Just problems looking for solutions - preparing businesses for the "New Normal".

As we (maybe?, hopefully?) seem to be reaching something of a peak of the Covid-19 pandemic (in Europe at least), eyes are starting to turn as to what the "New Normal" might look like. I wrote a first piece earlier in the month as I started to think about this. What is unusual is that whilst peering into the future, it is the short term future which appears most uncertain.

Pandemics have happened before in history, often with cataclysmic human costs. The Black Death in the mid-1300's is said to have wiped out 60% of the population of Europe by some estimates. These pandemics had economic costs - the Black Death drove up the cost of labour by creating scarcity, changing many feudal societies from serfdom to paid labour models. Covid-19 is probably the first pandemic in which the human cost has, whilst serious for those directly affected, been relatively light due to the advances in communication, knowledge and healthcare provision. But the economic dislocation has and is likely to continue to be severe in many different ways.

The economic shutdown has reaped damage to some business sectors, and those companies which were struggling prior to the pandemic are already falling by the wayside. In particular, those businesses which require the collection of people together to excute their business model have been hugely undermined. These range from concert halls, airlines, public transport through to shopping malls and retail. Some, like office real estate, perceive a very uncertain future as the technology of home working has come to the fore. Very few industries are left untouched, and the workforce re-adjustment required will often depend on physical space - for instance, old factories and offices which have had manufacturing lines, office desks etc. shoe-horned into them will need to be automated or closed as it is unlikely that social intimacy in such workplaces will be acceptable for sometime.

Urbanisation has been unleashed on the world now for over 2 centuries. The indutrial logic of businesses competing for labour and economic logic of human labour competing for jobs has driven the concentration of people, often living cheek-by-jowl in flats, small houses etc., and for transport policy to be geared to the mass-movement of people into and out of concentrated locations where businesses reside - whether for work, leisure or retail.

However, I am a great believer of the view that every problem is there to be solved. Human ingenuity is often unleashed in the most difficult circumstances. Wars often bring great leaps in technologies - albeit mainly focused on the best way of killing and destroying people and infrastructure. This pandemic is not a war, however our politicians like to be pampered by journalists that it is in some way. But it is and will unleash our ingenuity and almost certainly fundamentally change the way our world has been working up to the end of 2019.

I offer no predictions - I have no crystal ball, or the presumption to know the future; I offer only some of the problems that I see will need to be resolved - and that an inner belief that human ingenuity will resolve them. In fact, you reading these may already have the solutions! So therefore I offer only some things to ponder instead of binge watching Netflix in the next few days;

a) The Face to face meeting: At what point do you start to meet and greet strangers again - in person? Personal data about your own health is, quite rightly, viewed as personal. But as with other personal data, this has become a tradeable commodity - if you want it to be. So, if you meet someone new through work in the future, are you as certain today that you will not have a nagging doubt in your mind as to the health status of that person. It applies equally to sexual attraction. Regardless of how you meet - dating app, accidental meeting, etc. - your initial trust of that person maybe determined by their openness regarding their health (I am sure there will be an App developed for this!) But if its not Covid-19, then what of other infectious diseases that could impact loved ones with "underlying health issues"? This mild paranoia will ebb - maybe quickly - but the short term looks very difficult - even if there is a vaccine quickly developed.

b) Management capability: Do you really need a permanent office? Offices have been a strange concoction of manufacturing lines and network - oh, and in some cases, personal aggrandisement statements! But much of todays office work of the "manufacturing" variety is concluded using computers - and a desktop has little to recommend it over a laptop and broadband nowadays. The pandemic has shown how offices can be transferred anywhere, not just for the executives and sales people on the road, but for the administrator, creator or project manager et al. What it has shown more readily is how this technological innovation - now readily called home-working, but really mobile-working - has been ready for sometime, but has often been stymied by poor or inadequately trained management. It is absolutely true that face-to-face meetings and connections are vital to business - there is something integrally human about the eye-to-eye trust / body language etc. - but significant proportion of the 400k+ people who commute into London to an office every day (or into and out of any large city), in reality do not need to do so. How do you feel about squeezing onto that train in the morning when you know that almost all your work could be done from home? And that the reason given by your company is that "you had to do so"? The technology is there to radically change the ways in which office work and are managed, so the adaptation is human, not technological. Management (and management training) needs to evolve...

c) Personal travel around the world exploded in the latter half of the 20th century. Most airlines are target high paying business travellers to fill the expensive seats regularly, but they have enabled the millions filling the economy seats to see parts of the world that would have been closed to them a generation or 2 prior. Alongside personal business travel has grown the globalisation of trade - something that has both benefited and undermined segments of all societies (see (d)). The spread of Covid-19 was facilitated by travel - personal and business - the latter of which was supported by building and maintenance of the global supply chains and multi-nationals organisations that have been created over the last 30 years.

Some articles suggest this all comes to an end now. But I think the issue is more nuanced. We travel and globalise because we can, without necessarily asking the key question - "Why?". Post Covid-19, that question of why will be far more important. When the question was asked post-9/11, it got sidetracked into a purely security issue - air and sea ports increased in size and sophistication, business travelers continued to find cheaper places to manufacture and buy product, and great numbers of individuals continued to see air travel as part of their vacation experience, with the only inconvenience the 20 minutes to get through security checks. But if your vacation consists of (a) being packed into an aircraft for 2-8 hours to (b) be packed onto a bus to get to (c) a large hotel complex with shared food, pools and beaches (d) amongst strangers, for a significant part of our society having seen what a pandemic can do, that may not be something worth the risk, however small, of infection. Vaccines will help restore confidence - depending on their ubiquity - but would you accept that security checks turned into health checks as well - and at both departure and arrival? And how intrusive would these health checks be?

d) Globalisation of trade was under great pressure pre-Covid-19 as nationalism and protectionism became ascendant in the politics of many countries. What Covid-19 has done is slightly schizophrenic. To the average person and many politicians it has re-emphasised the need for self-sufficiency, of them, of their nation. But the pandemic has shown how irrelevant borders are when it comes to natural phenomena - whether biology or climate (In fact the difficulty for climate change advocates is that it lacks the "immediacy" wrought by a biological threat). This schizophrenia is going to bring Multinationals and nation-states into conflict, as the latter will be seeking a far faster shortening of todays global supply chains than the former's shareholders (and managers) will desire or be able to manage - an economic dislocation that will inform and influence international politics. Global companies will still exist, but their centre / HQ will be much weakened by the impact on personal travel, on local politics of self-sufficiency as well as the existing national / protectionist trends.

e) What will be our leisure of choice?; Leisure spending has risen faster than any other personal expenditure in the 21st Century - as food and manufactures have generally decreased in cost. The leisure industry is all about "experience" - about how you experience relaxation, euphoria, exercise etc. And it has been built as an industry in catering to mass-markets - yes, you have your experience "customised", but generally from a set of offerings, whether you build your holiday on online, attend your local gym, take your children to Scouts/Guides, attend football matches, play sports at a sport centre, attend festivals and concerts, even going to a restaurant for a meal, etc. These are all provided in a myriad of personal ways, but are predicated on the experience being delivered to a multitude of people at a time - often in very close proximity to one another. The leisure industry will recover since people will be desperate for fresh "experiences" after what will have been the monotony of lockdown, whether you are working through it or simply staying at home. But in the short term the picture of how you will choose to have these experiences is clouded, and has profound impacts on an industry which is largely dependent on personal expenditure to survive. Let me take 2 examples.

If you are a football club, already under financial pressure as many are, at what point do you re-open your stadium? And when you do, what is your capacity? Stadia are designed to squeeze as many people as possible (safely) into a space to observe, engage and enjoy what they are watching. TV pays millions for the rights to show these games, but wants full stadia to allow the "atmosphere" to be transmitted to the viewers, raising their engagement and desire to pay for the experience as well. If the stadia are empty, how will this loop work, and how do fans engage with the clubs they "love"?

If you run a concert venue, how do you cater for the increased concern about social (or perhaps as we exit from the lockdown, appropriate) distancing, when the viability of your venue is dependent upon filling every seat in the house, or stading room? How do the vendors who feed the throng of people that normally attend the venue value their franchise in the future, and at what point do you risk returning to the "normal" running of your business - and what reaction will the public give you for so doing, if they remain nervous of social intimacy with people they do not know?

There are lots more "if's, but's and maybe's". Manufacturers in China are already providing masks, protective suits, and perspex divides to separate people on production lines, but for those engaged in manufacturing electronic circuit boards, where "cells" of individuals work collectively in close proximity, the changes have had significant impacts on productivity.

"Getting {insert your country here} back to work" will be far more than exhorting those in lockdown out of there houses and back to productivity. It will require businesses to be agile enough to respond to ongoing consumer behaviours that have become habitual during the lockdown, and to ongoing concerns for health and well-being of employees in a far more direct way than the rise of "Health & Safety" culture has done so far. And the transition from lockdown to the "New Normal" will be fraught with scare stories, over-reactions and, dare I say, businesses which will find it impossible to adjust.

But whilst I have documented some of the problems, which you will agree or dismiss as you see fit, my firm belief is that even if the "New Normal" will be different from what was previously "normal", the fount of human ingenuity will overwhelm these problems with solutions. It will just be different from before in ways that perhaps we have yet to visualise, let alone come to terms with. Its April 2020 as I write.... and already I can feel myself thinking "Welcome to a great 2021!"

Stay Safe everyone....