How can businesses bounce back better after the pandemic?
1. REALIZE THE WORLD HAS CHANGED.
For better or for worse, the pandemic has changed the world. Its effects may linger for some time, especially if COVID becomes endemic, just like the flu.
Its biggest effect will probably on human behavior, and that has deep implications for business, especially for high-contact businesses, because consumption depends on human behavior. Businesses will have to figure out how much human behavior has or has not changed due to the pandemic. Will social distancing become the norm? Will employees prefer work-from-home arrangements to have a better work-life balance? In the US, some firms are having a difficult time coaxing young employees to go back to the office physically.
There are many ways that human behavior has been impacted because of the pandemic and businesses will have to figure them out. There will probably be greater health consciousness. That will impact business from the kind of health insurance they give out as an employee benefit to greater demand for cleanliness and ventilation in the workplace, malls, hotels, or just about anywhere people congregate. Digital devices and services that minimize physical contact will probably become more widespread. Financial services, for example, will shift faster from going to the bank to make a deposit to apps that consumers can use to deposit, transfer money, or invest.
Businesses will probably have to rethink business travel because the new world will be one where destinations will require proofs of vaccination, travel health insurance coverage, and perhaps, some enduring health protocols. Business conferences may also need a rethink, and the business of event planners will change.
Consumption goods that can boast of anti-bacterial or anti-viral properties are enjoying a boom now, and that will probably endure. For example, there has been a shift toward coconut oil, especially extra virgin coconut oil, because of the perception that it helps in fighting COVID.
For sure, business opportunities will multiply in the health sector, from vitamin formulation to the provisioning of masks and other infection-control products. Globally, even before the pandemic, because of the ageing of populations in advanced countries, there was already an increased demand for healthcare workers. The pandemic has ignited probably an explosion of demand for them, as countries try to increase their respective healthcare capacities in preparation for another pandemic. There will be increased pressure to produce more nurses, doctors, medical technologists, and physical therapists so schools with these courses will probably enjoy a sustained boom.
2. FIGURE OUT THE NEW WORLD AND YOUR PLACE IN IT.
The world has changed during this time of lockdown, and not just because of the pandemic.
On the economy, for example, the world is experiencing much larger fiscal deficits, record low interest rates, and disruptions in global trade. What does this new environment mean? Economists are divided. There’s a group of economists, such as Harvard Professor Larry Summers, who believe that rising fiscal deficits and very loose money will cause inflation. On the other hand, there are some who think that rising prices, if any, are temporary and are the result of the short-term disruptions in the supply chain. Whether the future will be one of high inflation and higher interest rates or of low inflation and low interest rates will certainly affect how businesses are run.
To some, the high fiscal deficits and inflation are welcome developments because of structural stagnation, the idea that the economies of advanced countries are suffering from depressed demand due to demographic decline and other factors. In much of the developed world — China, Japan, the US and Europe — there’s a worrying trend of demographic decline — people are ageing, and birthrates are low. This would mean fewer younger people who consume and an older workforce.
Also, during this time of lockdown, the effects of climate change have accelerated. Record heat waves and forest fires in the United States and Europe have shown that climate change is real. The Philippines is one of those most vulnerable to climate change, from more severe storms to rising sea levels. Businesses must plan for these types of climate-induced natural disasters, as much as they must plan for the next pandemic.
3. DO INTENSE SELF-EXAMINATION.
After this pandemic, businesses must examine themselves and ask: have we built resilience into our businesses? Are we diversified enough in terms of markets, products, or location so that in case a natural disaster descends upon us, we won’t get wiped out? Are our balance sheets strong enough to cope with periodic setbacks due to natural disasters or are we too leveraged and therefore must still pay fixed interest charges resulting in grave losses?
Are we digital enough? How much of our business is digitized and therefore can cope with physical disruption? Are we going back to the office physically and if so, how? How do we redesign our offices so that they are healthier and safer places to work? Do we have to change our employee health plans?
How do we update our disaster resilience plans? Do we have to build our business in the cloud, rather than on our inhouse servers, which could be disrupted by earthquakes, fires, or other types of natural disaster?
The world indeed will be different post-pandemic. In fact, the virus may be here to stay, and life won’t go back to pre-pandemic days. What businesses should do is to draw rich lessons while the lockdowns and mobility restrictions were in force and evolve to adjust to the changed environment.
Businesses may be poorer because of the pandemic, but they should be richer in wisdom and lessons learned. This is how to bounce back better after the pandemic.
Calixto V. Chikiamco is a member of the board of IDEA (Institute of Development and Econometric Analysis).