The New Normal

What is the new normal?

The answer to that question is top of mind for all of us.  The landscape has changed immensely; tomorrow’s environment will be different – much different, but will offer new possibilities for those who are prepared for adaptation and change.

From McKinsey and Company in 2009, 

“It is increasingly clear that the current downturn is fundamentally different from recessions of recent decades. We are experiencing not merely another turn of the business cycle, but a restructuring of the economic order. For some organizations, near-term survival is the only agenda item. Others are peering through the fog of uncertainty, thinking about how to position themselves once the crisis has passed and things return to normal. The question is, “What will normal look like?” While no one can say how long the crisis will last, what we find on the other side will not look like the normal of recent years. The new normal will be shaped by a confluence of powerful forces—some arising directly from the financial crisis and some that were at work long before it began…

… Through it all, technological innovation will continue, and the value of increasing human knowledge will remain undiminished. For talented contrarians and technologists, the next few years may prove especially fruitful as investors looking for high-risk, high-reward opportunities shift their attention from financial engineering to genetic engineering, software, and clean energy.

This much is certain: when we finally enter into the post-crisis period, the business and economic context will not have returned to its pre-crisis state. Executives preparing their organizations to succeed in the new normal must focus on what has changed and what remains basically the same for their customers, companies, and industries. The result will be an environment that, while different from the past, is no less rich in possibilities for those who are prepared. “ That article was written in 2009.  Eleven YEARS ago.

From MIT/Sloan just a few short DAYS ago, “We are in the middle of a historic rupture in the economic fabric of our society. The COVID-19 pandemic has already had a pervasive impact on the United States, and economic and financial market experts are hotly debating how quickly the economy will recover once we get “on the other side” of the contagion and the enormous pressures it has placed on our health care system. Although it is too early to estimate the exact economic impact, it is likely that full recovery of economic activity, including GDP growth, jobs, and unemployment, will take at least a year, and likely much longer.

But individuals and organizations must keep in mind that this view, as optimistic as it seems in the short term, is a potentially dangerous one when it comes to long-term planning, for four reasons.

The first is that it overlooks the negative impacts on consumer sentiment and spending, which are likely to persist for many months, if not years.

Second, the recent trend of governments trying to tilt the scales of the gig economy more toward worker righst likely to continue in the coming months and years.

Third, large segments of the economy are likely to be permanently disrupted as a result of the coronavirus’s impact on the travel, retail, and entertainment industries, among many others, requiring capital and labor to shift into new areas of economic activity on a massive scale.

Finally, the industries that survive the downturn, including those that are vital to our economic system, will face a long period of adjustment to working and interacting virtually rather than face to face. In addition, industries and companies will have to prepare for future pandemics by building redundancies into their operations and supply chains — initiatives that will take years to develop and optimize. “

This point is one that is made every time there is a major recession: The bigger the economic decline, the greater the acceleration of what economist Joseph Schumpeter called creative destruction. This is the cycle where a recession causes declining industries and marginally successful business models to disappear faster than they would have if the national economy had continued to grow. 

Our friend, the Corona, is causing a deep economic recession. The only question is HOW bad and HOW long — and which businesses and sectors will be able to recover to their previous levels of economic activity and how many (think sole proprietors and local businesses) will not make it through this.  

It is not just businesses that need to understand the new normal.  

Socially, we need to understand this as well.  Our relationships with family, friends, and co-workers will all change (they already are).  To stop the Corona we will need to fundamentally change almost everything we do: work (wow, telework does work – maybe we do not need all that airfare and real estate expense), play (how do I play basketball or other close contact games?), exercise (will gyms have spacing requirements?), social activities (backyard activities are already changing), shopping (Amazon has already changed many of our habits), healthcare (the use of teledocs is on the rise in the last 60 days), education (this will accelerate the problems for brick and mortar universities), care of family members (how do we protect the elderly and sickly).  This virus is survival of the fittest happening before our very eyes.  Darwin in 2020 (all species of organisms arise and develop through the natural selection of small, inherited variations that increase the individual's ability to compete, survive, and reproduce).

We all want things to get back to normal next week or maybe next month. But what most of us have probably not yet realized—yet will soon—is that things won’t go back to normal after a few weeks, or even a few months – it may be 2021 or even 2022.  We do not even know what normal is anymore.  

In the short term, we will watch businesses that rely on people coming together in large numbers: our favorite restaurants, those small funky cafes, the hottest bars, the fun nightclubs, our local gyms, big and small hotels, movie and drama theaters, our favorite art galleries, city shopping malls, weekend craft fairs, science museums, street musicians and other performers, sporting stadiums and sports teams , cruise ships, airlines, subways and busses, private schools, day-care centers all figuring out the new normal.

Do not forget the stress on parents and guardians thrown into home-schooling their kids, people caring for elderly family members, friends and neighbors trapped in abusive relationships, and anyone without some savings to bridge them through this inevitable loss of income.

Sadly, the true cost will be borne by America’s poorest and weakest. People with less access to health care, or who live high virus areas, will have less access to places and opportunities open to everyone else. Gig economy workers—from Uber/Lyft drivers to electricians to daycare to freelance journalists—will see their jobs become even more precarious. Immigrants, refugees, the undocumented, and felons will face yet another obstacle to gaining a foothold in society (MIT Technology Review).

Our world constantly evolves – the pace accelerates and slows down, but it never stops.  All of us will have to adapt to the new normal – how we live, socialize, work, play and travel.  Sadly, this Corona virus will have a big toll (much of this we are seeing daily with lives lost, businesses lost, weddings cancelled, domestic abuse on the rise, etc.).  

What we can hope for is that maybe our politicians (and the world politicians) will see that working together is better for all of us.  Every country, for once, has a common enemy. Pandemics like this very quickly reveal the social inequities that make segments of our country vulnerable.  We need to find the new normal where everyone continues to have a chance to prosper.

Americans rally.  We give.  We support.  We are creative and innovative.  We cannot beat this alone.  It will take more than a village.  But we will find the new normal – some of it is already here (just look back 60 days).

Together.  We.  Win.