By Carmen Amelia Lozano Cadena and Fernando Pereira Laverde
Unexpectedly, COVID-19 impacted all companies, large and small. Regardless of size, companies are needing to adapt to a new context that requires us to transform the way we work. Were they prepared for these inevitable and irreversible changes? Some managed to take advantage of formulas to reinvent their value proposition and business model. Other companies had to close down. For all of them, the key will be to empower employees who are intrapreneurs in innovation-oriented teams.
In Colombia, the global pandemic’s impact increased unemployment and poverty to levels of 10 years ago. In our GEM 2020 Colombia Report, 47% of those interviewed stated that they closed their business because of COVID-19. Another 18% closed because it was not profitable and 9% for family reasons.
As a result, new business projects were postponed and employees with years of experience were without work. Sectors such as the restaurant tourism industry were particularly hard hit.
Companies in operation for more than 3.5 years were most impacted. Factors included:
- Lack of innovation compared to the competition: 61% of entrepreneurs considered that their product is not new; 26% that it is new in the area where they live; 8.4% that it is new in their country, and 4.4% that it is new to the world. The study recognises that in the predominant consumer sector in the country, it is more difficult to present high levels of innovation. It is also true that the gaps in digital transformation "took its toll" especially on MSMEs. Agility and differentiation are required to meet the new demands of consumers.
- Technology backlog: 62% of the entrepreneurs considered that their technologies are not new at all; 26% that the technologies or procedures they use are new for the people in the area where they live; 9% that they are new in their country; and only 3% that they are new for the world. In other words, the debt of business technological renewal had already existed for some time.
- Low profitability: The second most frequent reason for discontinuity (after the effects of the pandemic) was the non-profitability of the business, with 17.5%.
Suggested Actions for the National Government
These major challenges require policies and actions at two levels.
At the national level, there need be policies to encourage and facilitate innovation in production processes, access to new technologies and processes, access to capital and the generation of knowledge-based companies, as stated in the study.
According to a panel of national experts highlighted in GEM Colombia 2020, government policies need to account for issues related to taxes and bureaucracy and in innovative financial offerings to entrepreneurs.
Suggested Actions for All Companies
At the internal level of companies, it is important to identify opportunities that foster entrepreneurial culture and mentality. There needs to be a strengthening of skills among collaborators and innovation-oriented teams, the main protagonists of change. They need to be capable of becoming intrapreneurs with the support of company’s top management. These teams need to lead innovation initiatives with courage, commitment and measured risks to help differentiate the company, provide increased value to customers and augment business profitability. According to our GEM report, Colombia recorded a comparatively high percentage of intrapreneurial activity: 4.3%, higher than the Latin American average of 4.0% and the global average of 3.6%.
Programs that empower innovation-oriented teams and their entrepreneurial mindsets must align with the corporate strategy. These employees must continuously develop competencies and entrepreneurial skills by strengthening their knowledge, motivations and beliefs.
Thanks to tools such as the EMP - Entrepreneurial Mindset Profile - from the Leadership Development Institute at Eckerd College, it is possible to identify the skills and capabilities of corporate leaders, collaborators, students and entrepreneurs, based on an international benchmarking that takes the form of a development plan, assesses the degree to which they are using an "entrepreneurial mindset" and provides resources to take advantage of this competitive advantage. These initiatives will make it possible to change the very low intra-entrepreneurial activity in Colombia.
Companies must continously operate in VUCA – volatile, uncertain, complex and ambiguous – environments, and their most valuable learning from the COVID-19 experience would be to enforce the entrepreneurial mindset of their human capital, and to learn how to organise innovation-oriented teams to be strong enough to face any future risking challenge.
Carmen Amelia Lozano Cadena is Manager of Business Development at Comfandi and professor at Pontificia Universidad Javeriana Cali. Fernando Pereira Laverde, Professor and Associate Researcher, Director of GEM Colombia 2021, Pontificia Universidad Javeriana Cali.