How are the global mega trends impacting your business in the context of Covid 19?
As countries across the World take their first tentative steps towards emerging from lock down, we notice that the context for business has shifted to a degree that could not have been imagined at the works Christmas drinks only 6 months ago. As we begin the slow reboot of the economy, this week we are considering what will make the difference for those businesses who will survive and thrive.
Before the Pandemic global mega trends were impacting business. A mega trend is a global and sustained macro-economic force of development that impacts business, economy, society, culture and peoples lives, thereby defining our future world and its increasing pace of change. Various commentators have defined these trends and we prefer PWC’s. They have identified 5 trends:
Rapid urbanisation
Climate change and sustainability
Shift in the global economic power
Demographic and social change
Technological breakthrough
We have been reflecting on whether the shift in context caused by Covid 19 has impacted these trends and also noticing that organistions that were already adapting business to take opportunity of these trends are being more agile in the face of the current challenge.
Urbanisation has interested us. Today more than half the world’s population live in Urban areas. Before the Pandemic PWC forecasted almost all of the new growth will take place in lesser known medium sized cities of developing countries. This may still be the case if there is no shift in industrial power and procurement from Indian and Chinese markets continues. But has the effectiveness of working from home impacted the need for city life in more service-based economies? Take London for example, an economy dominated by service and in particular financial services. The City contributes almost a1/4 of UK GDP. Will the long-established habit of office-based working continue or will there be a shift to a more remote workforce and if there is what will that mean to both the distribution of wealth perhaps evening around the country and to the talent pool available to those employers? Or is this just fantasy?
What about the environment? So many people are noticing noise reduction and cleaner air. In the lock down pause there has been a lot of reflection too. The fashion industry for example has been hard hit, as consumer behaviour has shifted and the spring/summer collection remains unsold. The fashion industry accounts for 10% of CO2 globally. Not to mention the value placed on garment workers who are treated badly and work in poor conditions. Could this be a moment for a big response? A transparent supply chain and lifting workers out of poverty? Could we move towards more sustainable production? Leadership will play a key part.
The pattern of the Pandemic was interesting. Starting in the East meant that some supply chains were hit before the Pandemic itself became a reality in the west. A client of ours was hit as early as January when his Signage business, relying on a factory in China, basically ground to a halt. It brings risk management of procurement decisions into sharp focus. Will leaders choose price going forward or will we see more localised purchasing? Economics will play a part in that for sure. As we restart will leaders make different decisions about their supply chain or how they risk assess it?
The trend of Demographics is here to stay. By 2030 the world’s population is projected to rise to more than 1 billion. People living longer and having fewer children. This is likely to be unchanged and in our next blog we want to look at the impact of this trend on the world of work. Perhaps one thing that we are hopeful for is that the people employed caring for people in later life are more valued as a result of the pandemic and there has been a rediscovered sense of community as people have more time to help out their neighbours.
McKinsey have reported that those companies that are both digitally and analytically mature outperform their competitors and predict that this gap will widen as a result of the Covid 19 Pandemic.
Technology is a trend that has accelerated in this context. We can see this in a number of different market segments such as online education and training, the Zoom Boom, online fitness, virtual tours of galleries and museums and online concerts and the rise of cashless payments – it feels as if everyone is reaching for a digital solution but what we are seeing is that the more successful companies are not simply transferring their offer form a predominately physical one to one that is digitally enabled but are reimaging what the offering is.
The digitisation of the world has taken a non-linear leap forward, working from home is now becoming a norm, people are realising that the time previously spent commuting can now be profitably be used on line or with their families, the ebb and flow of work is changing and the old prestige of a corner office has been replaced by what is on your bookshelves – we can see the impact on public transport, business travel and demand for tech or digital solutions. How are businesses picking up these new patterns and responding to them?
Of course, there is a darker side to the digital revolution cybercrime, increased levels of data gathering and surveillance is a real threat and needs to be balanced but does the urge to physically protect oneself out-weigh the risk?
We suggest that Leaders need to spend time looking for the patterns and what signals from the future we are seeing or what might be appropriate proxy signals – this is not an easy thing to do as the signals are confusing, they may be temporary or they might be the directing attention to the wrong future.
We are seeing a number of emerging capabilities that Leaders and companies who are being more successful during this period of disturbance are displaying and we are questioning why Leaders in other areas are not being as attentive or are being distracted by the day to day cash management, important as this is, to raise their heads and look for the emerging patterns. We also ask what of these patterns we expect to remain in place and become the “now normal”.
Adaptivity is the key to all of this as Darwin is reported to have said “It’s not the strongest species that survives nor the most intelligent but the most adaptable”. We often think of evolution as occurring over large timescales but where we are now the timescales for change have changed, everything is going into fast forward and even before we consider the “new normal” we are having to navigate the “now normal” – the future is no longer a destination but a series of incremental steps and experiments in the same way that natural selection is. Businesses that had the strongest balance sheets or cash reserves or the greatest intelligence of the past will be overtaken by those that can show the most adaptability, abundance in thinking and ability to recognise the new patterns.
Recognising the themes of Digitisation, Pattern Recognition and Adaptivity along with the Megatrends will be the difference between those Leaders that successfully reimaging and sustain their businesses through this pandemic and those that don’t and revert to familiar anchors. We recognise that this also needs high levels of emotional intelligence to navigate through these challenges.
We ask that Leaders reflect on the mega trends in two ways, firstly where they are in respect to them and their importance to them and secondly for their own business or market sector what they might mean as a “now normal” is coming into being, we leave you with some questions to consider this.
Anne McCarthy is an experienced leader of change and transformation, supporting business with their people strategy. (+44) 7801 091538.
Murray Cook is experienced at leading change in complex situations and developing creative solutions to strategic challenges. (+44) 7547 504277.
