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 macro 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 systematic mistrust, weakening international relationships and climate change — have not gone away.
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. “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 that 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. However, no one anticipated the deep damage caused by COVID-19, with a crash followed by persistent volatility.
Look to exploit remote work and e-commerce for better infrastructure and target requisitions to accelerate the digital business journey.
No. 3: Systemic mistrust
Even before COVID-19, global consumer and citizen trust was at an all-time low. Now, closed borders, fights for vaccines, and arguments over masks and rules, combined with a mistrust of “other”— even previously close trading partners — threaten 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, executives should 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.
Evaluate whether those actions 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. 4: 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 further reduced productivity by complicating business operations. The cost of operating in a socially distanced world is increasing costs, requiring significant reengineering to return to pre-COVID productivity.
Set bold goals for productivity that necessitate reinvention.
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, half of CEOs still see climate change as a factor impacting their industry.
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 in some geographies by a redirection of funding to stimulus packages, requiring alternative carbon reducing strategies to be invented.
No. 6: 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. Even small shortfalls of critical talent will corrode or destroy market positions.
Reconsider what types of skill sets will be needed in the post-COVID-19 world, and begin or increase reskilling programs during downtimes. Introduce agile learning as a core management philosophy and consider ways to widen the talent availability pool by rethinking remote work or gig economy options.
Technology advancement will, of course, have a large effect in the coming decade. AI, blockchain, quantum computing and the mass arrival of machine customers will change how organizations and societies operate. There will be more frequent market disruptions and the emergence of what comes after digital: Autonomous business. This will change the landscape of the decade.