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Navigating the Post Pandemic World Order - Our Take

Author: socialmedia@taplowgroup.com/Thursday, April 16, 2020/Categories: News

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As the world battles Covid-19, countries have triggered containment measures that have half of humanity in lock down. Not to mention the economic impact of a magnitude that is the most defining event since the Great Depression. A McKinsey report described this as an imminent restructuring of the global economic order.

With Global debt spiraling, several people, businesses, companies, industries and even countries are close to default. Much of the debt build up in corporates is in the old economy sectors, where current disruption to supply chains and sudden stop in current consumption and earnings has created a crisis of staying solvent, requiring Governments to step in to bail them out. With the prospects of Global growth in the near future remaining bleak, a recession has been officially signaled, and a depression spoken about in hushed whispers. To prevent wider collapse in markets, most Central Banks have stepped in with interest rate cuts and increase in money supply.

The narrative is already grim, without even considering the unprecedented loss of lives. The enormity and the frantic pace of the economic impact is straight out of a doomsday scenario. Washington Post reported that in the United States of America 10 million jobs have already been lost in the past two weeks, which is in sharp contrast with the 2008 Lehman led crisis when 8.8 million jobs were lost, but spread over a -gentle by comparison-106 weeks. Just as the sharing economy had made painstaking progress in carving out legitimacy for itself, this crisis is likely to create a big setback. SoftBank which had big bets on Uber, Ola, Oyo is already in the negative territory.

Business Impact across Demand, Supply & Human Resource

Through our conversations with business leaders, HR leaders and Economists, we have tried to capture broadly how different industries, based on their business models, are going to experience this crisis with varying degrees of intensity.

Demand from Customers

Consumer spending is grinding to a halt as fears of the pandemic keep people away from shopping centers, restaurants, movie theaters and workplaces. Aviation, hospitality and commercial real estate are amongst the worst hit sectors and are hanging in by a thread. Hospitality for example, will struggle to navigate the new reality. Business hotels will suffer a steep drop in occupancy owing to increased WFH and videoconferencing, and remote leisure resorts will witness a reduction in footfalls owing to increased cost and complexity of approach (e.g. reduced flight frequencies and increased fares), besides an anticipated stigma related to travel.

On the other hand, a few businesses like supermarkets, medical supplies and equipment, delivery- especially the last mile home delivery solutions will see a surge. Movement in healthcare to boost immunity will generate momentum.

Direct to Consumer- Consumers were already shifting their spending away from physical stores and may now permanently adjust their buying habits for certain categories toward e-commerce. Post Covid-19, organizations will accelerate their direct to consumer strategy with specific focus on last mile delivery and logistics capability through a mix of strategic alliances with online players and delivery service providers. Under the current scenario, this trend will manifest itself quickly with a number of traditional retail brands ditching their avowed distance from e-commerce channels to swiftly try and integrate with online platforms.

Supply Chain Disruption

Over the last two decades, the globalized economy and the mantra of economies of scale has shifted the supply chain of most industries to China. Only time will tell, if we will see an end to globalization and emergence of regional supply centers, as a fallout of this crisis. In the very least, we will see a shift and broad basing of manufacturing hubs to other developing countries.

While India has always positioned itself to be an alternate from a cost, resource and geo logistics standpoint, the business friendly environment and agility of countries in the ASEAN region may pip India’s policy makers’ efforts to attract the much needed investment that the country requires in the post Covid-19 period.

Organizational Human Resource Impact

Organizations are being forced to test their Work from Home infrastructure. Our conversations with HR leaders clearly state that technology is being leveraged, like never before, to maintain business continuity.  Consulting businesses are operating remotely which typically happened on client sites. Companies have moved their technical centers to people’s homes.

This will also lead to the evolution of the current theory of Organization Behavior and Development, which looks at Office Settings and interaction as a key variable in productive office dynamics. Today, managers are driving their teams and new employees are joining the work force and getting on-board the organization remotely, and employees are picking up work related skills and nuances remotely. Technology adaption will be essential across all roles.

Leaders and managers will need to re-learn how to motivate their teams – virtual TGIF anyone? Work From Home – coupled with social distancing necessitates individuals to cope with the lack of fulfilling their innate need for socialization and manage the additional pressure of other family members at home. While some industries especially distributed tech teams have been practicing this way of work in a limited way, the entire team working individually is a new reality for which all professionals will need to be prepared for.

There isn’t any blue book available but sooner or later, a mass remote working practice will emerge effectively across all sectors. Lots of not so called non-essential work would be automated further, strategy duration will be further shortened.

Streamlining Businesses and Processes: Companies at this point are forced to innovate and streamline their businesses to stay relevant. Organizations, with the luxury of free band-width or overcapacity, are using this time to look at strategic capability gaps and design futuristic policies.

Technology is the driver

Investment portfolio of traditional industries will see a radical change as they wake up to technology investment as the steady guarantee to uninterrupted production. Bots and AI which are beyond pandemic and can be remotely operated would be the new awakening of the ‘old-school’ Board or CEOs. They would realize that the investment on technology that was put off would have to take precedence over all else.

Post Covid-19, work from home products and services will evolve into business essentials and would not just be relegated to a remote contingency plan. The WFH category is already experiencing huge pent up demand to be fulfilled as soon as the current curb on movement is lifted.

Conserving Financial Capital and Human Capital

All leaders need to focus on is the basics i.e., conserving cash while evaluating deferment of projects with investments earmarked for future growth and development unless they relate to their response to the Covid-19 led challenge.

Despite the fear, many businesses and communities have shown a more altruistic response in the face of crisis. A section of large companies that are able to withstand some of the pandemic pressures are putting People before Profit. They are taking measures to ensure safety of their employees, consistently communicating and engaging with them, helping them to stay focused, purposeful and centered. They are using this time to build their people brand. People are going to remember how they were treated. So create that lasting impact on people!

The world has already commenced its journey to thrive both life and livelihood together which will be the new normal for the times to come. “Re-imagine” is the new verb that embraces us on all fronts whether our professional or our personal beings. Mankind under this crisis is witnessing revolution and evolution for once at the same pace competing with each other.

However, the world will move, mankind will continue to thrive but in different formats. And with that will emerge a set of organizations which will be stronger and agile and a new workforce that will be more resilient


This article has been contributed by Vrinda Guleria, Principal, The Taplow Group, India


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