As we are slowly getting used to the lockdown routine, it is high time to look beyond the horizon and start preparing for the changes that the post “lockdown” world will bring us. What distinguishes the nature of this crisis from all the previous economic recessions is it’s omnipresence and universality. Moreover, if we could have pinpointed previous economic downturns to specific actions of banks, traders or national governments, this time we are dealing with a truly invisible adversary.
The COVID crisis shows that we are much more susceptible and vulnerable to low probability events. It is not the virus itself that is changing the paradigm, but our newly acquired understanding of the unlimited and still unknown dangers the world holds, including, but not limited to new pandemics, global warming, migration crises etc.
It is important to note that many of the trends resulting from the current epidemics were already on the way, but now they drastically accelerated.
So how will companies react to a rapidly changing reality and how should they adapt to the new norm?
Post COVID Trends:
Embedded Redundancy of Supply Chains
Currently we are seeing many supply chains being disrupted as a result of severe dependency on ultra-specialized suppliers. In many cases we are talking about disruptions in China-related supply chains. Nevertheless, the same holds true for nearshore suppliers which can go out of business due to a local conflict, hurricane, earthquake and so on.
Thus, most companies will work to move from supply chain efficiency into supply chain stability and diversification. The Current crisis showed that companies can no longer afford lean and specialized supply chains as in most of the times their clients will be opting for reliability and stability of supply.
In short term this redundancy will mean increased capital costs, but a closer proximity of suppliers and risk negation will lead to more robust and healthy business operations long term.
Reducing Dependency on Physical Presence
The key technology that allows remote and distributed work appeared back in 60s. In addition to The Internet the proliferation of the personal computer has enabled millions of people to access and exchange information from anywhere in the world.
All technology and applications which allow seamless remote work has existed for many years, including video conferencing, collaboration tools, team chats and so on. Slack, Zoom, Skype, Microsoft Teams, WhatsApp and many other applications were already very widespread before the COVID crisis.
Many companies have built their whole operations around a virtual workforce, thus ensuring greater geographic coverage as well as significantly reducing office space.
What is surprising is the number of companies still clinging to old practices of open floor offices, long commutes and overcrowded or half empty spaces.
Current big “remote work experiment” will enable companies to model their costs and productivity in a virtual setting. Chances are, very few companies will go back to old ways of work, especially with huge numbers of people unwilling to go back to old hours and office locations.
Moreover, increased risk of infection will adversely affect any physical presence of companies. More people will be choosing to do online banking instead of going to a branch. More people will opt for grocery delivery instead of supermarket shopping. Online retailers will become even more dominant than brick-and-mortar retailers. In fact, if there has been any straw of hope for major American shopping malls, it was most definitely broken with the first COVID case in that geography.
On other hand, online SAAS will prosper even more than before, with Amazon, Netflix, Zoom, and Ocado leading way from the Sharing Economy right into the Isolation one.
In addition to established market players of the remote economy we will be seeing an emergence of Virtual Reality and holographic products and applications.
Premium on Employee Well-Being
As the situation unfolds, more and more people, who have considered their situation stable, find themselves without a job or with a significantly reduced salary. Contractors, tourism and hospitality sector workers have taken the biggest hit. Equally many full time employees are worried over their long term prospects in the recession job market.
In light of the above, companies interested in attracting the right talent in the future will have to provide prospective candidates necessary guarantees of position stability. Due to high uncertainty in the job market, caused by COVID, an attractive salary package will be of secondary importance compared to the insurances of job and income stability.
Talking about current employees, some companies will have to make tough choices of letting some people go to ensure the survival of the company. At the same time, however, companies will have to provide additional assurances to essential and key workers.
In addition to new employment insurance policies, companies will be wise to look into additional health benefits such as the introduction of regular health checks and employing company psychologists and psychotherapists. Just as digital transformations and GDPR led to the introduction of Chief Digital and Chief Compliance Officer management positions, the introduction of Chief Health Officer will be a logical result of ongoing health crisis.
Adoption of Crisis Contingency Teams
Just like national government, companies reaction might be characterized as successful or unsuccessful based on the timeliness and efficiency of informed decisions. Many companies had to take the leadership position in enforcing remote work arrangements long before national governments announced official quarantine or lockdown measures.
This can be achieved by having a specialized crisis management unit inside the company or close collaboration with a respected think tank or consultancy company. Current crisis shows companies will have to incorporate Contingency Teams into everyday operations to ensure timely response to any unforeseen circumstances.
Apart from decision-making, these teams can be tasked with creating helpful materials on remote work arrangements as well as informing employees on the developing situation.
Companies which will be quick to derive lessons and embed an extra layer of resilience into their operations will be the ones that will be most prepared to navigate the New Normal.