Thursday, June 20, 2024

Flexible Policies Key to Recovery Following Crisis


The growth curve is never a straight line. Businesses occasionally get buffeted by headwinds, as do economies leading to faltered steps. The key is to have systems to absorb shocks during rough times, lessen the impact and enable speedy recovery.

To this end, company and national policies have to be solid enough to sustain growth during good times and elastic enough to enable swift bounce-back during crises. In other words they have to be flexible.

Following Covid-19 pandemic that has sent shockwaves across the world, the need to embed flexibility in company policies has rocketed. Enterprises cannot afford to remain rigid lest they easily break in the storm of a crisis.

There are a couple of things businesses can do to be flexible.

The first step is to have a policy that encourages elasticity in the business model based on circumstances and changing times. If the situation demands tweaks in operations, and changes to supply chains and production lines, there should be seamless structures to realign and adjust an enterprise’s model accordingly.

Further, to be resilient throughout changing business seasons, firms have to be accommodative and anticipative of completely different scenarios. They have to imagine the worst possible case scenario, including shocks that could potentially disrupt markets and operations, as has the pandemic. The end goal is to install mechanisms to minimise, manage and mitigate risks during foreseen and unforeseen crises.

The next step to making a business flexible is through strategic partnerships. By reaching out and joining synergies, enterprises get the chance to adopt from others better strategies that could be working well during a crisis without necessarily having to build the entire ecosystem from scratch. Besides ensuring continuity and sharpening competitiveness, partnerships also offer a piece of the pie to businesses that would otherwise have missed out on the identified opportunities during an economic downturn.

It is precisely why some retail stores quickly partnered with online delivery service providers in the wake of the social distancing rules triggered by the virus that has pushed up online shopping.

Similar partnerships have happened with electronic cash transaction service providers.

Partnerships allow firms to focus resources on their areas of strength, leading to specialisation, competitiveness and efficiency, which they can share with their partners in a different field and gain similar benefits through reciprocity.

A convergence of progressive business models is only possible through strategic tie-ups, which could lower costs, shorten project turnaround periods and increase efficiency.

A case in point is the off-grid solar market, a green energy space.

Partnerships and specialisation are seen as the lift force behind the rapid growth of off-grid solar market in developing nations. This model has enabled thousands of small companies enter the solar field without building everything from the ground up.

Businesses are stepping into the green energy space by simply focusing on a single component of the solar value chain. For startups, this specialisation lowers the entry barrier in terms of costs, expertise and turnaround period while allowing them to perfect their craft, leading to efficiency. For established businesses, partnerships enable them branch out into off-grid renewable energy by providing a service needed by solar practitioners, for instance telcos offering data analytics, remote monitoring and mobile payment services.

This convergence has resulted in faster production of off-grid solar lighting and irrigation devices at relatively lower costs and with a great deal of efficiency as firms narrow their focus on one aspect of the value chain.

Solar industry has evolved quickly over a relatively short period, from the earliest days when traditional solar companies pursued vertically integrated models – covering the entire value chain from manufacturing to retail.

Much as this model helped such firms gather insights across the value chain and have control over their operations, it proved too capital-intensive, with only a few deep-pocketed players entering the field.

The model has since changed and smaller and nimbler firms are joining the fray in droves, resulting in frenetic growth.

The global off-grid solar market stands at $1.75 billion per year, and lighting 420 million households, according to Global Off-Grid Lighting Association (GOGLA).

The thing is businesses don’t have to own the entire value chain. Manufacturing of solar equipment could be done by a different company, while another firm may provide software, and others doing vending and installation of the kits in a seamless chain of coexistence around the same cause – solar electricity access. The same applies to other industries.

In conclusion, elasticity of business models and partnerships hold the key to making a business flexible, resilient and sustainable.

This article was originally published by the Business Daily

Dr. Edward Mungai
Dr. Edward Mungai
The writer, Dr. Edward Mungai, is a global sustainability expert. He is the Lead Consultant and Partner at Impact Africa Consulting Ltd (IACL), a leading sustainability and strategy advisory in Africa. He is also the Chief Editor at Africa Sustainability Matters. He can be contacted via

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