Why and How Societal Crises Give Rise to Extreme Growth Outliers: A Theory of External Enablement

Abstract

“Crises do not necessarily mean gloom and doom. They can provide opportunities to do things differently and better,” von Briel explained. “If you want to be able to seize the moment and benefit from crisis, it’s important that you make sure that your operations are flexible, expansible, and distributable.”
Flexible: “You’re able to use different types of resources. Let’s say timber is suddenly not available, or at least not in the quantities you need, then you switch to fiberboard, or vice versa, to keep your manufacturing going,” von Briel said. “You’re able to flexibly integrate and leverage resources to your own advantage and for your own growth.”
Expansible: “You find ways to replicate your operations relatively easily and at low cost. That allows you, on the one hand, to grow if there’s increasing demand for your offerings, and it will also allow you to use these additional resources that might become available due to crisis. Otherwise, your growth will be more constrained. Let’s say there’s suddenly way more timber available, but you only have one manufacturing plant; you can’t take advantage of that.”
Distributable: “You need to find ways to get to your customers relatively easily, independent of where they are, and likewise, you take advantage of resources or assets that become available, independent of where they are.” Uber Eats showed the benefits of flexibility, the authors wrote in “Why and How Societal Crises Give Rise to Extreme Growth Outliers: A Theory of External Enablement.” “This food ordering and delivery platform was able to realize a 54% year-over-year order growth during the COVID-19 pandemic. When lockdowns and reduced public activity led to a global change in needs, Uber was able to flexibly reallocate workforce resources from their ride-hailing business to the Uber Eats arm to respond to these changing needs. Uber Eats was able to flexibly allocate food deliveries to different types of vehicles, and it was able to expand its services beyond restaurant deliveries in response to the changes in consumer needs because it could flexibly open its delivery platform to grocers and other third parties.” Alibaba, which gained 50% more members and 300% more listings during SARS, showed the benefits of expansibility. “When Alibaba launched in 2000 with the aim to connect Chinese manufacturers with US procurement teams, the Internet was still in its infancy, and e-commerce adoption was relatively low,” they wrote. “However, this situation changed when SARS broke out in March 2003 and international procurement teams canceled their trips to China. Many Chinese manufacturers suddenly had vast overcapacity and few options to reach potential customers abroad, while U.S. procurement teams lost access to suppliers. This suddenly turned Alibaba’s expansible e-commerce platform into a viable alternative to face-to-face interactions. Because Alibaba was able to dynamically expand the functionality and architecture of its platform, it was able to add 4,000 new members and between 9,000 and 12,000 new listings daily.” Birds Eye illustrated the benefits of distributability. “While frozen food had already existed for a long time, consumers had shunned it because of its perceived lower quality,” the authors wrote. “However, nationwide surges in demand for easy-to-prepare meals—due to more women entering the workforce and the military’s need for tin creating shortages of canned foods—and the U.S. government increasing the legitimacy of frozen food by requiring fewer ration points than for canned options, provided a fertile ground for Birds Eye extreme growth. That is, Birds Eye was uniquely dispositioned to capitalize o