Lessons from Silicon Valley to tackle the crisis COVID-19

they could be the big winners in this global pandemic. Demand for their online services has exploded among people and businesses in a global quarantine scenario. We shop on Amazon, watch live shows on Facebook, storing more and more photos on Apple's iCloud, while searching for baking recipes on Google.

Collectively, Facebook, Microsoft, Apple, Amazon and Alphabet account for almost 40% of Nasdaq's market value. And these five tech giants are hiring hundreds, if not thousands of employees in California alone. Facebook COO Sheryl Sandberg recently reported to CNBC that the Menlo Park-based social media giant plans to hire 10,000 people later this year in product and engineering.

It is therefore important to reflect on the lessons that can be learned from Silicon Valley companies to capture competitive advantages in a slowing economic context.

1. Focus on Expansion

I spoke to some experts, entrepreneurs for over 20 years, to understand their views on the economic impacts of this pandemic in Silicon Valley. All were emphatic that this economic downturn, in particular, is favouring giants with cash reserves, as it allows them to cope with the temporary drop in revenue while they focus on expanding their markets.

Take, for example, the livestream market, which is exploding now due to Pandemic. Facebook's offerings for this market include Messenger and, more recently, Messenger Rooms, which allows up to 50 people to chat at the same time on the same channel. These fronts have been fast-tracked by Facebook from an expansion perspective.

Microsoft, on LinkedIn alone (which it owns), has almost 300,000 jobs worldwide at the time of publishing this article. Amazon has hired 175,000 people for its fulfillment and delivery network since the pandemic began. Amazon is currently looking for 3,000 more people in California alone.

And in addition to the big names in Silicon Valley, medium-sized technology companies are also hiring:

Palo Alto-based software company VMware has more than 300 openings in California and more than 1,400 worldwide. The company's vice president of talent acquisition recently wrote: "Our hiring efforts are focused on supporting VMware's five strategic priorities: Application Modernisation, MultiCloud, Virtual Cloud Network, Digital Workspace and Intrinsic Security." Santa Clara-based Intel has posted more than 700 jobs on its website, more than 70 of which are also based in California.

According to Joint Venture Silicon Valley, March's preliminary unemployment rate of 3.1% in Silicon Valley represented a sharp increase from February's rate, but is still significantly lower than in the 2009 financial crisis, when unemployment reached 10.5%.

A downturn is a good time to invest in people - for example, to upgrade the skills of your management teams. Competition between the best people in the market will be less fierce, with greater availability of these talents and at a correspondingly lower cost.

2. Investing for the future

Investments made today in areas such as product development and information technology or manufacturing, in many cases, will only bear fruit after this economic crisis is over. Waiting to move forward with those investments may compromise your ability to capitalise on opportunities when the economy recovers. And the cost of those investments will be lower now, as competition for resources diminishes.

Given the current financial constraints and considering that our companies are not "sitting on" $200 million of liquid assets like Apple, it may not be possible to do all or even most of the things they want and need. But that shouldn't stop them from making some bets. Prioritise the different options, protecting investments that are likely to have a big impact on the long-term health of your company, postponing those with less certain positive outcomes and abandoning projects that would be "nice to have" but are not crucial to future success.

Take the example of Apple itself that we just mentioned. The company was not in good shape when it entered the 2001-2003 recession, its revenue down 33% in 2001 from the previous year. Yet Apple increased its research and development spending by 13% that same year, and grew by about 8% in sales, up from less than 5% in 2000.

The result: Apple launched the iTunes music shop and software in 2003 and the iPod Mini and iPod Photo in 2004, starting a period of rapid growth for the company. Everyone knows the story by now, but few people associate the $1 trillion market value with the investments made by the company in the middle of the 2001 recession.

Companies that take the comprehensive approach will not only be better positioned to weather the current storm, but also prepared to seize opportunities emerging from the turbulence and gain a competitive advantage as the dark clouds begin to disperse.

This article is republished under the partnership between Nova SBE Executive Education and Startse » Read the original article