The Impact of Covid 19 crisis to the economy of experiences is huge and devastating

The Impact of Covid 19 crisis to the economy is huge and devastating, the sudden decline in economic activity is unprecedented. In these notes I will describe how businesses respond to crises in general and what type of businesses will have an extremely difficult time, owing to a downturn in demand combined with government protocols and regulations, changing consumer behaviour. Which business will not be able to survive and will go bankrupt, what businesses will survive, and what businesses will thrive.

In times of crisis new priorities are set, values are scrutinized, and what needs to change right now. Crises can shake loose and tear down frozen structures.

In crisis, conventional administrative theory often breaks down. In times of great uncertainty it becomes impossible to manage an organisation from the top. Decisions have to be made close to the action, by empowered people without normal hierarchical controls. So if the organisation is not run by a senior authority figure, it is run by the culture of the organization. Suddenly, the quality of the culture matters a great deal. (Robert Quinn)

What are the usual responses to crises? We identify three main kind of responses;

1. Active pursuit, keep doing what you are doing with even more effort and wait and see what happens; This will mean Slow death;

2. Survival; Immediate relevant response to the situation;

3. Deep change; rethinking your business, rethinking your core values and your value proposition, rethinking your capabilities, your culture and leadership and your revenue model.

Impact on the Economy of Experiences

The kind of businesses that are immediately affected are the businesses that are bounded to their location and time of service, and by their business model are mostly found in the Economy of Experiences;

• The visitor economy, Tourism, Hotels, Travel, Airlines, Airports;

• Restaurants, Bars, Catering businesses;

• Meeting & Conference & Event industry

• Cultural events, Theatre, Music, Concerts, Musea;

• Retail in shopping streets, shopping malls, warehouses;

• Traditional Education and schools;

• Facility providers;

• Public transport

• Sport & fitness clubs

• Contact businesses; Fysio therapists, beauty salons, hairdressers

• Marriages are reduced to 50%

By the time of writing some European Countries are slowly releasing their lockdowns, (In the Netherlands we have an intelligent lockdown, with an appeal on the responsibility of citizens to stay at home).

Businesses at a pause

What we have seen so far, for some businesses the activity has completely stopped because of the core primary processes are not allowed anymore by governmental health regulations. If these businesses, mentioned above, are not being to shift the main part of their business online they will have a very tough time and will eventually have to close down, go bankrupt, unless they will receive financial support from their government.

Survival mode, businesses with a twist

Some businesses quickly responded, tweaked and twisted their business process adequately and sometimes drastically because they had to. Consider schools, where higher education managed to put their teachings onine within days. Now British pupils are receiving lessons from celebrities as David Attenborough and Sergio Agüero. (Remote schooling). Many restaurants, even Michelin restaurants like Rijks (Rijksmuseum Amsterdam) changed from food serving in their restaurants, to food collection and food delivery. The famous Noma (Copenhagen) is now a hamburger restaurant. With a strong focus on collaboration with local suppliers and local support, they are evoking a sense of community as never felt before. Collaboration and co-creation support the changes; like local initiatives of a culinary journalist to organise food and drinks goody bags with local food and wine suppliers.

Of course they needed to learn new tricks and capabilities to put their menus on line and adapted quickly their distribution skills. Some of these restaurants were able to come to a break-even in their costs and even achieved a small profit, often reaching out to not only their existing but also to new target. They showed their guests to be able to respond quickly to a changing demand. If you show that you are able to respond fast to the changed situation you receive long term loyalty from your local community and clients, possibly even beyond your traditional clientele.

Retailers like Oger, a high quality fashion supplier in the luxurious P.C. Hooftstraat, immediately after the intelligent Dutch lockdown took the following interventions;

• Virtual Shopping by video call;

• Private Shopping to the max of 2 clients;

• Online discount during the lock down till April 28th;

• 1 Hour delivery service within the Amsterdam area.

• Online shopping coach in the web shop;

In terms of relationship they clearly care about their customers, and aptly managed to intensify their online personalisation, following their individualised customer service in a new form. I have to say that they did already good business in their web store (www.oger.nl). Another fashion retailer, closed their stores, then created private shopping by appointment and now opened their stores again within a limited time frame from 12-17.00 hours. By this adaptation manage to do reasonable business on the Friday and Saturday, while during the week days there are hardly visitors in the street (their online business is marginal, so there is room for improvement here).

This is also the case with other stores that stayed open, In fact there are hardly any clients during the week in the shopping areas.

Businesses with a higher purpose

What could you do to create a sacred space and help meet the needs of others?

A meeting and conference organiser Rotterdam Ahoy fell into a deep hole with a complete emptied calendar of events (e.g. European Song Festival) and contributed their exhibition halls to create an emergency hospital with intensive 800 patients care beds in order to help to local health authorities to cope with the Corona crises. Also the van der Valk Hotels offered their rooms to become an emergency hospital. They use their facilities and their capabilities to another market segment. Communication is more crucial at this time than marketing. Businesses that show selfslessness are making a difference, through which they deserve and earn empathy for their brand in the long run.

Businesses that thrive

These are the Amazons, Netflix, Streaming Entertainment services, Online retaillers, gaming platforms, home delivery restaurants. (Thuisbezorgd, Ubereats). Remote professional education, Telemedicine, Online Sextoys are booming (Financial Times). These businesses that are not bound by their location and time of service and can deliver their services synchronous on demand, and they continue to do very well in these circumstances.

Values in a different context

During the Covid-19 crises we are learning how people respond for the good and the bad. Also companies in the way to respond to action with shows their real character.

We observe that the priorities of our values are changing. There is an increasing sensitivity and awareness towards authentic communication.

We are living in a time that feels slowed down. In this period we see an increased sense of reflecting to what is meaningful to us and to others. We feel anxiety and experience vulnerability. We are aware that we are mortal, that we are not separated from other countries, but rather connected with the world and its global inhabitants. We are feeling ourselves weak and powerlessness and feel we need help and guidance. We are aware of the vulnerability of our parents. This leads to big questions? What is the meaning of our life? Who are our friends? What are our priorities? What are we missing? We have witnessed that there is an end to the makeability of our society and that health and happiness can not be taken for granted.

The future of the Economy of Experiences

When we look at The Economy of Experiences in the traditional way, lots has come to a almost stand-still. It may take years to recuperate from the downfall, and we may not be able to see co-creative experiences with large crowds any time soon. At least not before we have a vaccine to the Covid-19 virus.

When we look at the future of the Economy of Experiences, we see that a movement which was already visible, is now accelerated. Where experiences in the economic sense have been successfully staged to market products and services, we are witnessing an increased search for experiences that are truly meaningful. These experiences will form the next stage where value is created. Here the field of Economy of Experiences itself has to explore its own ‘raison d’etre’ to stay meaningful. Hence, the experience designers can meaningfully contribute to not only future economic recovery, but also the deep change we need to see in business for the good, and society for the better.

The progression of Value by Experiences