Crisis, what to learn?

The pandemic crisis on Covid-19, that we are facing and enduring, might be a wake-up call for our way of living, how we organized our health system, social security and the operational model of human society, the economy. Let me start with some observations and end with some challenges:

1 Covid-19 travels fast

The spreading of Covid-19 is a phenomenon based on human transportation or even better said, our travel-behavior. In a natural system the virus would have been a local issue and even possibly a isolated issue because the spreading through birds, mammals and flows of water and air, is not critical but incidental (like the eating of contaminated mammals started the virus to be hosted by humans). Human behavior is key to the travel-ability of the virus. That, combined with a human reflex of ‘denial’, brought the virus over borders even the biggest ones, like the oceans. Now, our second reflex is social distancing even to the level of practical shut-down of societies, only helps to ‘flatten the curve’. 

2   Covid-19 is there to stay

Our technology driven positivism gives us the feeling that in a couple of months the Pandemic will end and Covid-19 will disappear as fast as it came. The pharmaceutical industry is looking for solutions as well for prevention as for cures. Hopefully they will succeed very fast in both options. Covid-19 now is almost everywhere, the solutions should be also available to all, without the ‘social distancing’ becoming a ‘prevention in social inequality’.

3 Covid-19 destroys life(s)

People get sick and many die a terrible death, health systems (people!) are under severe stress and we see/hear (mostly) effects in the Western world. Mainly because of the capability to organize the information and capacity to operate society. Probably these societies became the first ‘followers of Wuhan’ because of our travel abilities. Other societies follow slower, have less capacity in their health systems and less capabilities to show adequate information on the pandemic consequences. Work is on hold or disappears, so poverty is the next Pandemic crisis. Life is at risk for many more than the infected people! 

4 Covid-19 creates inequality

Even in the Western world it seems to be that poor people have more severe impacts of the Corona-crisis. Many people with ‘poverty-diseases’ like obese, diabetes-2 and more, are suffering the most and have the highest number of casualties. Though in the Western economies there are social securities, the economic weaker individuals will be vulnerable for deeper poverty. This being said, we need to think about societies in the East and South, where social security is not or almost not available, healthcare is less developed, and cities/society often are far more crowded. Governmental support programs are relatively weak and the workers, the ones with the lower incomes (and mainly no savings), will suffer from the health- and economic crisis. Global solidarity is an urgent need. These are the producers of our clothing, our electronics so basically facilitators of our lifestyles. We need them in the long run, and they need us, the Western economies, now. 

5 Covid-19 shows the need of solidarity

Do we stand together? No, individualism and protectionism are what happens throughout the world. First, we are in denial, then we start blaming others, then we start to protect ourselves and compete with others on the need of hygienic protection materials and other medical needs. Bit by bit one can see that competition is not the best way to go. Is a life in the West of greater value than a life in Asia or Africa? The West has deeper pockets but should show an immense level of solidarity on all levels: healthcare, knowledge exchange, economic support and everything that is needed to save lives, to fight recession and to keep human dignity up. That is not philanthropy, that is basically, doing the right things.

6 Covid-19 should make us learn

Many things show up during this crisis. We are able to live our lives even in social distancing or even social isolation. Though many industries suffer, we can survive without travelling. Meetings and even classes continue virtually. All basic needs, like food (including toiletpaper) are still being produced and distributed. People’s creativity has no limits as can be seen through social media, every moment of the day. These are simple observations, I know.

On another level there is a huge learning possible on our economic system. Our focus on products and sales makes the economy vulnerable. Retail, of for instance apparel/fashion, dropped down in many economies by 90-95%. The Western brands are facing difficult times in the existing business models. Worse, is the effect on the countries where these clothes are made: their orders have been postponed, orders are being cancelled, payments delayed whilst often the production already has been done or started. The effect is disastrous. Huge numbers of workers are ‘on hold’ or even fired. In Bangladesh, India, Pakistan, Vietnam and other producing countries a massive crisis develops: the workers are the victims with no salaries, no social security and most of them without any savings. This will disrupt the industry on a, never seen before, level and in the end, bankruptcy will be the economic virus. The brands should realize themselves that their supply chain is not just a group of independent producers. Interdependency is key: no producers, no products, no business. Responsibility is key. That is: shared responsibility!

7 Covid-19 makes us localize

Travel is dimished, local production of essentials becomes important and the vulnerability of supply chains becomes visible. Nowadays production and consumption are massively shattered around the globe. When Covid-19 makes us close our borders, physically and even mentally, there will be a need for local/regional self-supporting systems. This will bring grand problems, since the Western world has no production capacity in many industries and other regions are depending on the global trade system. Smart localization and even smarter globalization will be needed. Already travel is being replaced by virtual meetings, we have a steep learning curve!  How can we re-arrange everything else?

8 Covid-19 shows the need of resilience

We can identify some critical phenomena that challenge the existing business models. The existing model is based on incidental and individual sales by customers. The next model should or could be ‘service-based’ contracting. The customer has a relation with clothing provider(s), who take care of the basic needs and the hidden needs of the customer. This is a long-term relation which continues even when retail collapses. In circular economy we identify this as ‘performance-based contracting’, it is not the product but its performance that is needed. The producer/retailer keeps the ownership and that means that stock becomes assets. Through a good asset management, the service-provider will receive user-based fees. These contracts are being made for a longer period of time (months/years). 

As in nature, after a disaster (like forest fires), the ecosystem will redevelop soon. Nature does not restore what was, it will develop what is possible. Now businesses should also use the moment to ‘develop what is possible’. Understanding that diversity brings resilience, so there will not be one single new business model. Up till now, we thought that diversity meant that we were in urgent need of new designs, almost every week or month. Of course, in fashion products change over time, but more important is the lesson that there is a need for new business models, in diversity and based on inter-connectedness!  

So, now is the moment for re-thinking your business models or re-design these when you prepare for the future, after Covid-19. This is a huge challenge, but the future will be challenging whatsoever even when you try to restart business as usual, now the need for innovation on business models is around everywhere!