In times of turmoil we must look through the noise and see the trends that will shape our future. Crises are not new, however this one is truly systemic and will be the defining global event for most generations alive today. Arundhati Roy furnishes us with:
Historically, pandemics have forced humans to break with the past and imagine their world anew. This one is no different. It is a portal, a gateway between one world and the next.
I’ve supplemented my own thoughts with those of leading commentators to identify 7 big trends that are being accelerated or amplified by coronavirus in a bid to define the new landscape.
1. SHAREHOLDERS RELY ON STAKEHOLDERS
Business prosperity depends on the health of society – coronavirus has made that link abundantly clear. Up until now, too many businesses have acted as if they are independent of society: running down natural resources, exploiting people, arbitraging rules and regulations, promulgating dubious sales and marketing practices and so on because they’ve been putting shareholder returns first (and have been allowed to get away with it).
Those days are pretty much over. Our fortunes are entwined and employees, consumers, regulators and governments are now wise to that fact. The Business Roundtable (US) recently acknowledged the importance of stakeholder health – it will be more impressive when member companies translate their intentions into concrete actions.
Former Unilever CEO, Paul Polman, notes that solving the pandemic problem has required a bigger level of partnership with entities like the World Health Organisation overcoming its historical reluctance to collaborate with business. Greg Hills, managing director of FSG, points out that system problems require system solutions.
They reinforce the need for public, private and social sector organisations to work together in new ways, traversing boundaries they’ve historically operated within. There will be a continued shift away from managing stakeholders to truly engaging with them.
2. HOWEVER, CAPITALISM IS HERE TO STAY
Capitalism provides incentive for private trade and industry to meet our needs instead of relying on government. I think we all enjoy the freedoms and advancements this system presents, but it requires prudent governance and supervision to work in our interests. Putting shareholder interests ahead of all others clearly doesn’t work.
Capitalism is often vilified, however it does have the power to create change at scale in relatively short timeframes. Author of The Great Disruption, Paul Gilding, writes:
Capitalism, correctly defined and well managed, can be a powerful and effective component of an intelligently designed, democratic and fair society.
We won’t abandon capitalism because it will take decades to figure out what a workable new system might be, assuming we could get consensus for change. However, the advent of the pandemic lowers our tolerance for unhealthy side-effects, and provides a mandate for improving the way that risks and resources are allocated.
With such a massive increase in public sector debt, government has far less capacity to fund social solutions and therefore more incentive to keep the private sector in line.
3. TWO PATHS. ONE CHOICE.
Ray Dalio, chief investment officer at Bridgewater Associates delivers some home truths in this TEDx interview on what corona virus means for the global economy.
He asks: Who pays? How will we deal with each other? How does wealth get redistributed? Will it ignite global tensions and war?
Ray believes our response can go two ways: wealth is redistributed to ‘increase the pie’, or via a ‘fist fight’, with those controlling power making sure they come out ahead. It’s unsettling that he’s not sure which way it will go. Looking at the way the US is failing from a leadership and collaboration perspective, his concerns appear justified.
Do yourself a favour and watch the video, it’s 52 minutes of gold, including the surprise of the interviewers when the penny drops that this is much worse than the global financial crisis!
4. THE RISE OF THE EQUITABLE CONSUMER
Corporate character – not just product brand character – is going to be top of mind for consumers who will seek greater equity in their relationships with companies. I know it’s cliched to say we’re all in this together, but it’s a fact, and if a company is perceived to be profiteering instead of pitching in it will incur more consumer wrath than in the past. Paying fair amounts of tax would be a good start.
I foresee an acceleration in the trend of companies partnering with government, charities and not-for-profits to create new types of value for their customers and communities of interest. Along with the ‘shared value‘ work of Michael Porter and Mark Kramer, Alan Murray of Fortune Magazine agrees:
I believe fundamental changes in the way large companies operate, as well as changes in the broader political environment, ensure purpose beyond profits will remain front and centre for the best companies in the years ahead.
Philanthropic gifts, corporate social responsibility programs and charity partnerships with brands will persist, however linking social investments to bottom line growth or connecting profit with purpose is the real trend at hand. It will be a test of corporate character, create greater tensions between short and medium term performance and require exceptional clarity of purpose.
5. INTERGENERATIONAL AND EMPLOYMENT TENSIONS
Will younger generations be dragging the heavy weight of the pandemic with them for a lifetime? With such a high debt burden, it’s hard to see how they come out unscathed. The only way to head off future flash points will be to give younger generations a greater say in our rebuild and recovery decisions, which may be a bridge too far for the stubborn Boomers and Gen-Xers who are used to calling the shots.
From a jobs perspective, the CEO of Social Ventures Australia, Suzie Riddell, points out that young people will find it hard to transition from education to employment. Re-skilling and adapting to changing labour markets is key.
The coronavirus may turn out to be the locomotive of history which accelerates the transition to a better, fairer society. But we will have to fight to ensure it happens.
Without strong and equitable political leadership, expect these tensions to boil over.
6. LOVING LOCAL. AGAIN.
We are entering a period of intense ‘localisation’. There’s good reason to re-think, re-boot and re-vamp local manufacturing, food production and create circular systems that bolster resilience to future shocks. Consumers have become more aware of where things come from and what is of most value to us as a result of coronavirus. Local and global interests can co-exist in the long run if sensible minds are put to work.
Professor Roy Green says this transition will take time in commodity exporting countries like Australia that haven’t invested enough in advanced manufacturing.
There are precedents for large businesses re-balancing. After their experience with Hurricane Katrina, Walmart started paying more attention to employee conditions, development opportunities, local food sourcing, smarter transport configurations, sustainable supply chain practices and renewable energy sourcing. Why? Kathleen McLaughlin of Walmart says that they now look to the business itself to create value and strengthen the systems they rely on in society instead of outsourcing that role to charities, NGOs and government.
7. TRUSTING BIG BROTHER?
The Australian Government is asking people to download the COVIDSafe app in order to improve our tracing of future transmissions via bluetooth technology – something that will reduce the risk of further disruptions and lockdowns. However it needs about 50% of people to participate for it to be effective, and it’s not clear yet if we’ll reach that threshold.
Government and private enterprise has excelled in exterminating our trust in the collection and use of personal data. Mark Andrejevic of Monash University believes public confidence must be won for tracking systems to be effective and experience to date shows we have reservations about entrusting our data to government.
Trust is not bought, it is earned; something that populist leaders and mercenary corporate CEOs have failed to grasp. It can be an uphill battle when the power to say ‘no’ is in the hands of the consumer.
It’s ironic that our locational data is being collected all the time through apps on our phones. It’s as if we are happy to be tracked, we just don’t want to know too much about it, and we’ll complain a heck of a lot if someone uses it for commercial, political or administrative gain.
Perhaps this is a case of two steps forward and then two steps back for tracking apps. Further outbreaks in the midst of recovery could become the catalyst for change. I wonder how many parents out there are looking forward to another 6 to 10 weeks banged up inside with their kids….?
There are many resources on this planet at our disposal: human, ecological, financial, social and economic. We can bring them together to solve our problems in a sustainable way and ensure everyone has the opportunity to live a decent life and be the best contributor to society they can.
Many of the trends I’ve outlined above are already in play; coronavirus is merely an accelerant. It reminds us that, in the words of Adam Smith:
All the members of human society stand in need of each other’s assistance, and are likewise exposed to mutual injuries.
Collective action, cooperation, collaboration – call it what you will – is the means for bouncing back and coming out of this stronger than ever. If we pass this test, it’s tantalising to think that the same urgency and resolve could be applied to addressing climate change.
You may agree, disagree or offer up your own view.
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This article replaces the original publication