THE Coronavirus is not only a health crisis of immense proportion, it is also an imminent restructuring of the global economic order.
For some organizations, near-term survival is the only agenda item. Others are peering through the fog of uncertainty, thinking about how to position themselves once the crisis has passed and things returns to normal. The question is, what will normal look like? While no one can say, how long the crisis will last, what we find on the other side will not look like the normal of the recent years. These words were written 11 years ago, amid the last global financial crisis by Ian Davis. They ring true today but if anything understand the reality, the world currently is facing.
It is increasingly clear our era will be defined by fundamental schism: the period before Covid-19 and the new normal that will emerge in the post –viral era; the “next normal”.
In this unprecedented new reality, we will witness a dramatic restructuring of the economic and social order in which business and society have traditionally operated. And in the near future, we will see the beginning of discussion and debate about what the next normal could entail and how sharply its contours will diverge from those that previously shaped our lives. Here, we attempt to answer the question being posed by leaders across the public, private and social sectors: what will it take to navigate this crisis now that our traditional metrics and assumptions have been rendered irrelevant? More simply put. It’s our turn to answer a question that many of us asked of our grandparents: what did you do during the war?
Our answer is a call to act across five stages of “R” leading from the crisis of today to the next normal that will emerge after the battle against Coronavirus has been won: Resolve, Resilience, Return, Re-imagination and Reform. The duration of each stage will vary based on geographic and industry context and the institutions may find themselves operating in more than one stage simultaneously.
Today a group of colleagues published “safeguarding our lives and our livelihood: the imperative of our time which emphasizes the urgency of solving now for the virus and the economy and thereby precedes our focus here on re-imagining the future post pandemic. Collectively, these five stages represent the imperative of our time; the battle against Covid-19 is one that leaders today must win if we are to find an economically and socially viable path to the next normal.
In almost all countries, crisis –response efforts are in full motion. A large array of public health intervention has been deployed. Healthcare systems are-explicitly on a war footing to increase their capacity of beds, supplies and trained workers. Efforts are under way to alleviate shortages of much –needed medical supplies business-continuity and employee- safety plans have been escalated with remote work established as the default operating mode.
Many are dealing with acute slowdowns in their operations while some seeks to accelerate to meet demand in critical areas spanning, food, household supplies and paper goods.
Educational institutions are moving online to provide ongoing learning opportunities as physical classrooms shut down. This is the stage on which leaders are currently focused. And yet a toxic combination of inaction and paralysis remains, stymying choices that must bemade, lockdown or not, isolation or quarantine; shut down the factory nowor wait for an order from above. That is why we have called this first stage “Resolve”, the need to determine the scale, pace and depth of action required at the state and business levels.
The pandemic has metastasized into a burgeoning crisis of economy and financial system. The acute pullback in economic activity, necessary to protect public health is simultaneously jeopardizing the economic wellbeing of citizens and institutions. The rapid succession of liquidity and solvency challenges hitting multiple industries is proving resistant to the effort of central banks and government to keep the financial system functioning. A health crisis isturning into a financial crisis as uncertainty about the size, duration and shape of the decline in GDP and employment undermines what remains of business confidence.
According to an analysis based on multiple sources, indicates that the shock to our livelihood from the economic impact of virus- suppression efforts could be the biggest in nearly a century.
In Europe and United states, this is likely to lead to a decline in economic activity in a single quarter that proves for greater than the loss of income experienced during the Great Depression. In the face of these challenges resilience is a vital necessity.
Returning business to operational health after a severe shutdown is extremely challenging, as China is finding even as it slowly returns to work. Most industries will need to reactivate their entire supply chain, even as the differential scale and timings of the impact of Coronavirus mean that global supply chain face disruption in multiple geographies.
The weakest point in the chain will determine the successes or otherwise of a return to rehiring, training and attaining previous levels of workforce productivity.
Leaders must therefore reassess their entire business system and plan for effective production at pace and at scale.
Compounding the challenge, winter will bring renewed crisis for many countries. Without vaccine or effective prophylactic treatment, a rapid return to a rising spread of the virus is a genuine threat. In such a situation, government leaders may face an acutely potential “Sophie’s Choice”, mitigating the resurgent risk to lives versus the risk to the population’s health that could follow another sharp economic pullback.
Return may therefore require using the hoped –for- but by no means certain-temporary viruses “cease –fire”. Over the Northern Hemisphere‘s summer months to expand testing and surveillance capabilities, health –system capacity and vaccine and treatment development to deal with a second surge.
A shock of this scale will create a discontinuous shift in the preferences and expectations of individuals as citizens, as employee and as consumers. These shifts and their impacts on how we live, how we work and how we use technology will emerge more clearly over the coming weeks and months.
Institutions that reinvent themselves to make the most of better insight and foresight as preference evolves will disproportionally succeed.
Clearly, the online world of contactless commerce could bolster in ways that reshape consumer behavior forever. But other effect could prove even more significant as the pursuit of efficiency gives way to the requirement of resilience – the end of supply chain globalization, for example if production and sourcing move closer to the end user.
The crisis will reveal not just vulnerabilities but opportunities to improve the platform of business.
Leaders will need to reconsider which cost are freely fixed versus variable as the shutting down of huge swaths of production sheds light on what is ultimately required versus nice to have . Decision about how far to flex operations without loss of efficiency will likewise be informed by the experience of closing down much of global production.
Opportunities to push the envelope of technology adoption will be accelerated by rapid learning about what it faked to drive productivity when labor is unavailable.
The result: a strong sense of what makes business more resilient to shock, more productive and better able to deliver to customers. The world has a much sharper definition of what constitute a black-swan event.
This shock will likely give way to a desire to restrict some factors that help- and make the coronavirus is a global challenge, rather than a local issue to be managed. Governments are likely to feel emboldened and supported by their citizens to take a more active role in shaping economic activity. Business leaders need to anticipate popularly supported change to policies and regulations as society seeks to avoid, mitigate and preempt a future health crisis of the kind we are experiencing today.
Educational institutions will need to consider modernizing to integrate classrooms and distance learning.
The aftermath of the pandemic will also provide an opportunity to learn from a plethora of social innovations and experiment ranging from working from home to large-scale surveillance. With this, will come an understanding of which innovations if adopted permanently might provide substantial uplift to economic and social welfare- and which would ultimately inhibit the broader betterment of society even helpful in halting or limiting the spread of the virus.
(The views expressed are personal. The writer can be reached at: sjugeshwor7@gmail.com)
