Singapore is slowly trying to round the bend in our circuit breaker efforts. We are have been seeing a dwindling number of local transmissions of the virus in the community, and while the total number of cases remains high, this looks to be petering out. Last week also saw, for the first time, the number of discharge cases for the virus higher than that of new infection cases. Well done!
Yet, we are not out of the woods, not by a long shot. Many companies are itching to start ramping up business in an attempt to close the shortfall in revenue for the past 4 to 5 months. Some will not be able to make it and will have to shutter for good (especially so for F&B outlets and bars). Some will come back to a new dawn of business, where the rules of engagement have changed significantly – and permanently. Others will thrive, simply because their business model is suited for post-Covid19 existence.
Will you thrive or will you capitulate? What will make one business soar after Covid19, and make another fail? In this post, I will share my ideas on this based on 8 Big Ideas that I picked up at a webinar last week.
So on 13 May 2020, I attended a webinar by Dr Pablo Martin De Holan, Dean of HEC Paris in Qatar. In his talk, he shared 5 big ideas for organisations, and 3 more for individuals. I do believe these are important for all of us to take note of, and, more importantly, understand how these will impact businesses and individuals going forward. The key thing to note is that while Covid19 will be the biggest disruptor of economies, it is also the biggest opportunity-provider for businesses. It all depends of whether we are nimble enough to catch the next wave, or too rooted in the past to move ahead. That is totally up to you.
The five big ideas for businesses are:
1. Nationalisation of the supply chain
It used to be that China was the world’s manufacturing hub and many global companies had uprooted their local production capabilities and planted them in China for “economies of scale”. Contract manufacturers thrived in China, increasing capacity to the point where unit costs were so low, that Apple could even make their newest iPhone for less than $500 (source: Investopedia, 27 Mar 2020). Mind you, they are selling that phone for three times the cost! However, Covid19 has demonstrated the risks of such a dispersed supply chain. The just-in-time (JIT) model of getting all your suppliers on a tight and accurate timeline works only if there is very high efficiency in your transportation – right from raw material to finished product. With global air and sea transportation in disarray, and with no real timeline to when air transport capacity will go back up, manufacturing and supplies will return home. This will translate to higher costs; and that will also mean higher price of the product, but that will also mean that there is greater supply chain resilience. Indeed, Covid19 will accelerate the advent of deglobalization, something which had begun before the start of the pandemic. “Made in Your Country” will now become hip again. So, time to start building capacity once more! Oh, and you know what? There might even be a nationalization of MNCs! Just last week, France cried foul, saying it was “unacceptable” when French pharma company, Sanofi, decided to give the US its virus vaccine first before its own home country! Nationalisation has already begun! Covid19 speeds up deglobalization!
2. Business Model Reinvention
It is not just your supply chain that will be impacted, but your whole value chain. What customers used to want, when they wanted it and how they wanted it, would have changed. As it stands now, most of us have gotten used to juggling work and home duties, getting online to attend a meeting as well as to learn new knowledge. All of our business processes have been impacted by the lockdowns, and new behaviours and habits are being formed as we speak. This will create new ways of doing things, and the “old” normal may no longer work. Business owners are already finding out that many functions don’t need to be conducted from a central location. This means that we won’t need to travel to the office, spend time to “get into the groove”, start the day’s discussions, submit reports, go for client meetings, and then at the end of the day, commute back. We would have saved all that time and yet produced the same output. Hence, commercial rentals may see declining renewals as businesses opt to make “work from home” (WFH) a permanent feature of their business model. This will certainly impact the way business is being done, the way products are being developed, the way services are being consumed. Hence, there will be a need for constant business model pivots as businesses adopt agile methodologies to reinvent their models. And, think about it, if your business models are being disrupted, aren’t your customers’ too? Hence there will be a systemic global business model reinvention where one pivot will lead to other pivots and so on. Fortunately, the time between pivots will lengthen, and the need for re-pivoting will peter out. Until the NEXT pandemic!
If it is not abundantly clear by now, everything that can go digital will go digital. There will be a recalibration of human activities to go online, perhaps even more than what we are seeing now during the lockdown. Machine learning, artificial intelligence and big data will be the currency in the “new normal”. Marketplaces have already become more digital, and they will be even more so going forward. Blockchain, which until now seems to be a concept that needs more validation, will become the key enabler for secure information validation. Services that once were thought to be in the domain of physical human touch can now go online, with some variation to the fulfillment. Take massage, for example. We may think that this cannot go online because we need a professional masseuse to rub all the kinks away from our back. But combined with a massage ball and an exercise mat, we can enjoy a back rub with an online connection to the sport therapist without having to meet with him/her. Experiences are now being recreated or replicated online with virtual and augmented realities. Since we now cannot fly to Everest, we can bring Everest to our living room! Of course, some human experiences may never be able to be digitalized; for example, childcare. And we still cannot build a car online, or can we?
Of course, if we nationalize the supply chain, recognizing that we don’t have all the raw materials, then we must expect that there will be slack. The JIT model works in a truly efficient market with zero leadtime. But the minute you have leadtime, there has to be some slack. And with leadtime, you need inventory. Such inventory will be housed in strategic stockpiling centres around the land. That increases costs, but it also increases resilience and flexibility. Obviously, the cost of this slack will become more and more expensive, and will weigh on the political will of leaders. The further we move away from Covid19 in the future, the less and less willing leaders will be to pay for slack. Yet, that is precisely the time we need to pay attention to the slack, and maintain that slack. Because, as we move away from Covid19, we are getting closer to Covid27, or whatever other number it would be. We must never forget that the next pandemic is around the corner; and while we will one day do a phoenix on Covid19, we will also be moving closer to the next one. Covid19 is NOT our first pandemic, and it certainly will not be our last. Hence, we need to ensure that the slack remains; and we must absorb that cost in the products and services that we consume.
5. New Ways of Working and Living
As we can see - nationalization of the supply chain, business model churn, digitalization and slack – these will certainly change the way we work. Even as we speak, UK has announced that Britons will be going back to a different type of workplace; there will be no more hotdesking, there will be no more pantry talk; there will be continued safe distancing. As mentioned earlier, this will make the case for prolonged working from home (WFH); so much so that it may become the primary mode of work. It also means that we won’t need to commute to work, we meet our customers online, we plan production orders from our kitchen table, and we cook our meals as we cook our books – I mean, prepare our books! Suddenly, Tim Ferris’s 4 Hour Work Weekcan become a reality for the majority of us, not just to the select few. Nationally, we can even start to conceive of a car-free nation, since many of us will not need to spend futile hours commuting to the office, and then back. Car sellers may find themselves out of business, even in car-crazy Singapore! In a sense, we will be seeing a blurring of the work-life divide; and where once we were striving for it to balance, it is now seamless!
And what do all these mean for us as individuals?
6. Non-Linear Careers
As jobs constantly get redefined, so too do careers. There will be greater enlargement of job scope at an accelerating pace. Responsibilities will constantly enlarge as businesses look to keep pace with rapid changes in the market, as well as with ever-increasing costs. While some portion of that cost will have to be borne by the customer, organisations will still have to bear part of it. To manage that, job responsibilities will be enlarged. Our roles will no longer be bound by our job description but by the requirements of the business and the economy. And with increasing focus on online fulfilment, jobs will evolve at a faster rate each year. This also means that we have to keep up with it at an accelerating pace. We must therefore embrace….
7. Lifelong Learning
This is not just a simple catchphrase in Singapore, but a global necessity. Everyone everywhere must constantly learn new things. Yet while the Singapore government has given all Singaporeans aged 25 years and above $1,000 in our SkillsFuture account to “take whatever course you like”, lifelong learning for your career needs to be better planned and executed. We mentioned machine learning, AI and big data earlier, right? Well, add to that simulation and modelling, scenario planning, strategic thinking, customer insights and business model innovation. These are the key skills that we should accumulate, not just as a matter of career progression, but as a matter of professional progression. In fact, these may increasingly become the key skills for the Roaring 20s, not just for keeping our job, but for consideration for a new one. We must constantly keep learning just to keep up.
8. Living with Uncertainty
Let me ask you a question… do the world’s airlines need saving? As we speak, the US is bailing its numerous airlines from United, to American Airlines, to Delta, to jetBlue and so on, to the tune of US50b (grants and loans). The Singapore government has bailed SIA to the tune of SGD48b (no chump change here!), and the German government bailed Lufthansa for close to EUR10b. Do we expect to fly anytime soon? Do we even NEED to fly? As it stands, airfreight is still moving. So, what we are not seeing is the movement of people between countries. But with the way the business landscape is changing, and with that also the opportunities for digitalized solutions – even for vacationers – do we still need so many airlines in the world? The bailouts are based on pre-Covid19 business models, which we have already seen, are greatly outmoded. So, do we really need so many airlines? For that matter, do we need so many hotels? What about private cars? Tailors? Casinos? Restaurants? Cinemas? Cafes? Tutors? While I am not suggesting that these jobs may be lost post-Covid19, many businesses are counting on business-as-usual (BAU) to return to them once the lockdown initiatives have been lifted. But the politicians around the world (save a couple) are unanimous about this - BAU will not be BAU as we know it. The U in BAU has already evolved, and what it looks like now, and what it will look like 3 months, 6 months, or even 12 months from now, is anybody’s guess. Things are now in a constant flux, and they will remain so over the coming years. In fact, this uncertainty will be here to stay, and until and unless we make ourselves more resilient, more growth-minded, to identify new opportunities, pivot our business model and work towards them, we will be sorely left behind.
The Leveller of Inequality
If there is anything you must prepare yourself and your business for, post-Covid19, is the fact you will not know what you don’t know. In fact, what we once knew, is no longer valid. Such uncertainty can induce fear in all of us. But there is another view of this; and that is one of opportunity. The Chinese character for crisis is 危机.The first character, 危, comes from the word “danger” (危险 ), and that is where your fear stems from. But the second character, 机, comes from the word “opportunity” (机会). That means that on the other side of our fear, on the other side of this crisis, on the other side of this uncertainty, is an opportunity; in fact, many opportunities. We cannot change the path of the pandemic, and we cannot make the environment less uncertain; we can only look at it as a means to embrace new ways of doing things. Pandemics are Levellers of Inequality; and what had once brought you to the front of the pack, may now drag you to the back; and what had once kept us at the back now propels us to the front. So, Covid19 has created for us a level-playing field, where the big players and the small boys can sit at the same table, and compete on an even keel. It is up to us to seize this opportunity, or to let it slip away.
So, let us all don the growth mindset, look beyond our limiting structures, and embrace the future. Because that is where the opportunities lie!
PS: If you want to know more about the growth mindset, do check out our FREE growth mindset assessment – the only such assessment in the world that allows you to understand the five dimensions of the growth mindset, and where you should be focusing on to seize the opportunities that Covid19 is offering to us! You can find that assessment here: www.growthconsultingtest.com