DEGREE OF UNCERTAINTY: Challenges and changes in post-COVID commerce
Published on 28 May 2020
Like most business owners, Professor Di Milia is considering what the world post-COVID will look like, unravelling and unpacking the opportunities and challenges moving forward.
As the Dean for the School of Business at Central Queensland University, he maintains the university operates just like a business.
Contrary to popular belief that universities have a bottomless, government-funded money pit, the Professor clarifies that for the past three decades, the government has continually reduced funding forcing universities to find their own income sources.
“An ideal example is how we moved into the international student market. Central Queensland University was one of the first movers to adopt that strategy.
“In a regional area, it's obvious your recruitment pool for students is quite limited, so moving part of our business into the capital cities was important to ensure our own survival and growth,” he recounts.
NO MORE NORMAL
We know the entire world has been impacted by COVID, but what was the impact specifically to CQU and the broader business community?
Professor Di Milia says COVID has demonstrated how interconnected businesses and universities are, saying the impact on universities then has an impact on students' ability to pay rent and buy food, which is felt right across the community.
Specific to CQUs School of Business, he says a 25% drop in student enrolments, particularly for international students who pay slightly higher fees than domestic students, means revenue coming into the school has dropped significantly.
“However, my expenses don't drop significantly. Right now, we are in a process of re-engineering our own business to find the balance point between revenue and costs,” he admits.
The Professor adds the longer-term outlook for his business is grim as well, given most models predict the over the next two to three years, international student intakes will remain limited.
“It's not a question of when COVID ends the world will go back to normal … the world won't be normal. We have several stresses.
“Even if COVID were to vanish tomorrow, we need to wait for the economies in some of our host countries to repair themselves,” he predicts.
Professor Di Milia references an unread report claiming 120 million people were made unemployed in India in the last month.
With India being a part of the university’s prime markets, the extent that these economies can start to repair themselves will have direct bearing on CQU building up business again and having these international students return to our CQU campuses.
Adding to this challenge, is that COVID has forced CQU’s competitors to go online.
“Our competitors who weren't into online education are now pursuing online education in massive ways.
“The University of Queensland closed for a week back in mid-March, during which time they threw all their resources into turning some of their face-to-face content into an online format.
“There's no doubt there's more competition for online students. When the big players enter the market with very deep pockets, we must also find a way to uniquely differentiate ourselves from the University of Queensland or from Monash University. At every stage, we are at risk from our competitors and our market's shifting and changing,” he acknowledges.
THE INNOVATION CONTINUUM
The challenges faced by CQU ring true for every business. So how do we prepare for increased competition? How do you attract consumer attention and turn challenges into an opportunity?
In Professor Di Milia’s opinion, it comes down to innovation.
“I like to think of innovation as a continuum from doing just a micro change to your processes.
“A lot of people think innovation means you have to buy expensive equipment, which is a big capital investment, but it need not be.
“Innovation can be implemented everywhere from micro-improvement, to your operational processes, to that large capital investment.
“If you look at your own supply chain within your business and identify one way of doing it with one less step, that should translate to a cost saving somewhere and the bigger your business is and the greater that cost saving is.
“Sometimes the answers are going to sit in-between. In every step, you have got to also think about all the possibilities, or the adaptability of your business,” he advises.
Being able to use the technology we have, to reach different markets and thinking about what differentiates ourselves from the competition is vital to business survival.
With so many players now selling online education, in his business, the Professor is questioning why would a student customer want to buy their online education?
“Is it because it's got the right content? Does it take less time to consume in terms of its assessment strategy? Does it have some other added value that others aren't offering?” he questions.
Finding the point of difference that appeals to the customer is key.
“It might be that you're prepared to pick up the phone and talk to someone. In this business, we tend to hide behind a screen and work with our customers by email. I have found you get a lot better response when you pick up the phone and talk to someone.
“You're showing the students that you're real and that you're genuine. I think every customer is important and I never think that I'm too ‘special’, being a Professor, to ring the student and solve a problem with them,” he maintains.
NAVIGATING NEW MARKETS
When it comes to identifying new markets, the Professor takes the approach of exploring ways of using technology to get a student in a global contest.
“I can have a student in Scotland. So why they come to me, must be because I do something that a competitor does not do and maybe that is a human impact. It could be the quality of my product … it could be a whole range of things.
“For the average business, what do you have and how do you do it better than your competitors and how do you let the market know that you actually have these benefits over a competitor?” he queries.
According to the Professor, the first step in this process is to conduct a market scan to see what your competitors are doing?
“If I'm looking to create a new university degree, I start by seeing what my competitors are doing, but I don't stop there because if you do that, you benchmark yourself to what they did, not what they're going to do,” he cautions.
Professor Di Malia says most people undergoing benchmarking stop at this point, meaning they assume their competitor is not interested in moving forward.
“That benchmark is history. You have got to now predict where this is going to take us. Benchmarking is one thing. The second step is to look at the future.
“What does the world economic forum predict as the jobs of the future?” he asks.
Professor Di Milia acknowledges while this sometimes takes a leap of faith, he says businesses must understand where their technology is changing.
He observes some businesses have done innovation and adaptability well, moving quickly to repurpose their business in response to a COVID-related need, such as going from manufacturing T-shirts to producing protective face masks.
"You can have a business that sells what you think your market wants, or you have a business that sells what the market actually wants" – PROFESSOR LEE DI MILIA
ADVANTAGES OF BEING SMALL
Small to medium enterprises have the upper hand over larger corporates in their ability to move quickly.
Typically, larger organisations need to seek more people's approval. Small businesses on the other hand can decide to adapt and change almost instantaneously.
While this is a great advantage and opportunity for small business, how do you know what the market wants to buy?
1. Trendhunter.com – this site allows you explore what is trending globally in different industries, without geographical constraints
2. Talk to your customers – ask them “What is the greatest challenge that you are facing?". Design a solution and test it.
Professor Di Milia says businesses can either prepare or try and predict some of the future, or you get swamped by it.
“You either try and meet the challenges or it overtakes you.
He suggests joining communities of like-minded business people to start brainstorming these challenges and opportunities can help.
“Innovation doesn't happen because you sit in your office and you think about it.
It is good to use spaces like the SmartHub, where people collectively come together to kick around those ideas. Our future keeps changing and industries we think will be there in five years’ time may be even bypassed.
“Rather than every small business trying to reinvent itself, think about the synergies in aligning with another business, because your core skills, or your core competency could be about doing X, but someone else is about doing Y so why try and do X and Y.
“Sometimes seeking alliances or some sort of relationship with other people helps to grow your business as well. It could be cross referrals. It could be all sorts of possibilities and finding a partner that may have similar goals.
“Take the lead. Do not wait for someone to give you permission. Understand what the future might look like, then go and find partners to help you navigate that future,” he suggests.
SOLVING MORE THAN ONE PROBLEM AT A TIME
Professor Di Milia says the university is constantly exploring new ways to expand and attract new markets.
“We have a lot of un-used real estate at the university. There is no reason why a high school could not come and use some of our facilities.
“I can't see why that can't be year 11, year 12, for a school in the region. I am thinking that way because high schools are fixed in terms of their land space, I have got plenty of land.
“I encourage us not to think in terms of high school and tertiary education. I want to blur that distinction.
One opportunity the Professor has identified to attract more students to the university is to get them studying onsite earlier, a strategy used by many sporting teams.
“Sporting teams reach down into 12-year old’s and sign up contracts with them about playing sport with them when they become adults. There's no reason why I can't use that idea and apply it here,” he proposes.
Professor Di Milia says the same ideology can be adopted by businesses, by thinking innovatively about how they could solve their own problems with solutions from another businesses problem, such as a school needing more space bringing their students to an unused university building, meaning they stay on to study at the university.
“The choice of a university can be made at an elitist and/or an emotive level. If you like people, you want to do business with them. Trust is critical,” he maintains.
SmartHub Business Manager Elize Hattin agrees, saying we like and trust the people we know and moving students on campus while still in their schooling years, will increase the like and trust.
“We can think the same thing about our customers. How can we engage with a larger community prior to them doing a transaction with you, prior to them becoming your customer?
“How can you bring them into your community? How can you solve a problem for them, add value to them, with the intent of doing business with the people in that community who like and trust you?” she suggests.
DRIVING FORCE: A FUTURISTIC CASE-STUDY
Will electric cars replace petrol cars? Professor Di Milia says one day they will. He hypothesises if he were presently investing in building service stations, this would be a concern.
“What I might start doing is thinking how would I repurpose my service station to accommodate electric cars? What do I do to attract drivers to stop on my premises, so that while they are charging the cars, they are also buying other goods and services I have in my store?
While this could be a very real challenge and opportunity, the Professor also acknowledges this situation may never eventuate.
“The technology we develop the next five years means you'll be able to drive further with that car. It means that you could just charge the car at home, making these repurposed service stations redundant.
“But … what sort of technology do you need create, build and install in a house to allow that charging to occur?
“If you monitor where these technologies are evolving, you start thinking in terms of what do I have that supplies that need?” he advises.
Professor Lee Di Milia is the Dean of the School of Business at Central Queensland University and regular guest presenter at the SmartHub.
The SmartHub encourages entrepreneurs and business owners to adopt technology and modern based business practice to make the entire business journey more profitable, more enjoyable, more effective and more efficient.
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