Undoubtedly, the corona crisis will change the way we live and do business together for good. At Achilles, we do believe that the changes we anticipate to come, will have implications for the design of products, services and business models.
7 key changes we expect:
- Governements will have sophisticated alert plans and keep stock piles.
- Critical materials will be produced onshore or near-shore. Supply chains will be fortified.
- Automation will accelerate.
- Digital transformation is critical to survive in business.
- The possibility for permanent personal hygiene will be an everywhere-commodity.
- Business models will be flexible and allow for crisis modus.
- Style and fashion will incorporate elements of hygiene.
GovernmentsGovernments will take precautionary measures, and this will result in a level of preparedness, comparable to that during the Cold War. What we have learned during the past 20 years is that a certain perception of threat is rational – even in Western Europe. We may think that the next corona crisis may be 20, 50 or even 100 years away, but clearly there are other threats as well, for which we need to be prepared. Bottom-line is: our governments need to make sure that our countries can handle all kinds of hazards, reaching from biological threats to chemical and nuclear accidents, to extreme weather hazards, cyber-attacks, etc. Or worse: a combination thereof. History tells us that very unlikely events seem to be happening more often and in less likely combinations than what traditional probability models suggest.
The impact of the quarantine on many businesses is devastating. Sectors such as travel & leisure, general retail, hotels & restaurants, tourism, and oil (just to name a few) seem structurally challenged. Combine the business challenge of being closed down for several weeks with financial leverage, and you have a combination of toxic conditions for an economic death spiral.
OnshoringDuring the corona crisis, global supply chains as well as permanent, just-in-time deliveries turned out to be unreliable. Factories, airports, or borders were closed; sometimes, even critical equipment was confiscated or subject to an export prohibition. Sterilising alcohol, ventilators, and medical masks were largely neither available for purchase nor stored. Being able to protect people during pandemics by vastly offering hygiene-products as well as foreseeing a fast and broad ramp-up of intensive care capacity seems less expensive than stopping the economy for a few weeks to keep people at home. We clearly see significant political pressure to enable the health system to switch to crisis mode and foresee sufficient capacities for the times when push comes to shove.
AutomationHiring seasonal workers from overseas to help during the local harvest was disrupted, even dangerous and broadly forbidden. The automation of agriculture has started years ago, and it will accelerate after the corona crisis. Automation will also accelerate in other sectors that could face severe disruption due to a virus outbreak. When industrial assembly lines, parcel or document handling, or all kinds of warehousing activities cannot take place because of an acute virus infection, it is clear that a higher degree of automation would have prevented those business risks. Think of self-driving delivery cars as a way to prevent infections from spreading while keeping supply chains and last-mile delivery intact.
Digital transformationThink of any business that has renovated or renewed its asset base with a loan during the past couple of years, hoping that modern equipment and a modern look would enable its success for the next decade. If this business has not been able to switch to digital distribution channels and/or enabled its staff to work remotely from home, it may have faced an existential threat during the crisis.
Digital transformation is not a long-term strategic goal anymore, it is an imminent Must to stay in business.Businesses have to be able to switch into crisis modus within hours, which includes digitally enabled distribution channels and fully functional remote work. This has major implications for the management style, corporate culture, and the IT systems involved. Integrated software providers that enable smooth workflows as well as those software companies that ensure great digital experiences such as VR or AR companies will be the winners of the crisis. Management styles have to shift from micro-management to employee empowerment. Work from home should become a broader phenomenon, and it should not disrupt the workflow of the organisation as a whole.
If your business is dealing with physical products or processes that need to be developed further, think of shifting to developing digital twins instead that can be developed further by online collaboration in VR.
Personal hygieneYou enter or exit a plane, train, metro, tram, bus, taxi, restaurant, supermarket, cinema or any other public place and you have not been able to sterilise your hands – impossible. Hand sanitisers will be everywhere, and they will become part of the natural flow or life. You can even think of a business with hand sanitisers: while you clean your hands, you read a display with advertisements.
Business modelsBusiness models that are based on some form of permanent revenue stream such as income from subscriptions or upfront membership fees etc. are clearly superior to the more traditional business models. Business models with constant revenue streams make sure that providers get paid even when the business is closed due to external factors. Business models that are dependent on physical interactions are often inferior or insufficient. The retailer that incentivises its customers to do online shopping after experiencing the product in a physical store turns out to be much more resilient than the one that is dependent on physical store transactions. While online retailers were already making the life of traditional retailers very difficult before the corona crisis, it is now evident that they stand out again as the biggest winners. The restaurant that runs a dark kitchen to produce standard dishes and that also distributes food through an external delivery service would have been able to keep up with the corona disruption. Focusing more on this strategy in times of crisis could have simply turned out to be the strategy of survival.
To get prepared, it is certainly advisable to identify your key business vulnerabilities and to work out mitigating strategies for the times that really challenge you.
Style & fashionAs consumers are more than ever aware that humans are the biggest multipliers of infections for other humans, it looks plausible to expect a style and fashion that demonstrates that awareness. In many Asian countries, it has since decades been part of civilised behaviour to wear a face mask for people who suffer from a flu. During the corona crisis, face masks and gloves have demonstrated to be the most effective instrument against a further distribution of the virus. It is therefore only reasonable to expect that Western countries will pick up the trend of wearing face masks to prevent virus infections from spreading freely. Furthermore, clean, white, round, simple shapes besides fashionable face masks and gloves as well as heavy-duty textiles that can withstand heat and cleaning deterrents, could well be an upcoming style of the future. Anything that reflects hygiene and cleanliness could well win over design elements in retro style or nostalgia.
Conclusion and SummaryOne of the key trends should therefore be an acceleration of the digital transformation process, enabling remote business activity without compromising a smooth workflow or a good user experience. Also, business models will more than ever move to generating recurring revenue streams to prevent fatal revenue disruptions. As a virus can endanger the health of people and therefore any business that is dependent on many people that are in close proximity to each other, it seems plausible to also expect an acceleration of the trend towards automation, including in sectors such as agriculture, supply chain management, healthcare, and industry. As it is also reasonable to expect governments to be better prepared for crisis in the future than in the past, a relocation of the production of critical supplies to an onshore or near-shore location seems further plausible. This should also accelerate industrial automation to compensate for higher labour costs. The individual awareness that a virus infection is a hazard for the people nearby, should lead to some changed style & fashion elements: the demonstration of personal hygiene and cleanliness could well be an important attribute of style and fashion.
The sudden emergence of the COVID-19 virus infection has changed the perception of daily risks and threats. Consumers are more aware than ever that an invisible and very present virus can be dangerous and even deadly. The need for social distancing and personal hygiene has vast implications for business and daily life.