We are currently living in a time of “punctuated equilibrium”, where the status quo has been rocked by a sudden change – and we all know the cause. The adjustment has been rapid, and while what the “new normal” will look like isn’t yet clear, working life and business resilience has to adapt fast to have any chance of survival.
To get under the skin of this brave new world, in partnership with Capita Consulting, WIRED gathered a group of business leaders – from law, hospitality and the tech sector through to finance, retail and private equity. We wanted to find out what they think about the prospects for business and how they’re planning to adapt to a Covid-centric economy.
Six observations emerged. First, the pandemic has catalysed changes already underway, and moving fast to match that velocity is the new survive or thrive factor. Second, all the metrics of the past have been washed away – there is a zero-basing at work. Third, the new terrain is about adapting fast to brittleness and adjusting in a non-linear and incomprehensible world. Fourth, resilience is everything, even at the cost of short-term profits. Fifth, putting people first – humanising businesses – is no longer rhetorical but an essential business activity. And finally, and almost in summation of the other five, there is clearly a great reorganisation afoot.
Catalysing the Covid changes
Azeem Azhar, author of Exponential View, sees the speed of change as the critical factor. Longer-term issues around big data, decarbonisation and the pressure on old business models are still here, the difference now being one of velocity as they confront business and individuals at a much faster rate. Covid-19 is a catalyst for change in business, and as Azhar says, this is now “about uncertainty, unknowability and volatility” and how organisations speed up their changes.
Improved testing kits, especially for travellers, and faster systems to identify, treat and discharge patients will all help to ride that volatility. Perhaps better science alone will shrink the two-week quarantine that is fast becoming standard operating procedure. Yet as Azhar points out, “getting a billion people injected with a vaccine we’ve not manufactured and don’t know how to make is not a 12- to 18-month process – which we’ve been talking about for three months already, so that should be a nine- to 15-month timeframe.” This is something that will likely take years to complete and for which the impact will be felt continuously. And this assumes that Covid-19 is the end to it; but we all recognise that Covid-20 and 21 are very real possibilities.
Zero-basing all goals
By contrast, Ben Hammersley, author and futurist, believes that Covid has shaken our ability to plan for the coming years at all. The goals and forecasts of 2019 are no longer useful: “there’s a crisis in futurism. The way that we talk about the future is fundamentally broken and in fact is no longer fit for purpose.” For Hammersley, “the old way we’d talk about the future would be to stand on stage and, at some point, have an exponential growth curve going up at the right. We’d talk about Moore’s law a lot.”
There would be many mentions of VUCA – or volatility, uncertainty, complexity and ambiguity – and businesses would look to a linear model of how the world worked. “That’s good up to a point. And the point at which it ceases to be good is the one that we have reached very definitively over the past few months. And that is when you have a massive disruption – those sorts of things that we previously based our strategies around stopped working. It doesn’t work because the world isn’t linear in that way”.
For financial services, that means a rare opportunity to “zero-base” the assumptions and forecasts that have defined the industry – a do-over, so to speak. For the music industry, it’s a chance to absorb the sudden shift to home recording and citizen-creators that Covid has catalysed. For larger tech startups, it’s giving the freedom to move quickly and hopefully not break things, returning to their previous agility and energy.
Adapting to brittleness, nurturing socialisation
Is this the beginning of new era? For Hammersley, “we’re never going to go back to a time when those techniques, when those linear stories told on stage at TED, actually work”. In his analysis, the confusion many people have felt around how best to tackle Covid is a symptom. “Instead of VUCA, we have this idea of BANI – of brittleness, anxiety, nonlinearity and incomprehensibility”.
Adapting to BANI is key to thriving under the new rules that have emerged in the wake of Covid-19 and this concept of business brittleness is perhaps a defining feature of the great reorganisation. For the hospitality sector, brittleness is a defining issue for the future. At one end of the scale, the economic loss of a lifetime platinum banker, for example, who normally spends $500,000 a year on premium travel, will hurt profits. The aggregated loss of many such consumers who turn to homeworking poses an existential risk not just to the airlines but to the concierge services that cater to this sector too. It is a chilling factor across the entire premium market – from durable to brittle, overnight.
This replicates across all areas – from premium to economy. So how do businesses pivot in this terrain? For hoteliers, that pivot is dependent on two factors: the re-emergence of stable airlines and travel freedom, alongside new ways to engender trust in the safety of public spaces. Built around socialisation, the hospitality sector now needs to persuade both staff and guests that their services are safe – something a proliferation of Perspex screens and protective gear is too scary and simple to do.
For larger firms, the mass shift of office workers to home and distance working has triggered a worldwide scramble to become much more adaptive, and to be better at adaptation in its own right. These businesses are looking to put human factors front and centre for the future and recognise that for many people an office is just as important a place for socialisation as restaurants and hotels. They are seeking to rekindle that factor.
Nonetheless, for senior executives across all sectors, Covid-19 has offered an opportunity – however forced – to accelerate how they transform. Dusty plans once abandoned as a low priority are surging back to life. Businesses are back in the resilience game.
There is risk to putting too much future emphasis on this, though. As Hammersley points out, there may well be a growing sense that firms will come out of this period “better prepared for all the previous crises they’ve seen, and radically under-prepared for the next one that comes down the track”.
Nonetheless, for most businesses the current emphasis is firmly on resilience. All fixed costs are under review – from travel needs and client relationship management through to the commercial property estate held by larger firms. For the very first time in more than a decade, resilience trumps efficiency and for business leaders that comes with new opportunities.
The new game afoot for private equity is to invest in businesses that have adapted quickly to Covid-19 to hire people who are thriving in this era of uncertainty. That means moving fast, hiring CEOs remotely, and pushing to develop fast moving businesses in all sectors.
For bigger businesses across the board, Covid offers a once in a generation chance to leapfrog sticky issues. As Azhar says, this “is a hard but clear choice. The oil and gas sector, for example, has a massive chance to invest in decarbonisation – but they’ll need to cut dividends for five years. This is true for all sectors”.
For many executive leaders this is a chance to humanise business and leadership at scale. Some even stressed that as ambitions have changed, corporate intentions have changed too. There is a divide emerging between those firms who only want to indulge the new normal versus the businesses that take it more seriously – making it “human centric” or basically putting people first. For these leaders, it is about trusting that people have good intentions.
Like Hammersley’s, this worldview holds adaptability as key – an example seen in the National Health Service in the midst of the pandemic. When everyone is stressed and under strain, the ability of NHS staff to deal with change has been inspiring for millions. Medical services have always been adaptable, but the pandemic has now shown that to the world at large.
The human element is perhaps the most obvious clue to how sticky the great reorganisation might really be. People’s lives have fundamentally changed, and how society deals with that in the long-term is telling.
Empathy is the new goal. Business leaders have learnt to tolerate – even embrace – the appearance of children in Zoom calls. Despite being socially distanced, many have used technology to speak to staff more, not less. Mental health considerations – already rising in awareness – have been laid bare and businesses are openly looking to help in a way that was unthinkable a generation ago.
A great reorganisation
The defining question is whether Covid has led to permanent change for businesses – and of the leaders we spoke to, the answer is a resounding yes. As Azhar wryly notes, “we’ve had an easy ride as executives since Milton Friedman and for the last 40 years – short-term profit was all that mattered. It was helpful, but it has run its course. This change was well down the path before – but it’s something we’re going to have to contend with now”.
Old structures, old ways of working, even old places of work are losing relevance. Hammersley agrees. “The most talented don’t want to go back to the office. There is a race to delay going back versus never going back at all. There is a competition to be the company that is most observant of the modern day”. For Hammersley, those people and companies that are least nostalgic may be those that are best poised to succeed.
Just as Covid-19 becomes a part of life, it seems that some sort of Great Reorganisation has indeed arrived – but it may not be what people expect. Business leaders no longer focus on just the technology as they don’t want to miss the interpersonal element too. This reorganisation may well be as much a change in ethos, in values and approach, as it is a shift to online relating, trade and business. Kind leadership, human-focused businesses and adaptability to change are now paramount – perhaps they always were – but better allied to modern technologies following the shock to the system that this pandemic has given us. The new normal is one where business have to adapt fast, put people first and stop looking back.
–For more information, visit Capita Consulting