The Post COVID economy
What comes after the crisis? Adoption and resilience imprint the future of an economy, which better understands complexity. The next couple of months will be essential to set the course of the local and global economy. As a thinktank, CodeCoda engages in providing a one-stop-shop solution for anyone who aims in futureproofing their business. We understand that business post-corona won’t be the same as before, and definitely, we won’t go back to business as usual.
The Corona Story
Governments around the world run by the phrase “Whatever it takes!”. When the health of the economy is at stake, any means justify the cost. This approach has long-lasting effects - especially on the marketplace itself. Economies are strongly interchangeable with subsystems in society, from Politics and Science over Law and Education, even touching Sports and Religion. While in a state of crisis, it’s not only the economy that undergoes a stress test, each subsystem itself underlies the same constraints – on a local and global level simultaneously.
Governments always intervene when the economy is in jeopardy, mainly because they believe it is the guarantor for a prosperous society and a growing market – at least in the collective understanding of citizens for an “After.” Saving the economy from a downfall seems to be as problematic as resurrecting the entire society. However, it is not as simple as that.
Economy and society are closely related, even interchangeable – and both have to undergo the same change every time only one of them is affected. Following the “Whatever it Takes” tactics, a “Comeback” effect does not come automatically. Moreover, COVID initializes a long-lasting process of renewal. The 2020s will be the age of resilience.
One thing is for sure: a crisis, despite all its downsides, opens new spaces for possibilities. Therefore, during a turmoil is when “(M)anything goes.” The next few weeks and months will be the window of near-endless options, and all resulting change will impact societies and economies for at least a decade. This change requires a new quality of entrepreneurship, entrepreneurial vision, and entrepreneurial courage:
Welcome to the atrium of the post-corona economy.
Roadmap to a viable Post-Corona-Economy
The roadmap of the economy after COVID will not follow a linear approach; moreover, we’ll experience adoption processes on various levels and even different speeds of adoption.
As we will explain, the following 3 phases to recovery will not strictly follow each other, but might temporarily overlap each other. For companies, the main driver must be switching to the “Learning” Mode. Even the slow “reboot” of the economy will happen under seemingly “unreal” circumstances.
Improvisation, Role discovery, and the “Letting go” from old routines become the day to day business. Amid the crisis, this requires a creative mindset and a culture of learning. The atrium of the post-COVID economy marks the beginning of a constant and lasting renewal of industry and commerce.
The world before Corona: Let it go
The world before COVID: Can we still remember it? Looking at old movies, they look strange and out of place. People were moving freely, hugging, and kissing. Public space seems to be the natural home to Mankind. Restaurants, Bars, and Clubs are crowded, and festivals are celebrated regularly.
The often-used term “Retreat into Privacy” is a reality only as an abstract terminology.
The continuation of the past is not the future.
The future before Corona
Before Corona, the future was far away, or already predestined. Climate Change, as a critical demand by younger generations, was never a severe demand for progressive radicalism. Nature burns, look at the Amazonas Bush or Australian wildfires, but most of the industry (or economy) continues in ‘business as usual’ mode. The Global economy is growing slowly but steadily. Promises of applied technology seemed to have the world in a fast grip. Artificial Intelligence, drones, self-driving vehicles - every problem appears to land a solution wrapped in technology.
To most people the future is questionable, I won’t call it indifferent. Life now was the credo of modern people, with yoga and mindfulness, even in business. For the rest, entertainment and consumer goods provide an endless power loop.
Seeding pre-Corona
From a bird’ s-eye view, the pre-Corona reality of society and the economy shows, however, that substantial drive to change was already seeded. Not on big stages or in front of broader audiences, but on multiple platforms and in small, but growing niche communities. In protest and climate change movements, principles like the Circular Economy were introduced and cherished.
The growing “We” culture of society led to the flourishing of Social Businesses, and the Ego of overconsumption of goods started looking outdated. The technology was inherently developed in collaborative plans aimed to be useful in society. Humanity and Organizations were looking for Visions to achieve sustainability for everybody.
No return to the old world
With the Corona crisis still active, the world now experiences a “Slowdown,” which is interchangeable with - a final break before the Crash - a gigantic deconstruction of day-to-day business with all its socio-economic consequences. During a crisis, it becomes visible what glues the world together – and what does not! The recognition and realization of our strengths and weaknesses are what’s important. Notable, however, not for a linear thought future, as a journey back in time is impossible. The shutdown has initiated irreversible developments. Nostalgy is your private business, but not a futureproof one. For that reason: Let it go. The pre-Corona times are not meant to be the future.
Phase 1
Destruction and Revision: Whatever it takes!
The radical shutdown teaches us complexity. As a reaction to this unwanted guest (namely Corona), governments around the globe were left with only one possible solution: The Shutdown. In our case, there was no solution than pressing the ‘Stop’ button. Never before in history, the entire world was transferred into a “Sleeping Beauty” state. The results of this global lockdown are dramatic and bear severe consequences. Due to the required speed, it was simply not possible to think about every detail, and just slowly, we start understanding the effects.
Domino effects in the subsystems of society
Because human life is at risk, many of the subsystems of society are reduced to the bare minimum of maintaining a functioning society. In a global system of delivery chains, when one domino block falls out, a chain triggers a process that inevitably ends with full-stop, and its residual effects create their chain reactions. Without a functioning delivery chain, there is no production; with travel restrictions in place, there is no flight traffic, and without retail, there is no consumer consumption of goods.
The result of interchangeable relations in subsystems destroys the individual parts of the system per se. First Aid measures and emergency operations, as depicted by governments, work only where previously established crisis prevention networks have already in place.
Countries with ineffective cooperation between governmental departments, banks, and the economy, help rarely arrives where most needed. A good example is the USA. Until April 10th, only 1.5% of Corona help-payments have reached their right destination. The amount of unemployment exploded within weeks to over 20 million, whereas in Germany, for example, the amount of “payment reduced” workers stayed below 1 million.
Recession ahead
Time works against the industry and the just-in-time world due to the fast lockdown eroded. Compared to the financial crisis of 2008, Corona has a millionfold impact. According to IMF, in 2020, the global economy will fall by 3% and the European - by as much as 7.5%. However, economists believe that in the following years, there will be an average world-wide growth of approx. 5-6% (IMF Blog[1]). Investors who see opportunities in times of crisis predict that a significant boost to the economy will occur.
Either way, the extent of the unfolding crisis is expected to be gigantic and economic previews are still vague. Because some believe it even will go worse. What seems interesting is how experts evaluate the crisis: Some think it will be a long way until recovery, others consider a mid-term interruption, and some believe it’s an instant “jump in and out.” Linear prognostics always provide a falsified picture of the world. With such theorem, economic theory may exist, but entrepreneurs and companies cannot.
Understanding complexity
From a view of systemic trend research, the one-dimensional models are a result of a linear cause-result relation. A central point of recognition of complex systems is the numerous amounts of feedback options, where time and space are decoupled.
Every decision leads to follow-up decisions and actions that trigger delayed, non-linear effects.
This crisis pushes the boundaries of complexity. We need to say goodbye to the linear approach to economic problems because it produces dead-end results and brings multi-faceted collateral damage. An essential experience of the corona crisis: After the immediate response, a switch to complexity and adoption must be achieved to become ready for the future challenges lying ahead.
We already see the first indications of a shift in the crash course of a Home-Office work. Zoom[2], for example, had 10 million users at the beginning of 2020. In April, this amount raised to over 300 million.
Decision Making and Self-organization
What it takes to cope and overcome hard times of crisis is the capability to self-organize and make decisions - in every single business. The Corona crisis dissolved all previously existing hierarchies, which have always been complicated, and for this reason, cannot be terminated or simply rebooted. A mass of consequences can be expected, with no capability for an accurate prediction. We believe that every company will experience those effects, regardless of size or area of operations.
Moreover, we begin to understand the world with all its underlying complexities and dependencies. Humans and health are now part of the economic equation, which, before the COVID-19 were not even a consideration. After the echo of the initial shock dies down, it will lead to several revisions that the industry and commerce will have to undergo. Answers to those revisions and re-thinking we won’t find in linear thinking. For many reasons, what matters most at the moment is switching into the “complexity and adoption” mode. This approach holds the potential for necessary means for survival in a volatile environment such as this.
Phase 2
Opportunities: Now or never!
While still in the phase of economic first aid and revisions, companies start thinking ahead and perceive new opportunities - a new era of entrepreneurship has opened up. In times of massive and radical changes, gaps, and possibility spaces open up, new dependencies emerge without the possibility to undo them. The crisis becomes the most entrepreneurial-heavy time we’ll see in decades. Every time, towards the end of disasters, is where visionaries come up with working solutions.
Staying in the game
The traditional “more and more” loses its shine. A new leitmotif begins to soar: remain in the game, preferably forever! In this dynamic process, achievements classified as KPIs or an increase in revenue, become degraded as what they are: A matter to achieve the cause. Crucial for economic or social success will be the attempt to adapt to the new circumstances.
Many things will be possible
Every complex visionary view of the world and economy stays in a pole position for launch. Many prospective perfect approaches are apparent. The creativity of a changed world view has already accomplished the impossible. Whoever has thought those views to an end owns the best starting position and will likely have an advantage. The Post-Corona economy will develop new networks in a never presumed possible speed – and suddenly, the impossible can becomes something within reach.
New projects kick-off and gain traction everywhere. Over-night global delivery chains become redundant as the “Quality Assurances” from China seem fictitious.
Identity, Creativity, and Speed
In the “now or never” phase, it is imperative to own a complex self-assured mindset. Current socio-economic dynamics are challenging and require an excellent understanding of ones’ strengths and potential. Companies will bind their strategies strongly to their identity, and this blend will help them to succeed in the broader socio-economic context. In this sense, the financial capabilities of a company become secondary. Now, a primary concern becomes a matter of creativity:
Ingenuity, not just financial muscle, will become a source of advantage, allowing cleverer firms to operate closer to full speed.
As is stated in the Economist[3] (04/2020), new networks and roles will develop in business. The old ways will be questionable, and speed will be the crucial factor. In the stillstand of the crisis, new opportunities open, which otherwise would have taken decades of slow progress.
Phase 3
Adoption and new Models: Anything goes
The way into new pathways require Resilience instead of Efficiency. With roles changing, a new type of relations emerges. The systemic understanding of economics creates new possibilities, theoretic as much as practical. The new credo is “anything goes.” New structures form, innovation becomes visible, and starts showing the first fruits of growth. From prototypes, new and more complete offerings begin to emerge - digitally established means that act locally as well as globally. The economy will work through regional networks and delivery chains, but it still interacts on a global level. Also, the big industry will focus on nearshoring and build local value chains. In the phase of adoption, resilience is vital. The building blocks to crisis-resistance, overall growth is established.
New Business Models
Businesses evolve by reasoning with new Business Models. In addition to the pure focus of a market, new economic principles and society itself form the framework for development opportunities. This trend can already be felt in the day-to-day business of most companies. Which company doesn’t have a strategy for Digitalization, Gender, or Corporate Social Responsibility? To this new reality, the “human” factor (Health and nutrition) and nature (climate) start counting and enters into the equation. For those reasons, new business models in the Post-Corona-Economy[4] form and carry a pronounced context of complexity. Those models do closely reflect management methodologies and business model development.
Resilience instead of efficiency
In the age of “Anything goes,” the classic efficiency-thinking ends, because it can focus only on limited situations of economy or society. From efficiency follows resilience. Resilient businesses stay on the move and adapt to a crisis at the fastest and best possible rhythm.
Advisory based management in many companies has led to increased efficacy, with cost-cutting and processes brought to the edge of feasibility, for a matter of increased profit. Exactly this culture of effectiveness ends with Corona. Entrepreneurs of the Post-Corona-Economy will increasingly entrust principles based on knowledge and complexity.
The Economy of the Future: Global and Local, Digital and Adaptiv
The economy has been shaken awake by COVID. Companies run using cycles that are now abruptly cut. This disturbance in business operations leads to a phase of instability – some companies will simply give up - without external help, they will not be able to overcome the developing financial crisis. Support will be locally or regionally organized. This is an additional reason why local and regional cycles will be on the rise and be established, if not institutionalized.
Localization follows Globalization as a regional focus to solve problems first seen through the lockdown. The ultimate-digital real day life will support this process: After the crash course in online-working, the future has been catapulted into the Now.
General vulnerabilities of companies lead to a “New Thinking”: Away from Efficacy - towards resilience. The capability to adaptively adjust to changing environmental circumstances will be the primary premises of management. The change will further lead to a long phase of active learning within organizations. Companies will densify their Networks. Instead of linear Value Chains, Value Networks will prevail.
The Post-Corona-Economy is in the hands of those local and global networks of companies who actively participate in the development of the society they are part of. Technology alone loses its’ protective aura and will be solely used to support those developments.
Conclusion
Deeply engaged in helping our business partners to re-think and re-establish themselves, we hold the tech knowledge and the social knowhow to build the applications which support the changing world surrounding us post-crisis.
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