The only constant in life is change - Heraclitus
Whether we want it or not, our world is changing.
If we don’t want to be left behind its good to think ahead what the future might look like and get ready.
The COVID-19 epidemic is one of the greatest challenges the humankind have faced in the last few decades. It will be a tragedy for many people. And it will change our lives. Yet, it is times like today that makes positive change and innovation possible.
In normal times it’s difficult to experiment, to try something new. People are afraid to leave their jobs, to pursue their hidden ideas, to take a risk. When we are surrounded by abundance, it’s difficult to move forward. But when we are faced with constraints, when we have no other choice, humans have proved to come up with unusual solutions.
There are areas when the process of change has already started much earlier like digitization or de-globalization. They are more likely to accelerate now. Yet, there are also areas where the changes were less expected.
- Remote work. It is one of the most noticeable changes that we already experience. Our work will not look the same. Employees have proved they can balance their private and professional life without being stuck in the office full days. For some, it’s a difficult change. Some parents struggle to do their work while homeschooling their kids. Yet, schools will re-open one day. Same with offices. And for many people, there will be no way back to the old way of working in office 8–5.
- Also, from the employer’s point of view, things will look very different. Suddenly it turned out the projects, and day-to-day duties can be done remotely. Team leaders and executives don’t have to micro-manage (and if they do its a sign something is not working properly). After a crisis when lots of companies will have to reduce costs there will be some obvious options. Why do companies need to spend so much money on office space in central districts of costly cities? Can some non-essential workers be located away from headquarters permanently?
- De-urbanization. Companies will rethink and reduce their office spaces. Employees will spend fewer days commuting to those offices. If you can effectively work remotely, there will be other questions that will follow. Would you still buy a house in an expensive and very crowded area just to be close to your office? Or would you instead buy a bigger house, in a more beautiful location, for less? Also, if you consider that the current epidemic is not a one-off event but might be re-occurring, then you can argue people are much safer away from the crowded cities. I think it will cause a significant exodus of people away from the biggest cities.
- Travel. I don’t think professional and private travels will go back to the levels seen before. Companies realized that there is no need to have in-person meetings in different countries when an online meeting can be equally good. I doubt our holidays will also depend on travelling so much as in the past.
- Back to the roots - nature and community. People will start to appreciate small pleasures in their life. Suddenly, we all realized how good it is to go for a walk, especially if we can do so in a park or forest. I think once the lockdown ends, people will keep nourishing those small pleasures they were banned from. Similarly, meeting with friends and family will become again something to celebrate and appreciate.
- De-globalization. This process had already started many years ago, but I think it will accelerate very fast after the current crisis. Companies, as well as countries, will have to reconsider how their supply chains should look like. Just-in-time manufacturing has failed when faced with closed borders and selected lockdown in different countries. Managements and governments will have to bring home manufacturing of certain crucial goods. The situation when so many countries are dependent on deliveries of healthcare equipment only from one country should not be repeated in future. That will also have significant implications for global trade and flow of capital.
- Rise of populism. Everything suggest that epidemic and subsequent economic downturn will lead to more populism. The post-virus world will never again be so open. Freedom of movement of people, capital and goods has probably peaked in the last decade.
- Online education. Another obvious winner in the current world. I don’t think the world of education will ever go back to the old model. Early education will see the least changes. After all, children not only go to schools to learn something but also to develop social skills when they are among their peers. Things will look different for higher education. It will be tough for elite colleges to keep charging big tuition fees for on-site courses. There is so much quality online education for much less without having to travel/relocate.
- Digitization. In the same fashion, there will be other services that can be done online, which are already thriving. Once people get used to them, why would they go back to old habits? Online shopping was already very popular in many countries, but now its getting a massive boost. There are other services that weren’t so popular online but will likely change as well (eg. medical consultations, public administration, elections, etc.). The growth of the online world will also need different infrastructure. We knew 5G is coming, but now the process will only accelerate in many countries.
- Universal healthcare. Do we still need to argue which system of healthcare is better: public or private? The current crisis in healthcare has proved that only well-capitalized and universal system can cater to the needs of the whole societies. Epidemic showed that society is only as strong as the weakest members are. You can be very rich and have private healthcare, but you are still exposed to the same diseases as the poorest people of the society. The way we can become more immune as a society is to strengthen the whole population.
- Science and research should regain its well-deserved place. People will realize that only through innovation and scientific progress, humans can move forward. Marketing or business management cannot guarantee development in the longer term. No government will be saving money on medical research to build resilience against future virus outbreaks.
- Less consumption-driven economic growth model. I am sure there will be many who will rush to catch up on shopping once the lockdown is lifted. However, I doubt we will ever get to a point when consumption has such a high share in our economies again. People and businesses will realize that they need bigger cushions for potential further lockdowns or any other unexpected events. Savings will go up, and people will start planning their future differently. More and more people will start rethinking how much goods they need to be surrounded by.
- It shouldn’t be a bad thing. Essentially, to put climate change at the forefront of our activities, societies need to consume and waste less. There might be more longer-term positive impacts on our climate than we currently envision.
- Similarly, capitalism is also very likely to transform. The whole financial framework we used to know will probably change. It’s quite unthinkable that future generations can repay all the debts we are currently building up without some sort of social and generational deal. Nobody knows how that deal could look like, but we are awaiting fundamental debate globally once we deal with the health and economic crisis.
- Structurally higher unemployment in years to come. There is cyclical and structural unemployment. The former happens when people are laid off from work due to economic slowdown. We already see this coming, and the impact on jobs will be huge (compared only to the Great Depression from the 1930s). But the cyclical unemployment will only mask the structural unemployment, which usually happens when economies change the structure, and innovations and new industries are being rolled in.
- To illustrate the above point, its worth to think about the industries that will suffer the most from ongoing changes. Airlines, tourism sector, global trade, commercial real estate, certain services. There will be other sectors that will replace them and will later or sooner fill the gap in the labour market. Yet, until that happens, we will see much higher unemployment rates.
Every crisis has negative and positive consequences. In the long term, the latter prevails. If we look for lessons in nature, we can see how that works. When the shock comes, it kills the weakest species. Those who survive become stronger. The same will happen now. If your company is well designed, have good leaders and its culture is based on trust, it’s very likely it survives. And once the crisis is over these companies and industries will thrive.