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5 keys to building a post-pandemic business

August 31, 2022, 6:00 PM UTC
These themes stand out in the current post-COVID environment both for their potential impact and the breadth of opportunity they offer for business building.
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Business building sounds fundamental—and it is. But many large incumbents struggle to do it with consistent success, creating openings for disrupters to thrive.

Incumbents are keenly aware of the need to act faster and more boldly. What they often lack are rigorous processes to proactively explore what’s coming next, assess value propositions, and rapidly test-and-learn their way to new, scalable business ideas. It’s actually not about chasing the latest trend or shiny object—or reflexively rejecting anything with a whiff of hype. It’s about unlocking practical insights that guide sustained investment in scalable ideas uniquely suited to your company.

The firms getting it right think of business building as an experimentation machine that drives innovation and growth. It starts with identifying game-changing trends and thinking deeply about how they will alter markets, shift customer behavior, and create new profit pools. We see several that are gaining increasing attention, offering strong potential for business building in the years ahead. 

Circularity

What: The fundamental insight behind circularity is that waste should be treated as an asset. This includes both physical waste, which is generated during production and distribution or at the end of a product’s life, and capacity waste, the great stretches of time that most products go unused (think about the car sitting in your garage). Eliminating both kinds of waste helps companies use resources more sustainably and trim costs. But it can also offer opportunities to create new business models.

Why now: Circularity isn’t new, but it is experiencing fresh tailwinds. Consumer, investor, and government concern over climate change is pushing companies to use resources more sustainably. And geopolitical uncertainty—Ukraine and China being exhibits A and B—threatens raw material supply. Not surprisingly, this is encouraging more start-ups and large corporations to explore ways to use less and tap the potential value in wasted capacity. Companies like IKEA and Bugaboo are designing products to be more easily repairable, serviceable, and reusable. Others are exploring business models such as leasing or resale to create new consumer solutions that are both circular and profitable.

What’s working: While circular models are emerging in sectors ranging from automotive to beverages, fashion is seeing a clear spike of innovation. Catering to luxury brand consumers who buy something, wear it a few times, and move on, secondhand apparel sites like The RealReal have emerged to give fashionistas a place to monetize their overstuffed closets. Fashion houses (which have in the past destroyed unsold products to protect brand scarcity) are responding by finding ways to upcycle returns into new products or resell “preloved” items. That has spawned another site called Archive, which is working with A-list brands like Oscar de la Renta, Cuyana, and The North Face to create online marketplaces for used merchandise. Galeries Lafayette in Paris has also opened a section for high-end secondhand merchandise. 

Digital assets

What: Trillion-dollar losses in cryptocurrencies? The collapse of so-called stablecoins? Looks like the digital asset fad has hit the wall, right? Don’t count on it. Companies and investors who ignore the emergence of blockchain, or distributed database technology, do so at their peril. There’s no doubt crypto and NFTs are both volatile and rife with hype and speculation. But early blockchain applications are also providing proof of concept for the development of the key foundational infrastructure that will ultimately support broader adoption.

Why now: Blockchain evangelists would have you believe that the old Internet is being replaced wholesale by a new, disintermediated online ecosystem (Web 3.0), where everything from your identity to your mortgage is tokenized and fungible. How it actually evolves, however, is completely up for grabs. What we do know is that (depending on your industry) change can happen very rapidly. Much like the explosive growth of e-commerce or app-based services, what once seemed exotic can transform industries in the blink of an eye. As with prior paradigm shifts in technology, web3 control points are emerging, and early adopters may benefit from first-mover advantages.

What’s working: Already, companies like J.P. Morgan, Visa, Mastercard, and Stripe are investing in various blockchain use cases to fortify their leadership positions in finance. Gaming companies, consumer brands, real estate players—all are exploring how to use programmable tokens to enhance loyalty, improve product functionality, and introduce new products that take advantage of smart contracts. Alfa Romeo, for instance, is using NFTs to create transportable records for each car. The Australian Open made a step change in the world of tennis marketing by using NFTs to create an array of innovative benefits for spectators.

Metaverse

What: The metaverse is another flavor of web3 where digital assets like tokens and NFTs exist in virtual- or augmented-reality settings. Arguably, it is already here: Consider Fortnite users, who routinely engage and transact with each other in virtual environments. Full web3 functionality and truly meaningful application, however, will require maturation in the underlying technology and connectivity infrastructure. The global imagination for how to put the virtual world to work in the real world is only now waking up to the possibilities.

Why now: That said, the metaverse represents a paradigm shift in how people interact in cyberspace. It has the potential to be as impactful on our lives as the smartphone-enabled Internet has been. Like any technology, the metaverse is emerging in fits and starts. Early applications in gaming like Roblox and Fortnite may seem trivial—until you realize that real money is changing hands in these gaming environments. (Roblox alone had $2.7 billion of virtual currency purchases in 2021.) This is all to say that forward-thinking companies are already exploring what’s possible in the metaverse and how they might build businesses there. As with digital assets, first-mover advantage may be critical.

What’s working: In gaming, the Roblox community reached 9.6 billion hours of engagement in 2021, with a robust digital economy based on Robux, the game’s version of virtual currency. In entertainment, a virtual concert by Travis Scott generated $20 million, including the revenue from virtual merchandise. In retail, stalwarts like Gucci are setting up virtual storefronts and selling virtual apparel for use by digital avatars in virtual environments. Applications are also appearing in verticals like healthcare (group mental and physical therapy sessions in the metaverse) and education (virtual campuses to foster learning and collaboration across geographies).

Artificial intelligence

What: Most corporate applications of artificial intelligence (A.I.) in recent years have focused on internal efficiencies like delivery-route optimization or self-service HR portals. But that’s changing. As investment dollars continue to pour in, companies are increasingly using A.I. to create new products and services or to enhance older ones. This isn’t without controversy—ethicists and technologists continue to debate the risks and promise of A.I. But the field is growing exponentially.

Why now: Most companies these days collect more data than they know what to do with. Those that figure out how to put it to work are creating new revenue streams and, in some case, transforming industries. The time is now to be thinking strategically about what data assets you have and what new data sets you could be capturing. Can A.I. be used to turn those assets into new products and services that can scale? 

What’s working: In pharmaceuticals, AI is finding its way into all stages of drug development. According to Chemical & Engineering News, major pharma companies are partnering with A.I. specialists to build capability at the level of biology (target discovery and disease modeling), chemistry (virtual screening, retrosynthesis, and small molecule generation), and clinical development (patient stratification, clinical trial design, and prediction of trial outcomes). While approval of a drug discovered and developed using A.I. is a ways off—and some industry experts argue that targeted applications within the drug development process will likely make more sense—A.I. promises to transform how the industry develops drugs.

In automotive, Bosch is using A.I. to build a new solution that helps drivers find parking spots. The company’s ultrasonic sensors equip cars to locate open parking spaces as they make their way through traffic, even if the driver isn’t looking for a place to park. As more and more cars deliver this crowdsourced information to the cloud, A.I. analyzes it, guiding nearby drivers toward available spaces, while making sure that no two drivers are sent to the same spot or that a driveway isn’t mistaken for an open space.

The business-building principle here is universal: The data is available. How can we use A.I. to turn it into a product that improves people’s lives?

The creator economy

What: YouTube instructors, social media influencers, online product reviewers—creators are a new and complex group of stakeholders for companies that blur the lines between customer, product ambassador, and critic. They are often power users themselves and can serve as a new kind of sales channel to reach other users. They may have the power to overshadow companies themselves when it comes to influencing purchasing decisions and can sometimes become competitors. As a group, they are disrupting traditional media, sales channels, and business models.

Why now: The creator economy has reached a massive scale in the past few years—$100 billion by some estimates. One reason: Consumers are increasingly skeptical of big corporations and are seeking the authenticity of creators. That’s forcing corporations to engage these creators to drive consideration for their products and inform the innovation process. Often, that means giving up a level of control over what these creators say and do—something many large companies may find uncomfortable but necessary to protect the power of authenticity.

What’s working: Grin, which closed a $110 million Series B funding round in 2021, valuing the company at $910 million, has developed a platform that helps brands like Warby Parker, Allbirds, and Mejuri manage relationships with creators. The platform helps companies recruit creators, build authentic connections with them, and then analyze how those relationships are working. Another start-up, Pietra, has emerged to provide business-building tools for the creators themselves. The platform connects social media entrepreneurs with packaging and fulfillment resources, e-commerce tools, and suppliers. Pietra closed a $15 million Series A round in 2021, valuing the company at $75 million.

These are big secular trends that promise reshape industries. Consumer needs are changing, the technology available to meet those needs is evolving, and business boundaries are likely to be redrawn. The companies keeping pace aren’t waiting for the future to emerge in the sharpest focus. They are mobilizing now to define what’s coming next and positioning themselves to thrive.

Mikaela Boyd is a partner for Bain & Company, overseeing strategy practice for the Americas. Dunigan O’Keeffe is a partner for Bain & Company and head of the global strategy practice. Arpan Sheth is global capability leader for the vector solutions group at Bain & Company.

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