’s different from the past.

Buckminster Fuller, the American architect, systems theorist and futurist, offered strong advice for how we can approach strategy today: “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”