The scientific community across the world has worked fast to create a COVID 19 vaccine- soon enough, it won’t be the virus that threatens businesses. What we lack is economic and social wisdom, to charter a course to come out of this.
Historian and intellectual Yuval Noah Harari say that we have already seen much worse than COVID 19. In his words- “In the midst of this pandemic, it seems like it is the biggest historical event ever. But this pandemic will pass, and with hindsight, it will look like just another event in the long history of our species. In 100 years, whoever rules our planet will hardly remember this pandemic (just as we barely remember the Influenza pandemic of 1918).”
While human hindsight may be kinder and more forgiving, 2020 and the lingering effects of COVID in 2021 have had a severe economic impact on local economies and communities. Supply chains have been disrupted and there have been devastating consequences for community groups. The employment of millions of youth and workers in the informal sector came under threat.
A new business structure that can weather storms
The economic vulnerability exposed by COVID-19 calls for a more resilient business structure based on local economic development for all-both in terms of offering inclusion as well as resilience and sustainability.
The pandemic offers an opportunity for intense introspection-
What is the real purpose of business?
How can we look beyond the ecosystem of customers, employees, business partners, and shareholders?
What has emerged is a business model that encourages-
De-centralized control: This reduces costs significantly. In times like Covid, such systems are like earthquake-proof buildings which survived the shocks better.
Speedy implementation: As businesses go digital, speed is the new competitive advantage. Ideas are no one’s monopoly, the one who implements faster, implements better is likely to become the market leader.
Long-term evaluation horizons: Companies must rethink the need for relentless quarterly and annual evaluation horizons that compromise long-term resilience.
The franchising ecosystem is an excellent example encapsulating the above.
Globally, franchising has always been associated with increased growth, income, and employment at the community level. Franchising is a combination of entrepreneurial zeal and a large ecosystem from which each entrepreneur benefits. This asset-light business model is here to stay- for the following big reasons:-
Axiom 1: Franchising comes after the business experiences success.
The franchisor has learned what works and what doesn’t, made adjustments, tried a variety of strategies, tested and re-tested. Finally, they have documented results, put a system in place, and want to grow. This is when they open a few franchises. Naturally, there’s a safety net provided to the entrepreneur.
Axiom 2: Franchising involves systemic innovation
An IBM-Oxford study, titled ‘Entrepreneurial India’, states that while the market evaluation of Indian startups has grown in the past four years, 77 percent of the venture capitalists believe they don’t have unique business models. Lack of innovation is the main reason for these business failures. At the very heart of franchising is systemic innovation, pooling together the resources of many entrepreneurs. This is a compelling competitive advantage.
Axiom 3: Community based prosperity
Franchising is based on shared resources, leading to the benefit of each franchisee partner. It’s a classic system that provides security for the individual entrepreneur.
The above axioms are over and above obvious ones like training, procurement, and subject expertise. If we are to truly adopt #VocalForLocal, then every Indian must partake in this shared prosperity.
Just as COVID-19 fast-tracked digital transformation (for business survival) I foresee an uptick in the adoption of franchising. Business leaders who can seize this opportunity will mitigate the pain for employees, consumers, shareholders, suppliers, and communities.
(The author of the article is the managing director of Jumboking India. )