Back Issues 11-20

LONG TERM SURVIVAL AND GROWTH STRATEGIES DURING A CRISIS.

Dzingai Katsamba

Innovation and Technology, Davinci Institute of Technology, South Africa

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Prof. Paul Singh

Research, Davinci Institute of Technology, South Africa

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Abstract

Background: Innovation has proved to be a messy process during turbulent environments - hard to measure and hard to manage. Most people recognize it only when it generates a surge in growth. When revenues and earnings decline during a recession or crisis, executives often conclude that their innovation efforts are just not worth it. Maybe innovation is not so important after all, they think. They may even think that their teams have lost touch. Most executives would even think that it is better to focus on the tried and tested than to waste money on untested ideas. The global Covid-19 pandemic has left many leaders grappling for survival as most organizations are suffering from acute financial hemorrhage. The question is, whether innovation is important during economic turbulence and what strategies are best for long term survival and growth during a crisis.

Purpose: The purpose of this paper is to produce a framework which helps in the understanding of the extent to which business model innovation can be used to capacitate multinationals in South Africa and beyond to develop strategies which can enable growth and survival in a volatile environment like the Covid-19 pandemic. The outcomes of this provide a tool to ensure survival and growth in subsequent volatility. 

Results: Models generated show that an organization will have an increase in revenue, an increase in profit, a return on investment, a return on equity, a return on assets and positive bottom-line if organization innovation is implemented. Survival and growth will be possible through process and product innovation, flexibility, creativity, combining and mutually adapting technological knowledge. The recognition of organisational innovation as a necessary activity for business will also ensure sustainability. If the organization does not align its strategies and activities to organizational innovation, then failure is imminent. This stagnation or reduction of revenue may lead to the closure of the business if it fails to cover fixed costs for a protracted period. 

Methods: Financial indicators were used as predictors of survival and growth if leadership, OI and BMI are used with their associated factors. To evaluate the relationship between the constructs OI, leadership, and BMI toward survival and growth, a series of discriminant analysis models were estimated. The constructs survival and growth consist of different financial indicators, including revenue, profit margin, return on investment (ROI), return on assets (ROA) and earnings before interest, tax, depreciation and amortisation (EBITDA). Models were run to optimize model fit. The standardized canonical discriminant functions which were used were significant and the correlation coefficients were high. 

Conclusions: The findings from the literature, the qualitative and quantitative outcomes, lend credence to the effect that organizational innovation will help companies to survive and grow despite volatility in the environment.

Key words: Organizational-innovation, leadership, business-model-innovation, crisis, volatility, survival, growth.