COVID-19 changed the way businesses operate, but executives must look beyond the pandemic to other global issues that will shape business in the 2020s.
COVID-19 might dominate the headlines, but it’s just one of eight key factors that will reshape business in this decade. The global pandemic will have long-lasting and far-reaching impact on the business world, but other shifts in macrobusiness environment areas — such as oil prices, weakening international relationships and climate change — have not gone away.
“Highly leveraged debt, crumbling international alliances and bubble-like asset prices. These were overdue for a reckoning”
Executives will have to grapple with a host of other challenges during the 2020s, but from that maelstrom will rise new business opportunities.
“The COVID-19 pandemic arrived at a time when economies were already on the edge,” says Mark Raskino, Distinguished VP Analyst, Gartner. “A decade-long boom, generated substantially from inexpensive finance and lower-cost energy, led to structural stresses such as highly leveraged debt, crumbling international alliances and bubble-like asset prices. These were overdue for a reckoning.”
No. 1: Global pandemic
The impact of COVID-19 will depend heavily on how long the pandemic lasts. A shorter time frame means that people will revert more quickly to pre-pandemic ways of operating. For example, after 9/11, people reverted to normal flying behavior three years later. If the pandemic persists, it’s more likely to have long-lasting societal effects. For example, the Great Depression impacted food habits for decades.
Think about how the pandemic will affect societal behaviors like personal hygiene and personal space norms, social gatherings and family interactions, the savings ratio and consumer buying habits.
No. 2: Market crash and recession
Although COVID-19 served as the visible catalyst for the 2020 market crashes and subsequent recovery, the reality is the markets were already fragile and precarious. In fact, Gartner found that in 2018 and 2019, half of CEOs were anticipating and preparing for an economic downturn, which makes this recession unique to those in 2002–2003 and 2009.
Consider a variety of business and economic growth rate curves and test recovery plans against different possibilities. It’s likely that organizations will see reconfiguration and trend shifts in capital markets.
No. 3: Tech exuberance fade
For the past 10 years, a variety of game-changing emerging technologies were a big focus for companies looking to innovate and differentiate. This tech enthusiasm may deflate during the next few years. Some technology, like artificial intelligence (AI), will continue to be popular, but uptake of more “bleeding-edge” technologies like quantum computing and blockchain, with less-obvious use cases, could slow.
Revisit plans for speculative investment in new technology as skeptical boards reduce interest in less-proven technology. Begin thinking about restructuring plans for digital transformation in the current environment. There will be a trend toward outcome focus and pragmatism over open experimentation and innovating with the latest technologies.
No. 4: Talent shortage
Despite an increase in unemployment rates globally, key talent shortages will continue to plague executives. While COVID-19 has increased unemployment and underemployment, it has not created new pools of in-demand talent.
Reconsider what types of skill sets will be needed in the post-COVID-19 world, and begin or increase reskilling programs during downtimes. Also consider ways to widen the talent availability pool by rethinking remote work or gig economy options.
No. 5: Systemic mistrust
Even before COVID-19, global consumer and citizen trust was at an all-time low. Now, closed borders, combined with a mistrust of “other”— even previously close trading partners — threatens to widen the gap. However, it’s possible that over the long term, a common enemy in the virus will inspire empathy, common purpose and cooperation.
In the meantime, consider whether consumers will continue to be loyal to long-standing brands or shift to those that have supplies of limited goods. CEOs had to make difficult decisions in response to COVID-19.
See if those actions have irrevocably shifted attitudes toward the brand. A more personal connection — such as an open, authentic and empathetic email to customers — might help overcome distrust.
No. 6: Weak productivity
Slow productivity growth and a lack of focus on efficiency and productivity has been at odds with the economic growth of the past decade. COVID-19 could drive changes that require executives to take a closer look at operations of the organization, from out-of-date products to bureaucratic roadblocks.
Consider how an increased proportion of remote working will affect overall productivity. The cost of operating in a socially distanced world will increase costs, requiring significant reengineering to return to pre-COVID productivity.
No. 7: Oil price conflict
The current global economy relies on oil. At its peak in 2008, oil reached a price per barrel of $150, but now faces the opposite and unplanned extreme. In March 2020, due to a dispute between Russia and Saudi Arabia, the price per barrel dropped to around $20 and after recovering, has hovered around $40. This has the ability to reset assumptions that are the basis of global competition in many industries and reshape economies.
Consider how hydrocarbon energy will compete with solar and wind and how this will impact global aviation, chemicals, plastics and others. Also, consider the possibility that an overshoot on oil supply cutbacks could cause the price to spike again.
No. 8: Climate change
At the very start of 2020, climate change was moving to the forefront of framing long-term business strategy and plans. Although temporarily overshadowed by COVID-19, executives should assume it will continue to influence businesses for the next decade.
Don’t be fooled by temporary environmental wins caused by lockdowns and reduced travel, although you can look to these outcomes for inspiration on how to adjust work permanently. Keep in mind that major infrastructure projects designed to mitigate climate change could be delayed by a redirection of funding to stimulus packages, requiring alternative carbon reducing strategies to be invented.
No matter how tired or jaded their team becomes, executive leaders must never short-change time spent on scenario planning and replanning. Expect to return to these macro factors repeatedly over the next two years. That work will be crucial to short-term corporate survival and long-term health.