Pivoting Your Product Line for the Greater Good: Lessons from New Balance, Dyson and Others
It is no longer uncommon for companies around the world to cease production on the products that made them famous in favor of manufacturing tools needed to fight COVID-19.
Since before the virus was declared a global pandemic, companies were shifting gears to meet the exploding need for formerly commonplace objects like hand sanitizer, protective face masks and disinfectants.
“The demand is so great, that we’re not prepared for the supply,” said Gretchen Hover, co-founder and managing partner for Imbue Partners, in a recent webinar conversation with Pragmatic Institute instructor Diane Pierson. Gretchen works closely with many medical, pharma, biotech, medical device and related companies, and has seen first hand how quickly the demand outgrew their supply.
That’s where companies from around the world have stepped in, pivoting their product lines for the good of the public over their own bottom line. While many large corporations are donating money to fight the virus, it’s the companies that have jumped in to manufacture much-needed products from their own resources who are making a real difference.
From Footwear to Face masks
It might not seem like a natural fit, a footwear giant like New Balance stepping into the medical equipment field. What gives them the right?
“Anyone has the right to be in this space,” Gretchen said, “whether it’s New Balance who’s now jumped into creating masks because they’ve got the materials.” And they do—New Balance is using a combination of materials available on-hand from local suppliers to make their face masks. They’re even using surplus laces from their running shoes to the straps on the masks1.
“They’ve got a plant in Maine. They’re right here in Boston. They’re made in America,” Gretchen added. According to an article by Forbes, the Lawrence, Massachusetts, factory began production on face masks on March 30 and took less than a week to get fully up and running. The Norridgework, Maine, factory is scheduled to be up and running by April 10. Between the two locations, New Balance hopes to produce 100,000 face makes per week.
“They’ve stopped making sneakers and they’re making masks on two or three shifts a day,” Gretchen explained in the video. “And they’ve been able to manufacture and send many to New York City, kind of the epicenter of this.”
Dyson Tackles the Ventilator Shortage
Leaders around the world are calling on their larger manufacturing companies to help meet the growing need for more ventilators. And these organizations are answering the call.
Take Dyson in the UK. In addition to their impressive lineup of vacuums and hair dryers, they’re now making ventilators. The company has designed an entirely new ventilator in just 10 days, which can be manufactured quickly and efficiently 2.
The transition between vacuums and ventilators seems like less of a shift than New Balance’s face masks, but there is a great deal more riding on the success of Dyson’s ventilators. Getting them right is critical to the survival rate for many COVID-19 patients, as the upper respiratory virus can make it extremely difficult for people to breath in severe cases.
Being able to see what has been done before in the creation of ventilators is no doubt one of the reasons why Dyson has been able to create his own version so quickly. Other areas aren’t as lucky, especially in the pharma and biotech fields due to the proprietary nature of their work. “What would be incredibly helpful is if our scientists [...] had access to what has failed,” Gretchen detailed. “[The] things that have not worked would stop, [and it] would probably accelerate [the production process] by years if they didn’t have to hunt and peck and possibly rerun trials and rerun tests and research that other groups already know don’t work.”
Alcohol and Perfume Turn into Hand Sanitize
Though most medical professionals will tell you that washing your hands for a full 20 seconds is the best protection from COVID-19, sometimes that’s just not an option. But with the hoarding and shortages of hand sanitizer around the world, people are risking their health every time they interact with the outside world.
Who had access to a steady supply of ethanol and other types of alcohol? Perfume companies and distilleries, that’s who. Companies of every size in the perfume and alcohol spaces are stepping in to help with the worldwide shortage of hand sanitizer.
Massive organizations like LVMH—which owns luxury brands including Louis Vuitton, Fendi, Christian Dior, Moet & Chandon and many more—is turning its perfume factories toward manufacturing free hand sanitizer gel in large quantities, according to its website3. They’ve been able to produce twelve tons of sanitizing hand gel, and distribute it across France in just a week.
Breweries and distilleries around the world are using their alcohol to make hand sanitizer as well. The CDC recommends using hand sanitizer with at least 60% alcohol in it to kill COVID-19 germs. Atlanta-based distillery Old Fourth Distillery is making hand sanitizer with 95% ethanol, which more than meets the CDC recommendations4.
Benefits and Risks of Pivotin
For businesses, it all comes down to dollars and cents.
Most of the companies who have pivoted their resources away from their primary products and towards helping out the world at large are doing so free of charge, or at deeply discounted rates. Dyson is donating 5,000 of its new ventilators to the world for free. LVMH is giving away vats of hand sanitizer to French hospitals. Local distilleries are handing out hand sanitizer, or offering it at very low costs.
But what are the risks of doing this?
Well most obviously it’s the effect on revenue. Depending on how much of their resources (supplies, labor, etc.) are being used in this humanitarian effort, companies working in support of the cause could greatly impact their revenue.
Sure, right now people aren’t buying as much as they were before. So these companies may have already been taking revenue hits. But what about when we enter our new normal and the demand for those products rebounds? Will these companies have enough supply to meet the new demand?
On the other hand, what are the benefits of pivoting to help the world?
The goodwill brand recognition that these companies will face for standing strong and helping out in this time of crisis will be exponential when we reach our new normal.
The market is going to remember which companies donated their products, their time and their money to help fight this virus as it ravages the population. And they are going to feel loyal to those companies they feel directly impacted their lives during this time.
If history is any indication, the medical professionals—along with their family and friends—will become Dyson fans as a way to thank them for building and donating those much-needed ventilators.
Those who receive New Balance’s masks will remember that name the next time they go looking for shoes.
Anyone who uses the hand sanitizer made by LVMH or a local distillery will be a brand loyalist for years.
And they will tell their friends, who will tell their friends, and on and on it will go.
Of course, to get those rewards, a company must be in the financial position to ride out this kind of pivot. And certainly not all companies can do the kind of wholesale change talked about here. But everyone should be looking for ways to support the first responders, the frontline and those in need. The investment in each other now will pay real dividends to all.
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