- Crisis Management
In late March of this year, I started putting together my thoughts on how COVID-19 would influence our world. In this post I’m sharing some ideas on the macro-level changes I think we’ll see in the months and years to come. I welcome thoughts and reactions in the comments.
In 2008 it was the banks that needed state support. This time it's the airlines. It's still too early to know whether this will mean that they'll be nationalised, or whether they'll be backed up by government-guaranteed loans. What is clear is that for at least the short term, states deem airlines to be crucial for their connection to the world.
Major events like the 2008 credit crunch and the 2020 COVID-19 crisis, show that some sectors (and the aforementioned are just two examples) need state backing when big events happen. Everybody was under the impression that these companies were part of the private sector, but when in trouble, the state should come to the rescue. In the not too distant past, states changed their view on the role of utility companies, to privatise or not to privatise, and different states have taken different stances.
Shortly after being bailed out during the financial crisis, some of the rescued banks were once again paying massive bonuses to staff and dividends to shareholders. There’s a strong chance that some states will not let that unpopular-with-voters scenario happen again, and will impose strict conditions related to state support. For example, the French government’s proposal to bail out Air France includes (very sustainable) measures aimed at decreasing the amount of national air travel in favour of train travel, and stricter CO² emission targets.
So all at once we see that governments around the world face an unexpected and non-voluntary role in helping certain crucial sectors. One could question whether governments are equipped for this, and it will provoke massive, and political, discussions about government involvement in certain sectors, also for the longer term. If you are in one of these affected sectors, you’d better start thinking about what this could potentially mean for you, because if governments have a stake in or control of a business, the governance for how that business should be run definitely changes!
The world has become accustomed to the concept of everything being connected. This crisis has exposed the downside to this. Not in digital spheres, but certainly in physical terms. Traveling so much, so cheaply and so easily, and using the lowest price products from far away, will be a thing of the past. Just-in-time has been the default methodology to enable low inventory levels, short delivery times and high efficiencies. To our pain we've seen that the downside of this efficient model is that it breaks when it’s disrupted and the lack of availability of a minor component can prevent the final production and distribution of products.
Travelling is another area where we'll be much more considerate than before: do we really need to be physically present, or is that merely a nice-to-have and could we be just as productive or more using video-calling?
Whilst companies have been fitting out new offices on the assumption of 60-70% of the actual space they needed previously, the crisis is teaching us that this percentage has been too high. Whilst forced to work remotely, people understand that there is no need to go to the office every day, and physical office space can be further reduced. Let's assume that the new need for workspace would be not 60-70%, but rather 40% of what was used before, meaning a potential reduction of required office space by another 30-40% from where we are now.
Interestingly enough, in the very short term,with the workforce returning to the ‘1.5m-office’, we might see more need for office space. The moment companies and property owners realise the lasting effect after COVID-19 in full, they will also understand the current overcapacity of office space, and the impact on the value of their properties. Additionally, this will attract more attention to the concept of home-office branding and virtual bonding within the company.
Two weeks ago, I hosted a 'What's next' video-call together with fellow Page member Barney Wyld (Group Director of Corporate Affairs at National Grid). Amongst other topics, the discussion covered who is best placed to lead the world during crises like these, and who has the best 'doing the right thing' compass. The latter is a pressing matter, as so many of our leaders are not independent - they might be running a political party or have a political bias, they might be running a business, they might have their own self-interests at heart and be using their power and influence for personal advantage. Yet the world requires leadership to navigate the way ahead - not just leaders, but very experienced, and independent, leaders. This is where we got to speak about people like Bill Gates (founder of Microsoft, now running the Bill & Melinda Gates Foundation), Jacinda Ardern (Prime Minister of New Zealand), Paul Polman (former CEO of Unilever) and Feike Sijbesma (Dutch COVID-19 commissioner, and ex-CEO of DSM, a global life sciences and materials sciences company). We discussed the conscience of leaders and how their ability to stay human and humble is greatly influenced by their partners (and in some cases their teenage/ adult children) at home - the 'chairman's better half'. These important influencers typically bring more empathy and a greater focus on doing 'the right thing', something that the world needs more than ever these days.
I’ll be back in a few days with further thoughts on how our “new normal” will impact our stakeholders and the ways our enterprises will interact with them.
View the second in this series here: How Stakeholder Decision-Making will Change After the Crisis
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