In the face of Covid-19, resilience has become the most significant buzz word in the global business landscape. Widely defined as “the ability to recover from setbacks, adapt well to change, and keep going in the face of adversity" every single consulting firm and think-tank has released a framework or toolkit for assessing a company's level of preparedness to survive shocks and thrive amid pandemics, severe economic downturns, and protests. What many of these models have overlooked is the role that inclusion plays in ensuring that a company can withstand and even thrive in the face of shocks.
Through my work across Africa and my role on global boards, I have observed that the companies least affected by the health, economic and social shocks that have emerged as a result of the Covid-19 pandemic are those that already had inclusive business models. A more in-depth assessment reveals two critical components of their inclusive business models which have set them apart and ensured that they survive and thrive:
First, they had invested in local sourcing from smallholder farmers and had built strong local ecosystems composed of small and medium-sized enterprises (SMEs) to support logistics and other aspects of their operations. As a result, despite the increasing levels of protectionism and restrictions in global trade, their businesses faced minimal production disruptions. For example, Nigerian Breweries Plc. (Heineken) benefited from its decades of investment in local sourcing of sorghum and cassava starch, instead of dependency on imported malted barley, and its relationships with local SMEs. The company worked directly with smallholder farmers and provided logistical support, ensuring raw material availability to keep its factories operational. Even small and medium-sized enterprises like AACE Foods, which I co-founded, experienced increased demand for its bulk spices and seasonings from large fast-moving consumer goods customers in May and June 2020. Many of these institutional customers faced challenges importing bulk spices from Asia during the lockdowns and were compelled to explore local sourcing opportunities. The AACE Foods team rallied its local supply chain of farmers and aggregators to meet these new orders efficiently.
Second, these businesses had invested in developing products and services to meet the needs of customers at the bottom of the pyramid (BoP). They had also built out extensive distribution channels to ensure wide-spread availability. These prior investments ensured that they could retain their customers and benefit from strong sales growth during the pandemic when many other competing products were considered unaffordable. Given the rampant job losses and declines in remittances which affected the purchasing power of many households, these companies even gained new customers during the crisis. For example, Godrej Consumer Products Ltd, prioritised innovation over many decades to produce a range of high quality and affordable personal, home, and hair care products in India, Indonesia, South Africa, and many other emerging economies. Its wide range of pack sizes and strong local distribution networks enabled it to meet the needs of its BOP customers for affordable soaps, hand wash, and home insecticides, in the face of a health crisis.
Researchers have cited statistics that indicate that 43% of businesses never reopen after a disaster, and 25% of businesses that do, fail within a year. We can only expect more human-made and natural disasters linked to climate change, future pandemics, economic shocks, and social crises. However, our businesses' ability to withstand these shocks hinges on the choices that we make as leaders today. Indeed, our decision to invest in inclusive business models hinged on local sourcing, innovative BOP products and services, and distribution strategies that engage and serve low-income populations, will not only strengthen business operations but also ensure resilience and our long-term survival.