As a species we prefer to deal in certainties. Along with toilet roll, flour and hand sanitizer, certainty is something we have all experienced a lack of in recent times.
And we don’t feel ready. We don’t feel ready to look at the future beyond the current crisis. We aren’t imaging a future.
We are still responding and of course, that’s right, but we can’t afford to remain in a state of stasis for too long. Assuming that on the trajectory of “respond, re-group and recover” we are currently all operating at “respond” we have to start imaging the strategies that will be needed in the next phase(s) and equip ourselves now. Those organisations that are able to operate in more than one mode – dealing with the immediate challenges, whilst evaluating options for the recovery, are far more likely to emerge on a growth trajectory than those that remain stuck in perpetual crisis management.
Scenario planning can seem like a fool’s errand; no amount of gazing into the corporate crystal ball will allow us to predict with 100% accuracy the outcome of the current crisis. But thinking through the different potential versions of whatever comes next will allow us to think about what we can do, and prepare us to be ready for anything – to develop and implement the strategies, structures and investments that will make us more resilient than others.
The darkness
There was a prolonged period of pandemic – a combination of inconsistent global responses to lockdown and treatment/testing resulted in rolling waves of infection. Governments responded with isolationist policies – both economically and practically. From competition for protective gear and medical equipment, to limiting supply chains to domestic use only, and refusal to provide mutual financial assistance – economies turned in on themselves with devastating economic and social consequences. There is investment now in technology but it is concentrated around monitoring and surveillance of citizens, and individuals are increasingly compelled to surrender significant volumes of personal data in exchange for freedom of movement.
Financial markets were and remain highly volatile, with ongoing pressure on supply chains, prices rise, reducing the liquidity in the market and levels of saving. Many businesses ran out of cash and were forced to shut down, adding to the already accelerating levels of unemployment.
The government has been forced to play an increasingly dominant role in providing access to capital – several parts of the economy are renationalised or at least given “protected supplier” status, while the rest are left to sink or swim. Many sink. State run or sponsored organisations are the biggest employers in the majority of economies. Protectionist policies are also favoured to try and protect jobs. International trade dwindled in the months following the crisis, and remains minimal. To limit the risk of “re-infection” international travel was restricted – and anyone looking to travel abroad now has to seek a visa regardless of free movement agreements, and produce a fit to fly certificate.
The disruption to education and training that emerged during the crisis has been mitigated by increasingly sophisticated online systems – but social distancing creates different problems, and there is a wide spread lack of trust and community spirit. Social inequality becomes more pronounced as the gaps between the haves and have nots widens. Those who can afford to fall back on savings are less affected, but those who are most vulnerable face the very real risk of a self-fulfilling downward spiral. Populations are weary of isolation and are suffering real challenges around mental health, sustaining relationships and common purpose. There was a backlash against the baby boomers – as young people had few employment prospects, but the welfare system continued to labour under the weight of funding a generation that had enjoyed employment, free education and access to affordable housing.
The black economy – based around the movement of drugs and people underwent a rapid decline in its BAU but cyber crime has replaced them with even more devastating financial and political consequences for both governments, business and individuals.
Vera Lynn
The pandemic persisted beyond expected timeframes. Unable to respond individually governments and organisations agreed to work together to meet the challenges of the crisis and a growing ecosystem of public/private co-creation and innovation thrives. These started in the immediate response phase – first coalescing around medical equipment, drug development, and supply chains – but then continued into the re-group/recover phase, and with wider positive impacts for communication, education, and care for the most vulnerable within society.
Key workers as a concept was redefined – and now includes virtual players in supply chains like supermarket workers and rubbish collectors. There was a general rebalancing of risk versus reward that saw some parts of the blue collar workforce accelerate out of recession faster than other professions.
The common belief that in a world dominated by AI and robotics person to person would retain it’s value took a hit – during the crisis services and interactions went virtual in a way we hadn’t believed possible. And it stuck. Where hybrid models do exist there is an increasing emphasis on the role of technology to deliver productivity.
Governments collaborated to provide crucial and targeted funding to kick start economic recovery, and assistance to those most affected by the crisis. Regulation is the price of this but a general rebalancing has occurred among the population -there is an acceptance that intervention saves lives, and as a result Big Government sees far less resistance than it might have done in 2018.
Organisations learnt renewed agility in the period of “respond” – focusing on redeploying skills to points of need. Manufacturers switched overnight to production of mission critical supplies – medical equipment, food supplies, protective clothing – and that agility has continued with organisations focusing on collaborative projects that are short, fast and get results. There was a common expectation for companies and leaders to be seen to be doing the right thing – from salary sacrifices for managers, to retraining staff to fill skill gaps, to providing community support.
Mary Poppins
The pandemic receded quickly. Collaborative efforts by various governments limited the contagion and after several months of lockdown, most countries were able to release their populations. The economic impact was widespread and there was a global recession but Governments are still investing heavily to resuscitate their economies.Large parts of the economy were pushed over the edge during the crisis. High street chains suffered particularly badly as did SMEs. However, there is a growing acceptance that the pandemic simply accelerated the trajectory of local/in-person to online/virtual models. Digital has quite simply come to encapsulate every aspect of life – shopping, working, communicating, learning. High streets and town centres suffered until reinvestment eventually redesigned them as residential zones, massively increasing the stock of affordable housing. Employment was hit badly but those sectors that thrived in the crisis started to hire fast and hard, and the initial impact was swiftly mitigated.
The end of the high street wasn’t the only trend that accelerated. Remote working – which stood at 5% of the working population in January 2020 – soared to 60% during the crisis, and it has remained widely recognised as an accepted and flexible way of reducing costs and managing work life balance. Call centres re-invented themselves as specialist hubs of expertise, and in a new, more flexible model continue the provision of all sorts of unexpected services such as routine policing, health screening and welfare services.We have moved to a platform economy where we trade in skills rather than time.
New virtual working technology had received a baptism of fire but proved itself resilient, and technology companies – both new entrants and dominant players – did very well out of both the recession and the recovery. Remote learning also saw huge growth – and while it was widely agreed that vast elements of social benefit were best delivered in schools, in person especially with the younger years, more and more institutions mastered the design and delivery of virtual teaching – massively expanding access to high quality education both locally and globally. Socially the “virtual pub” and online concert remained a thing. Distance no longer proved a barrier to maintaining relationships and AI enabled devices continue to proliferate to provide community support for the vulnerable.
New world order
The uneven nature of the pandemic and governmental responses to it, created a permanent rebalancing of economic and political power to China and the South East. A more consistent approach to testing and restriction of movement in those countries allowed them to get the virus under control more quickly than their Western counterparts and as a result they were able to re-group and then recover at pace, capitalising in fact on the stunted responses of Western governments. Chinese factories re-opened and immediately began supplying the beleaguered world with medical equipment and PPE. Chinese manufacturers have been up the mothballed factories of the West and put them to good use, and invested heavily in strategically important global corporations. The Asian manufacturing base thrived, and Western economies became increasingly dependent on the supply chains that stemmed from this efficiency.
As a result of this position of economic power these nations became increasingly dominant players in global institutions, and it became the norm to see the Heads of institutions like the WEF, G20, WHO and the World Bank coming from those regions.
Virtual rapidly became the new norm. As did a wider acceptance of greater government surveillance and surrender of vast amounts of personal data. There are mounting concerns however that with Chinese domination of eCommerce, the ask is to surrender your data not to your government (with some electoral accountability) but to a foreign state.
The virus itself was no respecter of class or wealth but it became increasingly clear that the wider and deeper impact was felt by blue collar workers, by deprived communities with poorer housing and reduced access to medical care or cash savings. Despite this there was a wider emphasis placed on values such as keeping public order, a common sense of sacrifice and a reduction in the culture of the individual. The positive green benefits of the crisis stuck. People liked the reduction in pollution and improved air quality. Reduced demand for oil means a further re-balancing away from oil rich developed nations to those (in Africa and Asia) with the technological agility to switch to producing green energy.
What next?
Organisations can no more predict the future than anyone else can. The advantage of thinking through possible scenarios is not to prepare for them but to prepare for everything; to adapt your organisation to be match fit regardless of what comes next. If we have been in a state of respond, re-group, recover... we are moving to recover, re-deploy and re-imagine.
This is an opportunity for business to reboot their organisations – forcing a hard reset on organisational models, technology and workforce assumptions.
Resilience is king.
First in that preparation is organisational models.
Corporate resilience has been tested like never before. Supply chains, financial operations, investment strategies, go to market approaches, customer fulfilment, platforms and systems all struggled to respond and/or perform during the Coronavirus pandemic and the ensuing lockdowns.
In whatever future organisations will place more and more value on resilience.It will come to trump efficiency in the battle to stay relevant, to stay open. Part of this will come from changing what we measure – resilience will be more valuable in some aspects like supply chain, and technology systems. Supermarkets are already looking at diversifying their supply chain – putting resilience ahead of simple efficiency in their drive to keep shelves stocked. Local or regional value chains may become more appealing, benefitting those who have national or regional models versus those who have built highly globalised versions. As people rushed to find online platforms for work (and their social engagements too) the majority struggled to cope with the growth. Zoom went from 2 milion users to 100 million in less than a week – it crashed. Most did, but several refocused quickly on the robustness of their service – and became the platforms of choice.
Resilience will need to be coupled with agility. Already we can see that those organisation who appear to be surviving / thriving best are those with three things in common. Deep cash reserves, robust services and platforms, and the ability to turn on a sixpence – be that in changing what they make (Royal Mint changing from producing coins to making visors) or adapt customer services models (Tesco have achieved the same growth in their home delivery service in six weeks as they have in the last ten years) or cut costs.
Agility is something we have all been talking about for a few years. But like many things the crisis has accelerated demand.Without the luxury of stability, and the comfort of long-term planning horizons, what’s needed today is the agility of a jet-ski versus the steady plod of a tanker. Being alert to new information and its implications, and then reacting with speed and purpose when faced with a new or changing scenario – could be the difference between the survivors and the rest as we begin to emerge from the aftermath of the pandemic.
Business leaders will need to look at both these behaviours and resist the temptation to bolt them on quickly – they need to be addressed by a complete overhaul of the behaviour and operations of the business.
Technology
Sometime around March 2020 it began to feel like the whole world had been sent home and gone online. There was a massive acceleration of the digitization of capabilities – and it is highly likely that consumers will stay loyal to those new habits. By taking on 5% of face to face GP’s appointments onto virtual platforms, 30,000 physical meetings a day were rendered unnecessary. The convenience of that experience – one of many that allowed people to fit activities around their working and family lives – will stick. Interacting with retailers, with utility providers, with government – will need to reflect these new expectations.
This will require massive investment in robust platforms and systems that can adapt to this demand for digitization and accelerated adoption of cloud-based technologies. Infrastructure investment will be critical – all singing and dancing applications that won’t work due to bandwidth limitations will not cut it. Full-stack technology must become part of the strategic decision-making process for all organisations. Partly this will come when organisations use technology to accelerate the process of innovation and decision making (which we will go into in more detail later). Agile working only succeeds when decisions can be made quickly – and implemented just as fast. Developing data capabiilties to spot trends and adapt to evolving markets will enable decisions to be in real-time rather than in the rear view mirror.
One issue here, of course, is cost. Capital investment will have to have a clear ROI in a cash constrained environment – but it will be imperative to invest more, not less. Organisations should look to focus on small, incremental wins to fund larger scale transformation and make smart partnerships – requiring less investment in assets and reducing exposure. This means a new form of innovation-focused accounting, replacinglengthy and bureaucratic investment decision-making with fast and informed judgement by empowered teams.
Finally there is the issue of security. According to the World Economic Forum, the average cost of a security breach to a financial institution is $5.3 million. To a media company that average is $4.3 million. There were an average 145 such security breaches per FTSE 250 company in 2018 alone. The current crisis has simply escalated this trend and as in every scenario more people remain online more for work or personal life, cybersecurity is where the new “opportunities” or rather vulnerabilities life.
We need to focus on working with security teams to identify and mitigate for likely attacks and prioritize the protection of their most sensitive information and business-critical applications. Make sure the Board is clear on the level of risk they’re exposed to and are prepared to accept.
People are our weakest link. Home-working policies need to be clear and include easy-to-follow steps that let employees make their home-working environment secure. Front and centre of this should be how to reach internal security teams to report an issue, and a no blame culture that rewards flagging up mistakes (opening that phishing email, losing your laptop) rather than punishes them. Cyber training should be made relevant to their non-work life as well.
In times of tightened finances it is still imperative that we invest in providing effective security capabilities, to ensure that we extend the same network security to “own” devices and to all remote environments. Capabilities like endpoint protection on all laptops and mobile devices, including VPN tools with encryption and an ability to enforce multi-factor authentication (MFA) aren’t really “nice to haves”. They are mission critical. So are automated threat intelligence systems and the capability to thwart common phishing attacks. And robust protocols to protect main stream systems.
Workforce
When it comes to cybersecurity people may be our weakest link – but in everything else they are the silver bullet. As with digitization the pandemic accelerated working practices that had been struggling to gain a proper foothold. Concerns over security, productivity, collaboration were pushed aside as a quarter of the world’s working age population started to WFH.
The benefits will stick; reduced pollution, low transport costs, better flexibility around home commitments. And organisations are on a steep learning curve to iron out the problems.
In any economic outcome, how we manage our people, what we ask of them, and what they ask of us, will be radically altered. We will expect them to be able to be part of organisations that can respond at pace and scale – that can acquire new skills fast or adapt existing ones. That may be part of a population that works with us rather for us (the ecosystem in play) and that can acclimatize to that almost at once. Decisions will need to become de-centralized because time frames have become hours not weeks. That means that systems and data will need to provide the context to enable people to do the right thing – and refocus fast when they get it wrong.
There will be unexpected challenges. Organisations are currently focused on replacing the collaborative effect of working in the same space, and trying to maintain a sense of team work. Absence management and mental health applications abound as leadership try to manage remote workforces and keep – but what happens after lockdown when a working population of 22 million all want to take the four weeks of holiday they have been holding for six months? How do you retain talent once the market recovers – when you probably cut salaries, axed bonuses and benefits, asked for more working hours and more output? How do we re-deploy our workforce? Do we really believe that everyone will awaken in Sept 2020 and go back to doing the same job? That vast workforces furloughed for months will simply pick up where they left off? And how do you build a succession plan that doesn’t assume you have weeks, months, even years to prepare someone to take over? And how can we incorporate succession planning thinking into roles at every level and not just C-suite?
These consequences seem small at the moment, in the eye of the storm, but they will re-emerge to prove to be very sizable problems unless organisations can put in place that common sense of purpose and unity that will focus the corporate mind on the collective good.
Leadership will have to be focused around trust. Trusting employees to make decisions, to be productive, to be careful with data. And will come with increased expectation that leadership will behave ethically – loyalty will be earnt through involvement in actions that support the community, economic recovery, protect jobs and put the safety of employees first. Leadership needs to operate in the weeds – in the shape of salary sacrifice and taking a front and centre role in the rebuilding of the economy – while at the same time standing front and centre of the drive to reimagine what the organisation could look like.
From our position in the eye of the storm, it feels vaguely impossible to begin to summon the courage perhaps even the energy to ask how do we move from respond/recover to recover/re-deploy/reimagine.
But without that mentality, the drive to ask “what’s next” the efforts of the first half of 2020 will go to waste. We may survive the crisis only to be defeated in the recovery.
