Navigating the Maze

Informing our future, creating new visions, and opening new pathways

“My belief is that the purpose of economic life is to meet the social needs of people” – Maurice Strong

Overall

Our future has never been more uncertain, this pandemic has created a level of ambiguity in our thinking driven by an unravelling of our collective social, political, and economic environments that has never been seen before in modern times. What makes this crisis so different from others is, that unlike the wars of the past century or the many financial crises of late, this time we are fighting an invisible enemy. The virus could have been contained but it was not, and this has thrown a spotlight on all that is wrong with the world. Once more the capitalist model is under attack, the system that has created opportunity and wealth, 12 years on from the last major crisis is facing yet another. Is the capitalism we have created failing and, do we need to change the narrative, to start to engage with a different future and become better leaders more focused on purposeful impact?

This crisis calls for a systemic thinking – solutions that address the issues in a piecemeal approach will only lead us further away from a truth, that what is needed is a new world order with a different set of metrics, value driven and human centred.

Political

The lasting shifts from this crisis, and there will be many of them, are harder to discern because this is a health crisis that was constantly downplayed (hidden / under-reported) and at the same time allowed to become a pandemic despite of or because of being a globally connected and interdependent world. The implications of what this means for globalisation and for the future are unknowable because we cannot answer with any degree of certainty, when will it be safe to resume business and life once more?

The political power plays are unfurling as the USA appears paralysed on the global stage. Inward looking and bitter, the trade wars it has instigated continue whilst the latest actions to withdraw WHO funding appears tit-for-tat petty. It may attract sympathetic nods because the actions of the WHO should be challenged for not calling time on misinformation, but the timing sucks when we are all facing this pandemic head on. Once more Trump appears to be handing the baton of global leadership to China, by-passing a fractured European landscape. It is too shallow to believe that this is all about Trump – America is and, will be for the foreseeable future, the primary stimulus for economic activity, giving its political strength backed by a psychologically pervasive military presence – real and fictitious, the idea of US as a stagnant failing global power is untrue. China may wish to dominate the current narrative but too many are pushing back against their advances to see them carry the baton across the finishing line. They simply do not have the cultural outlets that dominate stories, images and play to societies needs for heroism and survival. That is what the US pushes out there – so well and so ubiquitously. China has apparently picked the baton, they are behaving as the saviour of society, dishing out ventilators and masks along with sage advice on how to stay alive. Good intentions from the country where the virus originated – but at what cost to the rest of the world, as China absorbs an ever-bigger piece of the economic global pie.

Europe is a different challenge - how can one country contain the tragic impacts of this pandemic so well whilst its neighbours, allies in a confederation, suffer such immense loss of life? If you wanted a physical manifestation in European inequality here it is, in the disparity of death toll. Europe needed a joined-up response, a collective unified message to stand united in this hour instead it appears to once more to have chosen not to. The tears within Europe will continue to pull apart post crisis unless leadership, powerful clear visionary leadership, that pulls the thing together appears. My gut says Macron will be the man to make this happen if he is allowed to? His rhetoric in this crisis is urgent, decisive, and inclusive – far more so than any other European leader. If the grand project is to survive then we need him to lead from the front.

The UK is facing a double whammy of uncertainty because we have stopped talking about Brexit it does not mean it is not going to happen. The latest rush to import 80,000 Romanian fruit pickers is yet one more manifestation of a weak system of investment and a business model that is reliant on cheap. If we are to lose this dependence on others we need to correct the failing models of the past, if we are to survive yet another self-enforced isolation, this time for the country, then we need to reinvent the model to a far more value led one. The paradox of a Tory Prime Minister hell bent on bringing in immigration policies being nursed back to health by two migrant workers will not be wasted on many. The NHS will for many years be supported by every political party with a newfound zest and verve, if only because it is the last line of defence, politically, when the NHS relies on migrant workers to operate – the challenge has to be addressed and the question met – how can we do this without a full contingency of migrant workers?

Politically unity in the UK will not last, and post Covid-19 we will return to the bitter recriminations of political party politics, the question though will be whether the country will allow this to happen? We have a new leader of opposition, someone who is in favour of electoral reform, if the Tories are tarnished in their handling of the crisis, the handling of Brexit and the economic malaise that will certainly follow this situation then we could see the political landscape change for good. Democracy may be the winner post Covid-19 as we mobilise the country to believe in a better future. Of course, many will chime about political instability and a system that has done us proud but the standalones facing down PR will not win, because stability is a forgotten thing in the world of turmoil and change. Democracy does matter in the search for engagement and accountability, the British people have been heard, every Thursday night banging a gong for an institution we do not want to sacrifice on the altar of austerity. If this newfound voice is once more muffled, suppressed or ignored then we will return to a world of what was not what ought to be. The Tories have been given a chance to change their narrative by a young chancellor who has led from the front, and a prime minister who could, if he was so inclined, be focused on healing rifts and acting as a catalyst for collaboration and not the engine of dogma we expect. Boris’s experience may well be a life changing one for him – in many more ways than one – will he become Boris the Accommodator – a bi-partisan and inclusive leader or will he revert to type?

Economics

Traditional money is entering a complex stage in terms of its relative values as the flow between government printing presses and private sector survival will presumably at some point need reversing. The value of the money is liable to enter an extreme phase of volatility after a long period of relative stability as the world reassess the relative value, strengths, and weaknesses of each nation. The printing presses may or may not be reversed, but the costs of intervention will place an ever-increasing burden on business and society, all of whom are liable to repay the debt we have created. This may well be through higher taxes but equally it could be through the arrival of hyperinflation. Debts would be eradicated as the value of the stockpile collapses, a consequence of isolationist policies leading to a contraction in supply chains. Cost push inflation like we have never seen before as previously readily available goods vanish and supply chains become more vulnerable to contraction through enforced closure. A perfect storm, contracted supply meets maximum liquidity, demand becomes unsatisfied forcing prices higher, increasing demand as speculative buying occurs raising prices even more. Interest rates are a blunt instrument when the value of debt is falling, the flow of money will need to be contracted at some point but the aftermath of this crisis will demand that the central bank delay actions letting inflation back into the system. The next battle could be fighting a long-forgotten enemy, not just inflation but hyper-inflation. Volatility most certainly will be here to stay for a while, business will need to contend with a lack of clarity, the monthly fan charts of likely outcomes may become an estuary of available scenarios.

A new taxation system will be required, one in which social impact creates benefits because they reduce public expenditure and where toxic behaviours are penalised because they create costs.  This is a chance to reinvent VAT – where everyone pays it thus avoiding the need for businesses to stay under a threshold, capping aspirations and unleashing potential. VAT is a regressive tax on consumption but a valuable tool to fight demand for the right type of goods and services.

Societal

What is certain is that this crisis once more hits the most vulnerable in society harder than anyone else. What has become evident is how we are all indebted to everyone, not just the rich or super rich, we need everyone’s participation to survive. Rich enclaves and gated communities may well be what some aspire to but that is far too elite and removed if those paving the way are being eradicated in the process.

What is needed now is the creation of a whole new war chest, weapons of mass impact, of social change where traditional debt is swapped for social stakes, social equity, and societal engagement. Where accountability and the values of collective responsibility outweigh individual success. We may be on the cusp of witnessing the greatest redistribution of wealth ever, where tax havens are closed, global taxes trap corporations seeking to exploit and arbitrage tax systems, where the playing field is being rolled to a new state of level. It may be too much for many, but to ignore this message is to increase the chance of social unrest on a global scale, think of Hong Kong on the streets of every financial centre. Income inequality has become far too entrenched, excused by those at the summit as a rising tide for all, accepted by the political establishment who covet these new masters of the universe. Individuals will always aspire to be wealthy, that is what motivates many but we need to recognise the shoulders we are standing on and genuinely reach out to lift them up. The gap must close.

Post Covid-19 I see a move towards a cohesive society, a rush to be more inclusive and social. Whether it lasts depends so much on the political leadership that follows, they are the ones who will write the new dialogue. If they chose to revert to type then we would see society once more drift apart, if they chose to acknowledge the value of peer to peer cocreation, encourage this at every levels and bring about a far more inclusive style of politics, society would respond.

Post Covid-19 this society will move on from the service delivery model to the embrace the experience economy fully. Every business will evaluate its value proposition in the level of experience it creates. People will need – constant positive experience – and the businesses that strive to give it will further their own ends.

The constant desire to support the high street will lead to a capitulation in this aim and a recognition that we need to reframe it from a place of consumption to a place of creation. The best high streets in the world are at Disney, they know that experience counts, and we pay to join in. Change the framing – stop pointless taxation on a high street that cannot possibly compete, even with a fairer tax system, with the digital offering. Change the high street to a place of culture, a zone of experience, live events, parades, a coming together in celebration, in safety and hell bent on enjoyment, commercialise the experience and create a new value exchange. Invest differently and change the metrics and we get different outcomes

Technology

If this crisis has done one thing, it has accelerated many of the defining technology trends of the last few years, removing the inertia to change as urgency has become the catalyst for acceptance of previously resisted behaviours. It has also shifted our thinking and attitudes towards healthcare, we are witnessing fast changing innovations responding to the demands and needs of people, Meditech businesses grasping the nettle but also previously businesses in different sectors switching production where demand is needed.

Financial technologies are keeping money flowing, and post Covid more of these technologies will come online, the democratisation of money, the speeding up payments in a generally flabby process, this will become the norm. Cash has all but left the system as ‘tap and go’ in now fast becoming the only way to pay.

In this crisis the digital age has come of age, but in doing so we have opened a whole new area of dependence and as such vulnerability to any future disruption that may occur. Cyber security issues will be vital to address, new technologies like blockchain will be the answer to this. The technology inertia of the past has become the technology pull of the future. There will always be a challenge though, the role that technology plays in the battle between the human need to attain social cohesion in a world of social distancing, is a fascinating one. We see a continued push post Covid-19 to further the onboarding of new technologies as we strive for a solution but to rely on technology alone is wrong, we need to understand and engage with each other at the human level.

Ecological

We are moving on from the aims of a society to recognise the harm and rectify what we have done, to a society more committed to doing no harm and designing to do good. There is no good reason not to embrace circularity. The breathing space we have created for the environment through the crisis could be a great place to restart the conversation.

Businesses will function that much better when the are linked to the waste of the system. Proximity is essential if we are to create mechanisms to tap into the circular supply chain – we can do this, we must do this it will create supply chain security, a core challenge for any business, regardless of what that is.

Hospitality, health, agriculture and housing, better business design built on the single question of ‘how does what I throw away do for another business in providing them something they need? Answer that, every day and we create circularity.

Assumptions

The future depends on whether we are witnessing ‘temporarily’ suspended activities, activities that cease to have value or activities that are being accelerated towards a new paradigm. Are we witnessing consumption that is being disturbed or is the way we consume changing in a more fundamental way? Do we want ownership of assets or will the sharing assets be the new norm? A catalyst to a sharing economic model? Whether these trends are sustained post-Covid-19 depends a lot on the time we are locked down and whether an early release leads to a new resurgence in infections and the second wave forcing even more draconian responses.

The future we design is up to us, we can embrace a new set of assumptions, or hark back to the nostalgia of the past, I have no concept of which or what will happen but I do believe it is right we think of the future and challenge ourselves to engage with it. Here I outline eleven key assumptions that are informing how we intend to build The Weave.  

1.     The costs of the collapse in business activity and the bailout will be ultimately recouped whether this is through additional taxation or through inflation, this will leave business and society poorer with less disposable income. Businesses will learn to run lean where innovation will happen in framework of frugality. This will lead for a need to find ways to work collaboratively but also for these collaborations to be far more stable, fairer and clearer.

2.     The increased level of social distancing will create a rush to experience a sense of cohesion in all that we do and experience – cohesion through social distancing will be an ongoing paradox that will popularise regional connectedness.

3.     Supply chains will have to be more secure, closer to home and easier to access. The benefits of a circular supply chain at a regional level will be embraced creating benefits to ecological sustainability. Globalisation will change from the exchange of low-cost production to a knowledge exchange and technological solutions requiring far less freight.

4.     Travel needs will change regardless whether this is business travel and social travel. The mass travel market based on economies of scale will shift to one based on economies of scope where variety not capacity increases efficiencies. We expect local, domestic tourism and travel will increase

5.     Traditional offices will be less in demand and working environments under more scrutiny; home working will remain a common feature limiting domestic travel needs, changing commuting and time wasted on trains. Questions over HS2 will become ever more challenging.

6.     Open innovation will be the normal way of engaging with opportunity and change, collaborative networks will drive innovation supported by technologies but also the formation of regional innovation systems.

7.     Sharing economy models will become the norm, where assets are not owned by one but by many. Resources will be held by collectives and distributed networks will access the resources, creating and sharing in value.

8.     Technologies will become ever more powerful and valuable, the rise of 5G will increase our use and engagement with IoT and AI. The cybersecurity models of ringfencing systems will be replaced by blockchain technology where immutability, proof-of-value and timestamping will make things that much more secure.

9.     Change, organisational and personal, will become an ever-present force for the way we live. Organisations and people who can manage change will be in demand because of the shifting background

10. Data will become even more important to control and manage not by others but by ourselves. Cybersecurity will have to rise and the fallout will be that traditional firewalls, data portholes will be questioned and blockchain will become even more crucial to the management of business models.

11. Self-searching questioning will become normal – home education, distance learning and self-learning for preparedness will become even more evident. The rise in this style of learning will undermine the traditional forums like schools and universities

The Weave is a community dedicated to directing the region’s resources to the needs of entrepreneurs by setting of challenges and rewarding participation and engagement in solving them. We use technology to facilitate this and community building activity to create the trust on which the technology relies.

Join us as we explore the possible and convert creativity to value.

Contact me, James Cracknell on LinkedIn or follow The Weave on LinkedIn – community matters so be a part of one that really cares.