What will Business Look Like After Covid 19?
As we've reach the point where we have been living with (or locked down by) Covid 19 for a year it is difficult to remember what impact the pandemic has had on all of us. We have become conditioned to living in lockdown. What started as a novelty, the no commute working lifestyle of Zoom and Teams, became a slight inconvenience, then a limiting way fo life.
I've been working with people across multiple business sectors, from public sector to senior leaders in both PLC and SME leaders throughout, supporting them through the unforeseeable pandemic challenges. As governments clumsy responded to the emerging pandemic, so business tried to keep everything running as normal as possible throughout the turbulence.
Business leaders like stability, normality and predictability, it lets leaders work within the known parameters of a market and deliver results accordingly. So uncertainty creates a whole series of challenges for business leaders depending upon their sector. Some where shut down over night, others were not immediately affected at all, but most fell somewhere in-between left to pulled back to a survival model or tried to pivot into this new market reality.
Uncertainty unsettled all. Every basic business assumption overnight was challenged. Leaders were left with shifting foundations of their business. What was solid and certain, became quicksand and uncertain. Were order books valid? Were orders still able to be honoured or delivered? Where had customers (b2B and B2C) gone? Confidence took a hit and business assumptions evaporated.
The debate and planning for Brexit had taken years of analysis and scenario planning across every business sector, while many businesses had no time to plan their response to the Covid pandemic. We watched what was happening in Wuhan and elsewhere for months without fully understanding its impact on our business environment.
Covid 19 Impact
UK business was suddenly trying to deal with the complete unknown, and even worse than that, ever changing business scenarios. From complete shutdown and furlough staff, to the yoyo open, shut, partly open and shut again, through to the carry-on your essential workers, to adapt and onto expand as you are now the future.
Many sectors such as travel companies have shut down (nearly full hibernation), the high street (bricks only) through to events and leisure sector. These casualties of the pandemic are now about to reopen as the vaccine reaches the tipping point, but are they opening just as they shut, or will they have seen the shift in the market. The Government may provide a prime pump investment to kick open these markets (and significant pent-up demand and money exists), but will it be 'business-as-usual' or will the real shift be understood by these sectors?
Other business sectors which has operated and thrived (yes there are sectors which have seen significant growth from home improvement, builders, home deliver and technology companies) who have seen exponential growth such as those involved in every aspect of lockdown Britain.
Business did not stopped, but it has changed and here is what we know so far.
There's No Going Back To Normal after Covid19
The impact of Covid has been to jump the economy 5 years forward from its natural evolution for nearly every sector, and for some that could well be 10+ years forward. That's not an evolutionary move forward but huge leap forward throughout society and one that it will not step back from. This is described as a paradigm shift within a market. In the same way a the iPhone changed the world of mobile communication so Covid19 has changed the business world forever.
As we unlock post covid, many voices just want to get back to normal, book holidays, get back to the office and reopen the high street. These leaders voices are those who have not seen (or refuse to believe any change has happened). The reality is that while a semblance of what was normal may be seen (Government money often puts a short-term smokescreen over reality), in reality each of those markets has irreconcilable changed.
Will the high street simply return once the lockdown ends? This is unlikely as much of it has been mothballed, some of it permanently, but the impact of a year of lockdowns has changed how society looks at shopping. The customer and business has changed, what and how people shop. Home delivery is now the normal for many people and the sector has changed. Why would it change back? While segments of the population like the old shopping experience, the high street is not there to support it. It has been replaced by pure online / home delivery coupled with click-and-collect services. The large format stores have shut up shop permanently or reinvented themselves as online retailers.
The high street is not just mothballed but has jumped forward. Home delivery of fast food now dominates the market. For example Cinema's once the preserve of the new blockbuster release, must now compete with straight to home services form Netflix, Apple, Now (etc) services. Huge investments by vertically aligned providers supported by the customer who have upgraded their home cinema experience and new infrastructure of 5G (and 6G on the horizon). With home delivery of food and drink (you can order anything by Uber/Deliveroo (etc), why go out?
So this is not a short-term hiatus between the norms, which normal can bounce back from, this is a complete paradigm shift across the entire business world. Let me explain why.
In any market the macro factors which drive the market are defined within the PESTLE assessment of macro drivers. PESTLE (Political, Economic, Social, Technology, Legal and Environmental impacts) a good as any model to summarise this, defines changes and their impact upon a market. A pandemic does not just impact on one factor for a short period time. A fuel shortage does make people sell their cars, but not needing commuting cars, city centre offices, business HQ's or regional offices through to high street shops, mean that the business world has changed forever.
What governments' have done to insulate this change through bounce-back loans, furlough payments, tax breaks and deferred loans, will soften the impact, but will not be able stop the change for the normal to return, but soften the rate of change for a new normal to emerge with the least impact that any society can afford. The impact fo Covid is not just on one element of a the PESTLE analysis, but on every aspect of the macro environment within which any business operates. Learn more at: PESTLE
People's behaviours have irreconcilable changed. Let me start with just one simple example: Work From Home will become the normal, it was on a growth curve, now it will be the expected normal for a workplace. Why commute to an office, if people do not need to? People are more productive working from home and provide lower costs to the company and less commuting will means that while the office is still needed, it is now somewhere to connect with the team, it is not the place to actually do the work.
If people are not going to work then the commuter travel, parking, petrol stations, work fast food outlets, shops and support services are all redundant. While some can pivot, the fast food outlet can joint the Just East home delivery network, others such as the large format high street shops designed for high footfall cannot. The later high street features were slowly dying as pure shopping moved online through Amazon home delivery, this shift will mean that the high street will need to look very different.
Our towns and cities can become something else. Somewhere where people can connect with society, but not somewhere people need to be 5 days a week. PESTLE macro market factors cannot be ignored by business. PESTLE factors drive markets and create growth.
Where's the Growth?
For business owners in every market sector even those which have successfully pivoted so far, this shift is only the start of this unknown and unchartered new world. Change in business is usually seen at the edges, with a paradigm shift, the whole world shifts, except for the laggards (who just complain louder).
Looking for growth is therefore a real challenge. Leaders cannot just look to their innovator or early adopter customers, but need to recognise that everything has shifted, new players, substitute products and services and whole markets have sifted overnight.
The first thing for leader's to recognise is that the people have not gone away, they still exist, and so do their needs and expectations. They have been moving house, upgrading their homes and becoming more self-sufficient at unprecedented rates. Customers still have needs and wants, it will simply not be the business suit. Growth will come as the vaccine rollout takes effect, but will companies be ready for tomorrow's growth opportunities.
The First Bounce of change is happening now across all sectors as a result from the Covid paradigm shift. The growth in markets from house sales, home building is just the tip of the iceberg off the growth that will come from this shift. As change happens so clarity fo the change will be seen and Second Bounce growth will also happen, as new and emerging markets become established and begin to shift into profitable volume.
Looking for growth from historic analysis will be challenging for business owners. Paradigm shifts require owners to look for horizontal parallel examples rather than linear historical analysis. Is Covid19 more the the arrival of the internet to a sector rather than your business performance over the last 5 years?
Uncertainty is the New Reality
Now is an excellent time to review your business model. We know that markets will open up, but what they open up looking like is not yet certain. For some markets such as tourism (in hibernation during the pandemic) knows that people want to go on holiday and that delayed and latent demand will enable an immediate short-term bounce-back of this sector as people will still want to travel (and probably more than ever before).
The longer term effect of change for travel will have several major long-term impacts. Business travel will certainly change, why travel around the world when you can click a button and connect to them through Teams? Couple the introduction fo 5G and the move to SaaS delivery of many services and suddenly established travel models will need to be redefined. Couple all of those factors with people's rapidly growing awareness about the environmental damage which long-haul flights have on their carbon footprint and suddenly safe assumed business models, may not be any more.
This is true for many markets, every market has become uncertain. But do remember that uncertainty is always an opportunity for the entrepreneur. It's the entrepreneur leadership mindset, between fixed and growth, do you see the opportunity or see change as a threat?
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