The Post-Covid-19 World Will Be One Of Resilience
Covid -19 has created a shock of seismic proportions disrupting human, economic and social wellbeing with an impact that is simultaneously profound and lugubrious. The total shutdown across the world has exposed vulnerabilities in leadership, business models and supply chains. Under these precarious circumstances, more than 52 per cent are re-evaluating the current arrangements, 47 per cent have taken active steps to reconfigure their business models and supply chains and 36 per cent have accelerated their investments in automation.
The ability to generate capital for regeneration of the next cycle of products and services is of great importance to sustain the economic cycle. Consumer, automotive, manufacturing and transportation may be greatly impacted by the disruption, shifting consumer behaviour and in creating a rupture in the supply chains and across the value chains. The existing operating models need introspection and re-evaluation, with focus on resilience and agility. Monitoring productivity, tracking incidence, redeploying idle talent in areas of business facing demand surges and partnering with other companies to redeploy external talent for the broader cause, may be required at the moment.
As long as business was good, it was fine to work with overcapacity. But with revenues eroding, companies will be forced to ask, ‘Why are there so many people in this project? Are they capable of delivering the results? Is the strategy robust and do the people who have put up the strategy capable of strategic formulation of the company to attain goals?’ Now the management will put questions around the optimised organisation structure, enhancing productivity. All the hidden inefficiencies fettering profitability will be dealt with severely by making people at all levels more accountable for success.
The Post-Covid World
The post Covid world will be a completely different place to work in and live in, marked by stringent policy interventions, new ways of working and the way we consume. It is obvious that once the epidemic recedes, the landscape businesses operate in will change completely. The world would resemble life after the atomic bomb dropped on Hiroshima, undergoing a complete disruption in supply and demand. Customers once again will shop as usual and there will be complete rebalance in supply and demand.
Post the crisis, positions of companies will shift temporarily in terms of performance, with the interplay of customers, new policy mechanisms in place and an entirely new set of customers emerging. Success will depend to a great extent on the precept decisive actions that companies take in the middle of the crisis. The rise of Asia post the financial crisis of 2008 and increased security post the 9/11 crisis, are some examples of a change in the world order in the wake of a crisis.
Long term rewards to a great extent depend on how companies master in the transitory and transformational response strategy. Some important aspects of the transitory response will be managing cash, protecting employees and flexing supply to satisfy demand needs. This can be in coherence with occupying new leadership positions and building advantage through transformational moves and discerning investments. It is expected that when customer aspirations are involved, transformational moves are incisive, tepid and time consuming.
Lessons from History
If we peep into history, the Black Death killed 25-30 million people globally in the 14th Century in Europe, which had long-lasting implications on labour reforms. Women’s participation in the workforce became more relevant after World War II. With a large male population deployed at the war front, women were asked to fill positions for work hitherto done by their male counterparts. Hence, amendments were made to reduce social and legal barriers proscribing any discrimination. After the war ended, women’s participation in the workforce accelerated, reducing gender inequality, thereby making countries more productive.
Another major event that changed the way aviation was conducted was the 9/11 event. The marked terrorist attack reshaped the way transportation operated, with amendments in security policies, making screening of passengers more rigorous, underlying the trade-off between sanguine security and privacy. The practice became a standard across the globe, with more transparent screening and surveillance for the sake of collective security.
The outbreak of SARS in 2003 had a lasting impact on consumption trends and patterns. It is a very good example of societal crisis, leading to profound change in consumption. The attitude towards shopping changed completely as people were hesitant to go outside for shopping, leading the way for the emergence of e-commerce companies and online retail. The likes of Alibaba and Amazon scaled up during this crisis, to become global companies.
It is obvious that government influence at the time of the crisis had a long-lasting impact on how fast the country would recuperate from the crisis. This can be done expeditiously in coordination with corporate engagement. Companies need to ask governments how their actions would be good for customers, society and the business itself.
During the previous recession, IBM had advocated a relief of $30 billion for the technology sector. Following the passage of the Act, it launched a $2 billion monetary package to kickstart the fund, extending loans to projects with high returns, with an egalitarian objective. The company also mobilised funds in healthcare services that bridged the gap between patients and physicians. Post 9/11, a rescue package of $12.5 billion could not be approved in the US House of Representatives initially. But within a week’s time, board members of six airline companies engaged with exiting political leaders in power and promptly $15 billion was approved to support the airline industry.
Mother of Invention
Analysing the performance of companies over a century in the fog of crisis, shows that those who manage to influence key decision makers, be they regulators or industry bodies, yield great dividends in the longer run, which can be termed as transformational moves. Investments during the downturn can be advantageous as a predilection and hence, propel companies to a leadership position.
With changes in fundamental behavioural and attitudinal shifts, there is bound to be ramifications, such as more time with families at home, greater focus on family security, hygiene and health, embracing remote working, streamlining operations, decentralisation of the supply chain and crisis preparedness. The attitudinal shifts will have a profound impact on policy frames in areas of trade, foreign affairs, movement of people across borders, cross- border employment, healthcare standards and crisis preparedness. The US has recently curbed H1 B visa temporarily for migrant workers, as an example of how the world is reciprocating with the crisis. Countries will also focus on making their cyber defence more resilient and more coherent with national policies, as citizens will be more willing to elect governments who value preparedness and have effective response mechanisms in place in the face of enormity.
There is bound to be consumption shifts across existing product lines. ‘Necessity is the mother of all invention’ and hence, a response to the existing crisis may lead to new innovations. During World War II, with greater demand, there was forced innovation in the aerospace industry, leading to accelerated development and commercialisation of jet engines, development of pressurised aircraft cabins, atomic technology, synthetic rubber, radar and penicillin with lasting impact. New needs are born with the crisis.
The current crisis will surely have an impact on areas of mass disease testing technologies, affordable home office setups and digital collaboration apps and new medical tools. These are only the possibilities in the future and success to a great extent depends on how industry leaders adapt to the emerging crisis, offering solution to upcoming demand.
Take the example of two US watch companies, Bulova and Waltham. Both traversed the crisis of the 1920s by launching immediate responses, such as extending terms to retailers during the Great Depression and then shifting the production to war time instrumentation. Waltham simultaneously pursued the strategy of tight cost management and any further investments in the sales and marketing and curtailing of advertisement costs.
On the other hand, the other competitor Bulova, invested in the potential new sources of advantages by acquiring multiple domestic and international competitors and completely transformed the company through innovation. During this period, the company invested a million dollars in the advertisement campaign through a televised commercial. It is also considered to be the nascent innovators of the electric clocks and clock radios.
The company fostered a close relationship with the government, selling products to the government at specific prices and showing respect to disabled war veterans by opening a school for them, which taught watch making. The company aggressively lobbied to impose tariffs on imports between 1931 and 1954 and in the process, the product value appreciated by a factor of 24.
On the contrary, Waltham went bankrupt during the same time due to the volatility in the company position which can be called ‘prosaic’ at the greatest time of crisis, with an inadequate response mechanism and framework in place. It is also observed that the churn of Fortune 500 during the successive crisis was over 90 per cent higher than the average.
During times of crisis, the true potential of leaders get unlocked. It is their ability to decide on precision, deliver reliably, adapt boldly and engage with impact that determines the probability of success. Companies indeed should honestly find humane ways to support community, employees and society at large to make this world a better place eliminating the scourge of the epidemic.
