COVID-19 and the Future of Business

COVID-19, the coronavirus pandemic, is seen as an event of the century. Some call it a black swan event. Its impact is felt across all countries and sectors of business. The pandemic is reshaping the world. In this piece, I explore the possible changes that the pandemic could bring about in businesses.

First, let us see what the future is likely to look like. No one really knows. If the virus is rapidly brought under control we could be seeing a U-shaped recovery. If that doesn’t happen there could be a long bottom and late recovery – almost like a saucer shape. Alternatively, there could be many periods of ups and downs before a full recovery. Anyone who is forecasting today is literally gambling on the recovery. As and when things look up, the changes are likely to affect all business functions and activities.

Innovation: The pandemic has fostered innovation from using artificial intelligence to search for cures, textile companies making surgical materials, automobile companies manufacturing ventilators. The innovations are not restricted to companies alone. Many individuals are innovating on their own with great results. Companies could leverage this innovative spirit and use it built new businesses, new products or gain new markets. The trick is not to let the momentum slow down.

Consumer behaviour and markets: There is likely to be a shift in the way consumers interact with products. Trying on clothes before buying is a common practice on both online and offline mode. With the risk of infections through touch, consumers are likely to avoid touching clothes, leave alone trying them out. Attendance systems at companies will move to facial recognition over fingerprint scans. Companies will have to innovate to mitigate the risk of touch. This will happen to many kinds of products.

Markets for particular categories of products are likely to grow. Personal safety products like sanitizers, masks, gloves will grow. Surveillance products are also likely to grow as governments will see an increasing need to track. Ready to eat food is likely to be seen as a substitute for restaurant food that might be considered risky. Healthtech and services for the elderly are likely to gain traction.

 Operations & Supply Chain: With many countries in lockdown the disruption to supply chains is clear to see. Procurement teams are scrambling to secure raw materials and components, and, protect supply lines. Many companies that were dependent on supplies from China suddenly realised that there was no access. Supply chains need to be made more resilient. Supply chain teams need to know exactly which suppliers, sites, parts, and products are at risk. This information will allow them to put themselves first in line to secure constrained inventory and capacity at alternate sites. Most of the procurement activities are centred around cost savings. This means obtaining supplies at the lowest cost possible, provided they fall within specified quality parameters. Post COVID-19 this is likely to change with risk of supply being factored into the cost.

Finance & Risk: The pandemic is likely to have (at least) short-term impact on the finances of companies. With many companies shut down and small business bearing the brunt, recovery is going to be painful. With little cashflows, repayment capabilities of companies will be limited. With an uncertain future, bank credit is likely to short. The risk of touch will propel digital payment systems. Insurance companies will have to learn to deal with different kinds of risks. Force Majeure will take on a new meaning.

 Human Resources: Work from home is becoming a new reality. After the COVID problem is gone, a significant share of work may move to WFH mode -- at least partly. Human resources will be challenged to train people with skills that will enable them to work more efficiently. Staff may see a risk that they may be compared unfairly with people who are more visible in the office. How do we reimagine water cooler conversations that lead to many solutions and innovative ideas? The hiring process will need to take into account needs to WFH performance. Employee health, both physical and mental will gain prominence in the HR function. Social distancing within the work area would become the norm. Online learning will get a boost. There is likely to be greater emphasis on videoconferencing as a means of doing business. Business travel will increasingly get substituted by videoconferencing.

Sustainability: One of the side-effects of COVID-19 has been a tremendous reduction in pollution levels. Cities like Delhi which remained smoggy almost throughout the year, now, sees greater visibility and cleaner air. This is likely to trigger the demand for electric vehicles and solar power so to maintain their environment. Thus, decarbonisation is likely to pick up the pace. At the same time, ESG investing has been picking up traction in the recent past and data seems to suggest that they have outperformed during the downturn are likely to capture the imagination of the public.