Why are some firms becoming more successful during the COVID-19 pandemic?

By Peter Lorange

The COVID-19 pandemic has led to a worldwide recession of immense proportions.  Many companies are closing down, either for good or temporarily.  The firms affected are largely those who were heavily dependent on the “old” way of doing business, with the physical presence of workers, as well as interaction between other groups, such as suppliers or clients.  Examples of companies that seem to be particularly hard hit are firms in the transportation sector (airlines, cruise lines, etc.), hospitality (restaurants, bars, hotels), health studios, and manufacturing firms where social distancing is more difficult to organise (assembly plant types of business, including automotive, meat-packing, etc.).

However, there are some winners and, perhaps unexpectedly, we see that the advent of the COVID-19 pandemic has led to extraordinary economic benefits for some, including individual investors and corporations. 

Statistics, primarily from the US, tell us that the relatively few “super-rich” have become significantly relatively richer compared to the rest of us, who tend to be more directly affected by the adverse economic fallout from the pandemic.

When it comes to the corporate sector, too, we see a similar phenomenon: some firms seem to be doing exceptionally well these days.  Why? 

In the rest of this note, we discuss this phenomenon. Let me hasten to add that my findings are not founded on systematic research, but rather on observations that I have made, as well as significantly based on my experiences with the various firms that my investment company, S. Ugelstad Invest (SUI), has invested in. 

Before going further, I should point out an essential difference, learnt from the public sector.  In some countries, notably Vietnam, there have been significant additional investments in the public health system.  This seems to have made this sector stronger, more able to cope with the COVID-19 pandemic. In other countries, notably the UK, there seems to be relatively less investment in the country’s public health sector, seemingly leading to a less agile public health system when it comes to dealing with the pandemic (CNN). Perhaps we might learn from this when considering how firms cope with the emerging COVID-19 challenge; more direct investments may be key!

1. Going virtual right from the start

A crucial factor seems to be to what extent a given business has been conceived of or organised beforehand as embracing virtuality, and whether its business model is fundamentally based on virtuality.

It seems to be the case that firms that have been built up with a more conventional business model, more “physical”, may often have a handicap when it comes to transitioning to more virtuality, or to a new virtuality.  Some may not actually not be capable of making an effective switch at all. Many are burdened by a dual cultural focus, physical and virtual, often making the reorientation to a stronger focus on virtual harder and significantly more time-consuming. 

In summary, it seems safe to conclude that those firms that start out with a virtual business model tend to be more likely to succeed. 

2. Ability to build on relevant previous experience

Tony Robbins is traditionally world-renowned for organising and implementing large physical events, with sizeable crowds of attendees gathering in relatively crammed conditions.  With the advent of COVID-19, and with the requirement to practise social distancing and to wear facemasks, he seems to have been successful in developing a virtual meeting place concept, drawing on what he knew to be critical success factors from before. We give examples of this in our discussion of Case Study A, later. 

3. Ability to take advantage of proprietary know-how

In some companies, perhaps particularly typically many so-called high-tech firms, there may be a so-called “monopoly factor” at work; a particular technology may be quite unique for a given company, allowing this firm to expand relatively freely, even within a COVID-19 infected space.  Companies such as Apple or Amazon may have a unique ability to leverage their proprietary technologies. Big tech firms thus tend to grow and show bigger profits!  This is also reflected in many stock markets, with significant value enhancement among high-tech firms. 

4. The CEO

It seems to be a broadly shared dictum that the person at the top should ideally be a good “listener” and be able to adapt relatively quickly to what the customers say.  However, this proposition is based on the realities of the past, i.e. before COVID-19.

The successful CEO today seems to be an “in-between” type.  They clearly need to be adaptive and able to react with speed to new realities.

Today’s consumer is perhaps not necessarily as clear when it comes to signalling his or her preferences, except perhaps when it comes to a strong increase in the focus on safety; virtuality is preferred.  Beyond this, however, it is perhaps possible to detect or suppose other emerging/new customer preferences. To cope successfully in this new context, a successful CEO must perhaps be relatively more stubborn, even slightly arrogant, when it comes to believing in their own vision, ready to stay firm in their beliefs, leadership and company purpose. Hence, the successful CEO today seems to be an “in-between” type.  They clearly need to be adaptive and able to react with speed to new realities. 

Growth, excessive cash amounts in the bank

During the COVID-19 era, most firms have typically been able to generate a certain amount of free liquidity from their operations. One might question whether this is typical, keeping in mind that most firms tend to experience demand.  And this has commonly been channelled into new investments and/or R&D to stimulate further growth.  Alternatively, there may have been dividend payouts to the owners. In today’s new reality, there tends to be a much lower propensity to invest or to engage in R&D, often with a potential payoff relatively far into the future.  Dividends tend to be trimmed down or entirely shut off, too.  The result is that many companies find their cash reserves increasing significantly.  This build-up of cash seems to be partly positive, partly negative. 

– Positive: This might indicate that the firm’s management is in control, specifically when it comes to cost management.  To be in such a good position when it comes to establishing a robust break-even point is of course vital. 

– Negative: With such excessive cash levels, it seems clear that the firm might be able to grow faster and further, but that this potential is not being pursued. Is the CEO too conservative?  Is the board seeing potential opportunity losses?  Are boards becoming too risk-averse?

What is needed?

What seems to be critical in instances of such an accumulation of cash in today’s COVID-19 pandemic context is a clear growth plan:

– Which are relevant areas to expand one’s business through internal means?

– Then, with a strong growth trajectory established, what might be good take-over opportunities?

A growth plan, in this context, is thus very much a matter of “dressing up” the firm for more growth, and thereby being able to make acquisitions to enhance the growth further.  In the end, a sale or an IPO might eventually be on the cards. 

We have identified what we see as four issues closely associated with the creation of economic value for a firm during the COVID-19 pandemic.  Let us now attempt to illustrate this through four case studies, all from SUI’s portfolio of firms.  All names are, of course, disguised. 


A. The health supplement company

This company, based in one of Europe’s largest markets, was a leading distributor of important health supplements  in this sector, largely selling through the many independent doctors in this market.

The success of the business model in the home market, to build on the independent doctors, was replicated in the new markets. Learning from experience seemed to work!

An initial effort to expand into a specific region of another European country, with traditional wholesalers and distributors, and where the language was the same as in the company’s home base, failed.  Management seemed to miss the fact that there were many differences between this market and the home market that had not been appreciated, such as national loyalties among the doctors, already close ties between the various entities in the supply chain, etc.  Language similarity was not enough!

Subsequent efforts to expand into other countries by focusing entirely on virtual marketing and distribution seems to be succeeding.  The fundamental link to the independent networks of doctors was behind it all.  This virtual approach was even launched in the market which had initially failed and was successful!


  • The success of the business model in the home market, to build on the independent doctors, was replicated in the new markets. Learning from experience seemed to work!
  • The virtual reality was easily implemented.  There was no strong traditional business model to be dealt with. 
  • The CEO was clear when it came to his vision: grow, based on the successful recipe so far!  At the same time, he took fast action to ameliorate directions that did not work out. 
  • Rapid growth was pursued.  All available cash was used for this.
  • The end point has not been seen yet but might involve an eventual sale of the firm. 

B. The cosmetics firm

Part of this company’s strategy was to operate, as well as franchise out, beauty salons that focused on hair care and nail treatments, as well as skin care.  The company was also engaged in a virtual business – namely selling and distributing beauty products, and services to individuals, as well as to the many franchise-taking beauty clinics.  The company failed.  Why?

  • The reality of this complex business model turned out to be close to unmanageable.  And some of its culture was grounded in the “old” economy (beauty salons), while the rest was virtual (distance-based sales of cosmetics). 
  • The CEO was unable to manage this complexity, exasperated by the fact that several of the firm’s senior managers were perhaps not on top of their jobs.
  • The cash-flow burn rate was not under control.
  • Strategy means choice.  Instead, the CEO allowed for even more complexity, such as entering new markets, without closing down some of the activities that did not work.  The CEO did not seem to learn quickly enough, or to act in time!

C. The food company

This company was initially launched to focus specifically on a product named after a famous classical music composer. To stay afloat economically, the company then expanded into various food lines, and into several countries, including the Americas, as well as Asia. Then, the company “stumbled onto” the market for consumers with vegan eating habits. 

The company is struggling economically, being neither a success nor a total failure, and is now trying to separate the two different businesses. 


  • To build on the company’s initial know-how concerning a given specialty food seems to work. The vegan food sector line appears to be growing!
  • To expand the product line, as well as geographical presence, without a clear “strategy means choice” approach seems to have been less successful. 
  • The CEO appears to have been more opportunistic, active in many markets, rather than focused. 

D. The discount company

The company was making good progress when it came to the development of its app. However, it turned out that the customers (consumer-based companies) were not ready to sign up for the company’s discount programme, choosing instead to proceed to offer their products as they had been doing before. The end result was that the company ran out of cash, and liquidated. 


  • The customers seem to have decided to follow a more conventional way of retailing in the face of COVID-19.  They do not seem to have been ready for the company’s products. What is the challenge here?
  • The CEO kept on spending to develop the company’s app, instead of making progress with its commercial drive to ensure revenue.  He seemed to react too late to what became a liquidity crisis and was thus not able to sell his company to one of its competitors. To sell, with or without COVID-19, is hard, often impossible, when in a crisis! 


We have identified four cases of factors that seem to be particularly critical when it comes to enabling a firm’s success in the realm of COVID-19.  And our four case studies seem to add credibility to this.

In summary, companies need to listen more and better to their current and new customers, think creatively, maintain leadership confidence and move quickly. COVID-19 has been an accelerator of many business challenges and dilemmas, in some cases even an instigator of problems or crises, but it has also offered incredible opportunities to those rare firms who had (pre)-invested in digitisation, who were and are close to their customers and listening to the data, and who are agile enough to adapt constantly to changing paradigms! 

About the Author

Peter Lorange, after having sold his shipping company in 2006, has been a successful entrepreneur and owner of a highly diversified family office.  He has been regarded as one of the world’s foremost business school academics, holding the position of President at IMD, Lausanne for 15 years, as well as several positions on shipping company boards. His entrepreneurial journey spans across key areas such as education, shipping, investments, and pre-dominantly Family Businesses.  Peter founded the Lorange Network, a digital learning and networking platform, in 2017.  Peter is Norwegian, residing in Küssnacht am Rigi, Switzerland.


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