The Big Break – Post-pandemic ‘New-Normal’ | Part 3

Following on from Parts 1 and 2 of this report, see Part 1 here, see Part 2 here, the final Part 3 of this report covers the remaining sectors impacted by ‘The Big Break’.

Law

Analogue organisations and traditional structures simply will not suffice in an era compounded by pandemic where agility and flexibility are fast becoming core competencies. Stuart Fuller, the global head of the legal services arm of KPMG, expects the COVID-19 crisis to ultimately change the way law around the world is practiced^clxxvii. This is likely to feature more than just turbocharging the need for law to digitise and even automate existing processes, workflows and culture. Even prior to the COVID-19 crisis, Dani McCormick of LexisNexis had suggested that ‘…lawyers will become more and more niche and specialist, creating their own more individual brand,’ as digital transformation and automation account for a wide range of general tasks^clxxviii.  

Indeed, KPMG believes it will ‘…drive this eco-legal system of business and legal to being seen as more intertwined, and legal in a business context will come a lot more to the fore^clxxix.’ Ramifications could perhaps be even broader, with legal sector opportunities further enticing big tech into the space. 

Mark Cohen believes that in the long-term, ‘…tech-enabled companies will create legal training and learning centres that offer competencies including, but not limited to, legal expertise^clxxx.’ The erosion of industry and silo boundaries, already underway before the crisis, could accelerate as a result of shifting customer demand and tech possibilities. The legal industry in some ways typifies the type of fragmented market that platforms, whether big-tech driven or not, thrive in. It is plausible that ‘…the legal function will no longer be divided into law firms, corporate departments, and other supply chain providers. It will operate as a seamless, integrated team drawn from multiple sources.^clxxxi’

Such work could increasingly coalesce remotely. ‘I think that the way we do our daily business will change fundamentally,’ says Tomu Johnson, counsel at Parsons

Behle & Latimer^clxxxii. 

Appearing/disappearing

• Law as an embedded service.
• New forms, and sources of competition.
• Legal industry ecosystems.
• Traditional law training as the only route into the industry.
• The billable hour.

Challenges

• Need for professionals to engage in continuous learning to find, establish and reinvent their own niches.
• Digital transformation of a conservative industry that has done well in the past adhering to its rules and assumptions.
• The courage and culture to selfdisrupt.

Opportunities

• Shifting the role of legal services into a more continuous, advisory state for customers.
• Widen the reach and affordability of legal services. 
• Create new ecosystems, deliverysystems and points at which to provide value adding services.

Logistics and Warehousing

Globally, online retail sales are projected to surge by 53 percent to $6 trillion by 2024^clxxxiii. Ecommerce in the UK could rise from 19.2 percent of total retail to 33.8 percent by 2024 and 53 percent by 2028^clxxxiv. COVID-19 is likely to accelerate ecommerce usage, placing emphasis on the capacity of logistics and warehousing and compelling the use of new technologies and systems.

Drone technology could see a tipping point^clxxxv as tech capacity matches consumer demand for instant delivery. The logistics and transportation drone market is forecast to grow to $1.6 billion in 2027, from $24.5 million in 2018^clxxxvi. Autonomous delivery systems could redraw the spatial geographies of logistics companies with access to road networks potentially becoming less important. If P2P logistics take-off for last mile deliveries, this redrawing of warehousing spatial economics could further change.

By 2026, 80 percent of last mile delivery could be carried out by autonomous machines, including drones^clxxxvii. Such examples exemplify why the warehouse industry possesses the third highest automation potential of any sector^clxxxviii, with around 50 different technologies being used at various points of the chain. 

By 2025, over 4 million commercial robots are forecast to be installed in over 50,000 warehouses, up from just under 4,000 robotic warehouses in 2018^clxxxix. By 2030, most warehousing operations could be automated completely, especially with regards to the more simple and repetitive tasks^cxc. 

As a market, warehousing faces two conflicting trends in the post COVID era. The first is a potential redrawing of supply chains from just-in-time to just-in-case, implying the end of ‘lean.’ The countertrend is the emergence of 3D printing as a way of reducing warehousing needs (and supply chains) by ensuring the copy only exists in cyberspace until needed. Although more likely for manufacturing goods than the wide range of consumer goods, the economics of warehousing could be completely rewritten as a result.

Appearing/disappearing

• New models that limit personal contact and road congestion.
• Automation of processes/systems.
• Technology tipping point.
• Relative reduction in just-in-time warehousing vs. previous trajectory?
• Changing economic rationale.

Challenges

• Regulation.
• Picking tech that gives greatest ROI.
• Matching customer expectations.

Opportunities

• Provide near-instant delivery.
• Last-mile delivery market boom.
• New models for providing goods.

An analysis of global supply chains in early March 2020 calculated that the world’s 1,000 largest companies and their suppliers had over 12,000 facilities in then-quarantined areas of China, Korea, and Italy^cxci. For organisations with risky, opaque or else vulnerable supply chains, de-risking and even reshoring capacity to home markets will likely form an immediate priority. Japan has begun a ‘mass manufacturing exodus’ from China^cxcii for example. Political pressure could exacerbate this trend while automation could in part counter the impact, but either way the nature of jobs, skills and tasks in a post COVID-19 world are unlikely to resemble those of today, to say nothing of changing purpose, perceived societal value and attractiveness to potential employees.

Take enabling technologies such as additive manufacturing (AM), for example. Pre-pandemic studies from 2019 estimate the impact of AM on global trade range anywhere from lowering it by 10 percent to 40 percent by 2030^cxciii. 

 However, the reshoring of manufacturing can unlikely be achieved solely by 3D printing, as some 500,000 unfilled jobs exist in the U.S alone thanks to a manufacturing skills deficit^cxciv. Sweeping automation stands out as one quasiplausible solution but perhaps a more sustainable one from a societal perspective can be found in how we acquire skills and education. 

Machines and advanced automation are now being paired with human workers. 85 percent of manufacturers globally believe such connected workers will be commonplace in their plants^cxcv. 

The range of skills required will change. Digital already prompts a greater number of multidisciplinary and cross-sector partnerships – a situation likely to accelerate as manufacturers switch markets overnight, services tap external expertise and government becomes enmeshed in everything. Smash-up businesses and sectors will ensue^cxcvi, with new capabilities and skills resulting.

Appearing/disappearing

• ‘By 2030, AM will integrate into existing manufacturing workflows (and) revolutionise the way we develop, create and source goods^cxcvii.’ 
• Regionalised production^cxcviii and digital supply chains.
• Supply chains could move from just-intime to just-in-case.
• Global supply chains that optimise for centralisation and reduced costs have serious potential weaknesses^cxcix.
• MIT suggests that ‘…businesses should value resiliency and risk reduction in their plans and investment calculations, not just whatever gets them the lowest cost today^cc.’

Challenges

• Skills and talent acquisition. 
• New competitors from different markets.
• Changing mindsets.

Opportunities

• Building resilience to future shocks.
• AI based modelling.
• Digital twin usage will gain prominence and used to compare the long-term impact of different action plans, making it easier for companies to make good decisions^cci

Marketing

At the dawn of 2020 we had accepted that social media, big data, AI, geolocation and other technologies were significantly changing how marketing works^ccii. As of late April 2020, print advertising revenue had declined by some 80 percent versus the pre-COVID baseline^cciii. Fluidity in consumer behaviors and attitudes are inevitable in the post-COVID world. This requires marketers to revisit underlying assumptions and accepted truths that may no longer apply: COVID could prompt a complete marketing reset.

Marketing leaders will likely be compelled to rethink their companies’ value proposition and reassess which products and services could best deliver on that^cciv. Beyond the acute phase of the crisis, new norms will certainly form. As with much planning for the future, the key lies in horizon 2 – building that bridge between the immediate horizon 1 COVID environment and the future horizon 3 of 2030 and beyond.

Horizon 2 technologies such as VR and AR have the potential to rapidly rearrange the marketing environment, as will market moves by Google to abolish third-party cookies in its Chrome browser by 2022^ccv. Partly due to such moves, Gartner forecasts 80 percent of marketers who have ‘already invested in personalisation will abandon their efforts by 2025 because of a lack of ROI, the perils of customer data or both^ccvi.’ Indeed, only 17 percent of consumers believe personalised ads are ethical^ccvii. How to provide personalisation without appearing intrusive may require consumer buy-in, or else rely on a degree of ‘de-personalisation’ by aiming offers not at humans, but at their bots. Drucker foretold ‘the market of one’ decades ago but it will need to be permissive to take hold.

Appearing/disappearing

• New paradigms.
• New forms of consumer-centrism.
• VR and AR forms of marketing.
• Current forms of data gathering and personalisation.
• Old forms of ROI as boundaries between consumers, workers and other stakeholders blur.

Challenges

• Marketers will need to be fast and pragmatic to manage the crisis, while also being strategic on how to weather the downturn.
• As we delegate commerce search to our bots, ‘adverts will seek to game our avatars’ algorithms, making marketing as much about information and computing power as human creativity^ccviii.’ 
• Marketing to robots will require a different approach.

Opportunities

• Go beyond purpose led marketing to purpose led products and services^ccix.
• New tech allows new forms of engagement.
• Rethink value propositions.

Media and Entertainment

Media and entertainment have already seen significant disruption in the period since 2010, thanks to a range of technological evolutions and breakthroughs. What remains from this upending of entire business models is a ‘weakened ecosystem vulnerable to failure and abuse^ccx.’ It thus lacks widespread trust. Indeed, a Sky News poll revealed that 72 percent of the public does not trust newspapers with regards to the coronavirus, and 64 percent do not trust TV journalists^ccxi.

In the broader consumer economy, changes in behaviour previously expected to take more than five years may have already happened in five weeks^ccxii. For example, print advertising revenue has decreased some 80 percent since the start of the pandemic^ccxiii, indicating an acute shock that could further shape future media usage. 

Entertainment has undergone a similar change with esports assuming a prominent role for Forumla1 and others. The hybridisation of sports coverage for viewers will see physical events complemented with digital offerings^ccxiv and perhaps even change the in-stadium experience. Such changes are likely to endure after the crisis. 

These technologies, perhaps especially augmented and virtual realities could introduce a more immersive form of media – dubbed spatial journalism – seen as the potential future of reporting^ccxv. 

It has also been noted that, somewhat counter-intuitively given low trust levels, COVID-19 proves media’s value and importance, but that it requires new and better ways to measure such value^ccxvi. New models, for connecting people-to people, for consuming a wider array of media, verifying truths, highlighting disinformation and allowing the media to connect with consumers will all likely appear during this decade.

Appearing/disappearing

• Private micro-networks could be the future of how we connect^ccxvii. 
• New forms of participation and consumption.
• Tech driven customer-centric experiences.
• New measurements of value.
• Appearance of niche ‘narrowcasters.’

Challenges

• Overcoming lack of trust and disinformation.
• New business models.
• Legacy mindsets in incumbent organisations.

Opportunities

• Rebuild trust and deepen participation.
• Technological rebuttal of deep-fakes and disinformation.
• Use new technologies to rewrite the media and entertainment industries. 

Meetings and Events

The meetings and events industry was one of the first to succumb to the impact of COVID. In March 2020, 99 percent of business-related travel was cancelled in China, 96 percent in Europe and 85 percent in the United States. Thanks not only to its reliance on other industries such as airlines but the nature of logistics planning for events, it could be one of the slower industries to recover.

Pre COVID, virtual events were already starting to change the way we meet. When comparing the 2019 survey results to the 2020 results ‘of the percentage of planners who use hybrid/ virtual meetings in more than 10 percent of meetings, North America has seen an uptick in that number, going from 43 percent to 58 percent. Europe has seen an even larger increase, jumping from 49 percent up to 66 percent^ccxviii.’ With corporate budgets for travel likely impacted in the post COVID environment, the lower cost of attendance coupled with the increased content flexibility that online allows, could all see many previously face-to-face events remain virtual^ccxix.  

This shift, however, is unlikely to ‘…be universal, and it won’t be evenly distributed among types of events, industry sectors, local vs. distant, or other factors^ccxx.’ For some, hybrid events will likely act as a useful and necessary stopgap but not one that is ultimately viable as a replacement for face-to-face meetings^ccxxi.

Indeed, 7 out of 10 events professionals ‘have moved their face-to-face event partially or fully to a virtual platform, and many don’t see that as a short-term fix during the pandemic but something that will continue alongside in-person events going forward^ccxxii.’

For those pioneering a new virtual model, but perhaps especially those not planning on it, the need to embrace innovation, new formats and new technology is heightened by COVID-19. Virtual events may well indeed require a different blueprint^ccxxiii, but face-to-face events will need more than ever to justify the ROI of participants. 

Personalising content, enhancing the professional gain, a better personal experience and more will all be necessary against a backdrop of heightened sustainability awareness and shifting customer behaviour.

Appearing/disappearing

• New business models.
• New forms of collaboration and partnerships – perhaps even with only tangentially associated industries.
• The number of in-person events, conferences & meetings will be lower than any pre-COVID projections.
• The rationale for many low-level meetings that can be done virtually.
• Many providers and parts of the ecosystem today will likely disappear.

Challenges

• Those in the meetings and events industry will need to explore diversifying revenue streams. 
• Events will need to coalesce tightly around individuals’ needs – meaning more customisation, personalisation and technology to make this happen.
• New talent and skills needs.

Opportunities

• Human need for connection remains.
• Technology from 5G, AR, VR and holograms can improve the online (and in-person) experience.
• Reinvent the industry.

Mental Health services

COVID represents a dual health challenge; with the mental health crisis stemming from social isolation, economic worries and health concerns almost certainly likely to outlive the acute physical health challenge, and likely require enduring engagement for years to come.

Pre-COVID, mental health disorders were on the rise in every country in the world and were forecast to cost the global economy up to $16 trillion by 2030^ccxxiv. In 2018, the WHO forecast the number one cause of depression to be work-related stress by 2030^ccxxv. Likewise, nearly a third of people believe that increasing digital life would be mostly harmful to people’s future health, mental fitness and happiness^ccxxvi.

Could COVID accelerate the sentiment expressed in Davos 2020 that mental health should be a social and economic imperative^ccxxvii? ‘Governments must find evidence-based ways to boost the resilience of our societies and … to treat those with mental ill health remotely to come out of this pandemic in good mental health^ccxxviii.’ Since the mental health problem could be so widespread, any solution could feature business involvement to a greater degree than at present, for example by providing therapy access or modifying work conditions if necessary.

Moment-to-moment monitoring of anxiety and depression could feature, using digital technology, machine learning, AI counselling^ccxxix and an on-demand deployment of evidence-based treatments. AI is already able to detect depression^ccxxx. Ultimately governments may compel companies to fund the treatment of workers they have impacted negatively mentally.

The story of COVID and mental health is not only one-way, however. The advent of widespread homeworking could help tap potential talent pools unable to compete in dense office environments because of their existing conditions. Microsoft and Goldman Sachs have already banked on neuro-diverse talent to fill their talent needs^ccxxxi – others may look into this area as homeworking becomes a more mainstream practice.

Appearing/disappearing

• Greater involvement of employers in mental health provision and care.
• Providing alternative working conditions for a range of neuro-diverse employees. 
• Greater awareness.
• Public-private collaboration.
• Greater costs and human suffering, absent strategic change.

Challenges

• Building collaborative platforms.
• Building new pathways to work for people unable to socialise/engage in crowds.
• Cultural change.

Opportunities

• Develop new pools of sometimes otherwise ignored talent.
• Demonstrate greater loyalty to employees.
• Contribute to cross and intra-industry solutions.

Pharma

McKinsey estimates that ‘…big data and machine learning in pharma and medicine could generate a value of up to $100bn annually, based on better decisionmaking, optimised innovation, improved efficiency of research/clinical trials, and new tool creation for physicians, consumers, insurers, and regulators^ccxxxii.’ New models are likely to emerge; indeed, investments in digital-therapeutics companies in the United States have grown by an average of 40 percent a year over the past seven years to reach more than $1 billion in 2018^ccxxxiii. 

However, several of these new companies thrive in areas that pharma traditionally does not, such as advanced analytics, human-centric product design, appetite for risk and flexible business models. In a digital future, such features are a likely requisite for pharma companies unless they choose to partner widely and deeply. ‘The payers, providers, and pharmaceutical companies that gain experience and build partnerships now will be in the best position to grow with the industry and benefit from the coming waves of innovation^ccxxxiv.’ In some cases, these partnerships may appear counterintuitive; witness the emergence of cigarette makers as possible sources of a COVID-19 vaccine^ccxxxv.

The COVID crisis and its response will likely hasten the advent of a post-digital world and usher in the emergence of the biotech era^ccxxxvi. Steve Jobs once remarked that ‘…the biggest innovations of the 21^st century will be at the intersection of biology and technology^ccxxxvii.’ Biology, in part thanks to COVID-19, is fast becoming the new ‘digital’ and biotechnology (broadly speaking the combination of the two) a key driver of the future economy. Using living organisms to make products or manipulate existing processes could fuel innovation across healthcare, wellness and pharma itself. If DNA does indeed emerge as the new silicon as is suggested, Wired proclaims that ‘…biology will be the next great computing platform^ccxxxviii.’ Pharma straddles many of these changing areas, but absent change is not guaranteed to thrive in them. 

Benefits in the biotech and pharma environment could have far reaching implications in other parts of the consumer economy.

Appearing/disappearing

• New and non-traditional competitors.
• New overlapping. health/pharma/biotech ecosystems.
• 3D printed pharmaceuticals.
• Shorter value chains.
• Holistic cost of illness model.
• Analogue supply chains. 
• Purely manipulating atoms

Challenges

• Developing a risk-tolerant culture.
• Developing the ability to collaborate and partner effectively.
• Using strengths to pivot models at the appropriate time.

Opportunities

• Biotech.
• Machine learning and AI in drug discovery and development.
• New business models.

Real Estate

Deloitte correctly suggests that ‘…real estate companies are being impacted in different ways, largely dependent on region and asset class^ccxxxix.’ The longterm outlook is likely to depend on these very factors too. 

That said, the long-term impact on specific sectors can be outlined. The long march of the death of the high street has continued for more than a decade. What might be different now is the speed of acceleration in the wake of COVID-19 fallout. There is an old saying that it only takes a month to change a habit, and we may be about to experience the phenomenon that when forced to get used to something, it has residual effects. The disease’s unique pressures will likely shape how senior living communities are designed for years to come, for example^ccxl. 

What we expect from real estate is also likely to evolve. Buildings that automatically adapt to the preferences of occupants, that engage outside help where need be – for example relating to the security or health of occupants and are capable of balancing preferences^ccxli may strike some as fanciful. However, the technology to do many of these individual things is already proven through IoT, wearables and smart buildings use cases. 97 percent of real estate players think that digital and technological innovation will impact their businesses, but 56 percent rank themselves as 5 or less out of 10 with regards to their digital and innovation maturity^ccxlii. 

Indeed, without a clear sense of how to engage and with the distraction of a multitude of short-term problems to deal with, the danger is that the evolving ecosystem will be defined by others. Building management, data management and performance measurement^ccxliii will become critical levels of future RE success.  RE will also plug into wider infrastructure initiatives; for example, Chicago has announced plans that require electric vehicle (EV) charge capability for new buildings by 2040^ccxliv.

Appearing/disappearing

• Need for flexible buildings and flexible terms.
• Value-adding smart buildings.
• More empty space.
• Real-estate agents?
• Analogue real estate players.  

Challenges

• Players will need to offer new value propositions for distressed occupants.
• The need to digitise at pace.
• The need for new skills, competencies and ideas.

Opportunities

• All RE players are in the data business and are inherently digital businesses and orient talent, skills, practices and management to reflect this.
• Adopt advanced technologies at scale. The industry has traditionally been slow to adopt new tech and to adopt a customer-centric view: this must change. Some sort of tech-radar and awareness of global trends is vital.
• Build ecosystems that help players realise their long-term strategies.  

Real Estate (Commercial)

It is plausible that the commercial real estate (CRE) market will never look the same again. Even when lockdowns are lifted and commercial space reoccupied, it is likely that many people and companies will be less eager to return to the previous status-quo of densely packed workplaces. Barclays has suggested that big offices ‘…may be a thing of the past^ccxlv.’ This would seem especially so if the remote work experiment proves successful^ccxlvi.

Indeed, Bain predicted pre-COVID that by 2027, most work will be project based, with teams blending internal and external expertise to provide the required skillsets^ccxlvii. Virtual forms of collaboration, the rise of co-working spaces and how we access scarce talent will all impact how much office space we need, how we use it from day-to-day and in what capacity we use it. For one, ‘…changing patterns of work are prompting companies to see workplace design as a way to attract talent. Office design…must be responsive to the speed of change^ccxlviii.’ If it isn’t, most companies have already discovered an alternative during the COVID lockdown.

Longer term, subsectors such as office and industrial could be impacted by changes in where people work and changes in supply chain. Could COVID-19 lead to a lot more, empty retail and office space? Could it then be re-developed as residential accommodation or space for remote workers and self-employed, financed by zero or negative interest rates continuing much longer than previously thought? And could this be eagerly bought up in a negative interest rate induced housing boom? 

COVID will likely prompt some CRE players to digitise and look to provide a distinctive and personalised tenant and customer experience^ccxlix. As seen with retail, where leases are being renegotiated throughout the acute phase of the COVID crisis, a new relationship between occupant and owner/developer is likely required. This is perhaps the most obvious way for real estate players to actively remake the old-value chain into a broader ecosystem and to allow for a greater degree of personalisation. Undoubtedly, new markets could flourish, with ecommerce demands increasing demand for warehousing spaces.

Appearing/disappearing

• Flexible space.
• More engagement with Proptech.
• Rebalancing of CRE profiles.
• Demand for non-value adding solutions.
• Growth of virtual spaces lowering CRE demand vs as-usual growth – including closure of up to 100,000 stores in the U.S by 2025^ccl.

Challenges

• Overcoming acute short-term issues.
• The ultimate goal for developers, investors and owners is to identify and incorporate weak signals and trends before end users are even aware of them.
• Adapting to continuous change.

Opportunities

• Technology could feasibly contribute to redrawing the entire industry.
• As new formats of work prosper, physical spaces will need to become ever more strategic and enablers of wider workforce strategies.
• New partnerships, standards and direct to end user relationships.

Retail

In 2003, the SARS outbreak helped provide not just a boost, but lasting growth for China’s nascent ecommerce sector^ccli and for Alibaba in particular. The COVID19 crisis will likely have similar impacts globally. 

Since workers globally stand to lose between $860 billion and $3.4 trillion of income in 2020 due to the crisis^cclii, retailers everywhere will need to revisit strategy, messaging and value propositions. Consumer habits will be lost, and others will be gained, for example Lazada Singapore’s CMO believes that the future of e-commerce is in combining livestreaming and entertainment^ccliii. 59 percent of consumers worldwide reported high levels of interaction with physical stores before COVID-19. In next 6–9 months, 39 percent of consumers expect a high level of interaction with physical stores – clearly below the pre-COVID levels^ccliv. 

The interplay with existing trends will be interesting – the American economy for example is already in the midst of ‘broad and often deep dematerialization^cclv.’ While ‘sharing’ is out for the moment, it  could resume at some point given the convenience and economy it offers. Rent the Runway has partnered with the retailer Nordstrom which sees the former incorporate Nordstrom’s inventory into their platform. Future plans include using data about the kinds of products customers want and what items work best within the rental model^cclvi. COVID19 will likely accelerate this type of convergence and other forms of hybridisation of conventional retail business models^cclvii. On-demand services could surge. McKinsey, citing numbers from China in March 2020 suggests room for cautious optimism for a consumer rebound^cclviii. Those that are prepared for it with appropriate offers, partnerships, strategies and engagement will rebound quicker than those who assume a resumption of normal.

Appearing/disappearing

• Shoppable video could form the future of retail^cclix.
• More hybridisation, collaboration and partnerships with a range of sectors any competing models.
• Digital platforms and remote retail.
• Amid the COVID-19 outbreak. UBS analysts think 100,000 stores will close in the US by 2025^cclx.
• Complex supply chains.

Challenges

• Consumer tolerance of crowds may require rethinking of plans to build physical experiential retail.
• Adapting messaging, relationship and purpose to rapidly and drastically changing consumer circumstances.
• Adapting organisational skill base to a different future of connection and experience.

Opportunities

• 52 percent of UK shoppers are happy to share their consumer data with retailers if they can save money, suggesting closer relationships^cclxi.  
• Digital retail platform use will become a central part of our lives.
• Tech offers room to personalise and experientialise in-home retail too.

Shipping

Despite the changing face of globalisation and the ascendancy of China, the nature of the global supply chain has remained reasonably static since the 1950s. The COVID-19 crisis not only impacts the face of globalisation and prompts greater regionalisation but could catalyse required changes in its nature too.

Navin Kumar, director of Maritime Research at Drewry suggests that an early lesson of COVID-19 is that ‘…the world has been too dependent on China for everything^cclxii.’ Long term it seems almost certain that supply chains will diversify and, in some cases, shrink as companies look to re-shore capacity with the assistance of additive manufacturing and other technologies. Ports could therefore increasingly cater to smaller ships and shorter routes due to the rise in local and regional production processes^cclxiii,’ for example.

Paul Cuatrecasas, CEO of investment banking firm Aquaa Partners says that ‘Covid-19 has just slapped everybody in the face so get ready because what’s coming is going to be even greater disruption in different forms^cclxiv.’ The digitalisation of the sector, extending even unto autonomous shipping will necessarily embed resilience and flexibility into supply chains and logistics more generally. 

In 2019, it was forecast that shippingrelated emissions – accounting for 3 percent of the total global carbon emissions – could climb between 150 percent and 250 percent over the next 40 years^cclxv. Decarbonisation of the shipping sector could cost anywhere between $1 trillion and $1.4 trillion^cclxvi yet coalitions have already been established that seek to produce zero carbon vessels and fuel by 2030^cclxvii. Beyond COVID-19, industry and environmental sustainability would appear intertwined. The current crisis may prompt more rapid digitisation as resiliency and flexibility become core competencies and thus accelerate the journey towards a more sustainable future.

Appearing/disappearing

• Green technologies.
• Digitally enabled models. 
• Platforms and ecosystems that include non-traditional competitors/partners.
• Old assumptions about global trade, in both its nature and geographical footprint.
• The regulatory environment will likely require extensive change.

Challenges

• The COVID-19 crisis represents a long-term issue of disruption for the industry, not a one-off.
• Multiple vectors of change, some only tangentially connected to COVID-19.
• Regionalisation replacing globalisation.

Opportunities

• Accelerating digital diffusion and building smart shipping options.
• Autonomous shipping.
• Building the resiliency to cope with the looming sustainability issue.

Smart Cities

Governments and urban authorities are using smart city technology, 5G, sensors and data to trace real-time health issues and conduct contact tracing. Smart cities’ technologies are also helping to determine whether social distancing rules are being followed^cclxviii. Such a moment would appear to be a watershed for smart city development, if not universally welcomed from a longer-term privacy perspective.

The use of machine learning allied to such systems could create not just sensing, but predictive cities. Nashville Fire Department, in the US, is already testing advanced analytics software predict the location of future incidents^cclxix. 

By 2025, one-fifth of all data generated worldwide is forecast to be marked as ‘critical’ to daily life, and nearly a tenth as ‘hypercritical^cclxx.’ Data collection and analysis are becoming prominent features of building systems, which will likely mean that facilities and cities best positioned to analyse their data and provide actionable output to users will likely gain competitive advantage within the marketplace^cclxxi. 

Collaboration and ecosystem partnerships will accrue prominence in many organisations’ smart city plans since few have the necessary direct to consumer reach with the 100 billion to one trillion IoT connected devices forecast to be around in 2030-2035. At the same time ‘…the future is moving toward integrated solutions that connect all verticals within a single platform^cclxxii.’ All buildings and    ambient data will likely feed into one of a number of shared systems, including a health based one. 

Such data is likely to span freely available sources such as local demographic patterns to more protected sources. The benefits of these platforms are already being factored into decision making. 

Appearing/disappearing

• A.I in cities governance.
• Open data.
• Smart city governance platforms.
• Unified data.
• Stand-alone solutions

Challenges

• Balancing privacy and security.
• Public and private collaboration.
• Building citizen centric services.

Opportunities

• The first global framework for smart city governance is emerging^cclxxiii and potential players and stakeholders should engage with it immediately.
• Smart cities could generate up to $2 trillion worth of business by 2025^cclxxiv.
• Smart cities could become key talent magnets in their own right (43 percent of business leaders are looking to move offices to cities with a compelling smart city vision^cclxxv.) 

Sustainability

A 2019 study found that 78 percent of asset owners globally are already integrating ESG into their investment processes^cclxxvi. This relatively narrow interest in sustainability is likely to broaden into other areas and issues.

Health care and issues surrounding food, obesity, and tobacco could face renewed interest and calls for collaboration that have already been demanded from pharmaceutical organisations. However, the concept of sustainability will probably need redefining in the COVID-19 era and what follows^cclxxvii. 

For example, ‘90 percent of companies feel as though they need to change their core business model at least somewhat in order to operate within a truly sustainable economy, and 38 percent feel that their core business model will need to change radically^cclxxviii.’ If city-level actions are anything to judge by, the crisis could be the time to reassess how things are done. For example, Milan has announced an ambitious scheme to reduce car use after lockdown^cclxxix, and has repurposed 35km of roads into cycling lanes.

The circular economy concept could be key to achieving a new form of sustainability. Our pre-COVID evidence suggested we are becoming less circular, not more^cclxxx, yet Gartner suggests that by 2029, the circular economy will be the only economy that matters, replacing wasteful linear economies^cclxxxi. With the economy, supply chains and consumer attitudes all being rewritten, now would appear the time to start building the type of networks and collaboration required for such a system. 

Scientific breakthroughs are concurrently allowing such a transformation; witness the creation of a mutant enzyme that can recycle plastic bottles in hours that could be commercialised within five years^cclxxxii. 

Sustainability is increasingly likely to form a key KPI, not just for investors, but consumers becoming more aware of the impact and link between humans and the natural world.

Appearing/disappearing

• Sustainability as a KPI and investment factor.
• Infrastructure of circular economy.
• A new definition of sustainability.
• New recycling paradigms.
• Linear supply chains.

Challenges

• Need for new metrics.
• Overcoming legacy thinking and business models.
• Investment in a time of recession.

Opportunities

• Review the role of the organisation in the wider community.
• Create sustainable long-term value.
• Creating purpose driven organisations that appeal to talent.

Technology

The new normal of the COVID crisis – of remote work, online education and social distancing – will continue to create demand for products and services delivered by the tech industry^cclxxxiii that could become long term in nature. Demand for cybersecurity solutions will also boom since at present organisations only protect 60 percent of their business ecosystem^cclxxxiv. The 73 percent of executives citing the rising importance of cybersecurity over the next three years^cclxxxv will almost certainly have grown thanks to the COVID crisis and the cybersecurity mess it could turn out to be.

Big tech is almost certain to emerge from the crisis in a stronger position than it entered it. Various forms of technology receiving public scrutiny before the crisis are now central in fighting it, including the gamut of surveillance-based options. However, given the expansion of the state, governments may also feel emboldened. The Economist suggests that tech companies ‘…best defence is to propose a new deal to the citizens of the world. That means clear and verifiable rules on how they publish and moderate content, helping users own, control and profit from their own data^cclxxxvi.’

Outlined by the World Economic Forum, it was suggested back in 2017 that a ‘…person’s data should reside in an account where it would be controlled, managed, exchanged and accounted for^cclxxxvii,’ by around 2028.

In addition, ‘the pattern of ‘life data’ could emerge as a new way to de-commoditize consumer financial products.

Consequently, new businesses may emerge to meet the market need for access to these data flows^cclxxxviii.’ Consensual data access could knock down the remaining barrier to entries if not to existing industries themselves, then the ability to offers customers new ways of doing things and meeting their demands and wishes in non-traditional ways – such as providing ‘banking’ but not being a bank.

Appearing/disappearing

• Ambient technology.
• A new bigtech/public compact  
• Tech will propel new working, health, entertainment and shopping practices that will probably become a permanent fixture of the next normal.
• Me-too products and services that do not satisfy shifting consumer demand.
• Free to use consumer data.

Challenges

• Avoiding bigtech vs. big government issues.
• International patchwork of regulations.
• Ensuring cybersecurity as an in-built, default style setting.

Opportunities

• Creating new sticky markets – virtual events for example – that endure past the crisis.
• Regaining broad public trust.
• Create value for users when using their data.

Transportation and Automotive

The transport and automotive sectors are significantly impacted by the crisis. Some 80 percent of automotive and related companies report that it will have a direct impact on their 2020 revenues, while more than 80 percent of the world’s auto supply chain is also connected to China^cclxxxix. The crisis also provides an opportunity – or perhaps compels incumbents – to experiment with new ways of doing things, trialling new technology such as autonomous vehicles (AVs) and accelerating strategic plans^ccxc.

The obvious example lies with autonomous vehicles. During lockdown in China, food delivery service ‘Meituan began piloting AVs for delivery throughout Beijing. The delivery vehicle from Meituan can travel up to 100km carrying load of 100kg at the speed up to 20km/h. It mainly delivers fresh vegetables and food. China Unicom worked together with Meituan to ensure the support of 5G network for its autonomous delivery vehicle^ccxci.’ Milton Keynes has also seen COVID inspired AV use.

It is noted that young markets plus those with dense geographic concentration of key parts, such as electric vehicles (EVs), are especially vulnerable to the nature of the COVID-19 crisis. The longer term looks more promising. For example, previous forecasts were for green transport set to overtake cars in world’s major cities by 2030^ccxcii. It should also be acknowledged that interest in autonomous vehicles has risen in direct response to the crisis ‘…as manufacturers look for driverless delivery systems that would be useful in pandemic situations. If those systems take hold, EVs could benefit^ccxciii.’

If they do, and in a timely manner, this could even speed up development and investment for electric air taxis, which were forecast earlier in 2020 to reach a $1.5 trillion market globally by 2040^ccxciv.

Appearing/disappearing

• More autonomous vehicles and transport.
• More person to person logistics to cope with the growth of ecommerce.
• New mass transport concepts that reduce physical contact.
• Less business-related transport than many otherwise have occurred thanks to proliferation of virtual options.
• Could spatial economics start to be lessened by AVs to the extent that commuting patterns etc. begin to be inexorably altered?

Challenges

• Long term investment plans will likely need revisiting and re-prioritised, in light of decreased short to mid-term revenue^ccxcv.
• Travel patterns, as well as commuting ones, may not recover to their pre COVID-19 state^ccxcvi, regardless of AV uptake.
• New models for premium transport – will we still need business class as previously configured if we are traveling less for business?

Opportunities

• Mobility-as-a-Service
• Ecosystem approach to aviation, e.g. profit sharing for airlines and airports.
• New public-private ownership models may begin to address sustainability?

Travel and Tourism

COVID-19 is likely to cause $1 trillion in direct losses for the global tourism industry, up to $5 trillion indirectly, as well as lead to around 50m job cuts in 2020 alone^ccxcvii. The previous normal may never be fully replicated, with trust in safe travelling, disposable income and consumer behaviour all potentially impacted in key ways, not to mention the status of airlines, hotels and other key infrastructure. A return for hotels to their 2019 levels could take six years at least^ccxcviii. Enhanced short-term challenges could also feature: Australia and New Zealand for example, have already discussed the banning of international travel, both inbound and outbound, for 12 months^ccxcix – or forming a ‘Tasman travel-bubble.’Indeen, Germany is considering allowing foreign holidays to countries with low levels ov the virus and modern hospitals.

The old normal may not be desirable in any case. Many destinations have quickly progressed from over-tourism being their primary problem to complete loss of livelihood. Neither are sustainable. The COVID pause will enable new strategies to be crafted for those with the foresight to create more economically, culturally and environmentally tenable propositions. The environmental costs associated with industrial tourism were being questioned pre COVID. For example, a 2020 study of EU consumers found 62 percent advocated banning short-haul flights for the sake of the environment^ccc.

A lot of commentary has suggested virtual travel as a possible substitute, both short and long term. Whether this satisfies the needs and desires that drove the wish for travel in the first place remains unresolved, but technology will clearly have a part to play in the recovery, or redesign, of the industry. Extended reality tools ‘could boost event sales for hotels by 8 percent^ccci, for example, while the Faroe Islands has launched virtual forms of tourism that have proven extremely popular.

Appearing/disappearing

• More local, time-limited tourism.
• Increased use of tech throughout travel.
• Attempts to provide virtual and personalised forms of travel.
• Freedom of movement is likely to be reduced, whether periodically, or should politics take inward turns in key countries, perhaps permanently with regards to some international routes.
• The middle market, should recovery follow an L or U shape, could see reduced growth.

Challenges

• We are still forecast for four billion part-time tourists, globally, by 2040^cccii. Environmental limits are finite; services, products and incentives for greener and more sustainable travel must emerge.
• Create more resilient tourism models and reduce risk of overly concentrated industries.
• Adapt to the new consumer norms that will likely emerge in the post COVID world. Tourism related interests need to plan for a range of scenarios.

Opportunities

• Align tourism with sustainability, health and the needs of the local community.
• Reorient products and services.
• Pioneer alternative ways of experiencing and consuming.

Future of Community

As of April 25^th 2020, 22 percent of Britons are noted as belonging to a community support group, with more than a third joining since the start of the pandemic. The Economist notes that ‘…2 million people have joined local support networks on Facebook while daily users of Nextdoor, a hyperlocal social network, has risen 90 percent^ccciii.’  

Depending on how economic structures and paradigms evolve, the pandemic could preference localism over globalism and also change how we fund our communities. In the short term, community development financial institutions, churches, and nonprofits could help businesses and residents to rebuild. In the medium to longer-term, ‘…new financial products and programs such as community rainy-day funds could fortify the resilience of communities^ccciv.’

It is equally plausible that companies will be asked to contribute in new ways. The concept of social intrapreneurs could flourish, whereby entrepreneurs who work as employees within companies, develop business solutions for social or environmental problems, and attempt to ‘future-proof’ communities. In fact, companies may themselves seek this role since evidence suggests such moves also benefit the company – 24 percent see their initiative as a catalyst toward company transformation^cccv. The relationship between communities and the state will also change. It could plausibly become more ‘remote,’ whereby states digitise much of their services^cccvi in the face of higher debt. Future partnerships joining the state, business and local communities would seem more likely.

Changes in how the community relates to itself, to business and the state will all need to coalesce to some degree to combat future issues. For example, loneliness is something most of us are uncomfortably getting used to during the lockdown. Yet there are 6.8 million men aged 60 and over living alone in the UK today, which is projected to reach 9.6 million by 2030^cccvii.

Appearing/disappearing

• New personal support networks. Will they endure?
• New business-community links.
• New government-community links.
• More localism and local awareness.
• Plans for dealing with ageing.

Challenges

• Creating new norms.
• The challenge of loneliness.
• The digital divide could limit effectiveness of digital services.

Opportunities

• Chance to re-assess social norms.
• Chance to build more resilient communities.
• Future-proof our communities.

Future of Religion

Danish analysis of 75 countries’ internet use since the onset of the pandemic, reveals that ‘…search intensity for prayer doubles for every 80,000 new registered cases of COVID-19^cccviii.’

In March 2020, these reached a 5-year peak, surpassing levels of major events such as Christmas, Easter, or Ramadan. At the same time, churches are already finding new ways of fulfilling many outreach programs. For instance, at NorthWood Church, Texas, the women’s ministry has organised ‘…online coordination to take the elderly to the hospital, to providing them with meals, as well as organising and providing lunches for impoverished children^cccix.’ Equally many congregations found that video conferencing was an ideal way to stay in touch, look after one another and share the message of their faith. This will likely persist after the pandemic is over.

The level of change COVID could induce may be unprecedented, but a wider interest in religion and spirituality is not the only plausible implication. The 2013-2016 Ebola crisis highlighted the need to ‘build bridges between development and faith, science and spiritual approaches vital^cccx.’ Organisations that push narratives of pseudo-science, or embrace a complete absence of science, rather than science complimenting faith, could instead ‘reinforce the decision of the non-religious to stay away from organised religion^cccxi.’

The Economist notes that ‘COVID-19 has not generally widened fissures between faiths. Rather, it has widened those within the ranks of all great religions^cccxii. In countries such as Morocco, Saudi Arabia, Bahrain, and Iraq many view the restrictions as violations of religious practice and, in some cases, outright repression of religious minorities. Could the new normal be used as yet another justification to marginalise religious expression deemed too extreme, or religious practices that are politically inconvenient^cccxiii?’ 

Pre-COVID, many churches arguably operated without too much reflection on their identity or mission. Inherent questions now require an answer: ‘What is the Church? A building? A particular gathering? A community? What is worship? What really matters in a worship service^cccxiv?’ 

Appearing/disappearing by 2030

• More visible religious organisations footprints in wider local communities.
• Use of tech to provide community.
• Rising interest in spirituality.
• More regionalisation of previously global entities (Methodist Church split)
• More online only churches.

Challenges

• Fissures within religions.
• Accommodating new interest without alienating the faithful. 
• Prolonged COVID changes could redraw notions of what constitutes a church.

Opportunities

• Provide stability, community and hope in a world in flux.
• Partnering with other community or faith organisations to help furthercommunity outreach^cccxv.
• Increased roles for women as more activities are and remain home based.

Future of Work

In August 2019, some 54 percent of executives predicted that ‘digital’ would have a significant impact on their industry over the next five years^cccxvi. We would assume that a similar survey today would reveal a significantly higher percentage. Work from home, a consumer-centric proposition, collaboration, digital supply chains and other facets of digital transformation have fast become necessary to transact business. 

On April 29^th, the ILO announced that nearly half of global workforce was at risk of losing their livelihoods^cccxvii. It is likely that swathes of these jobs will not be restored in their original capacity once the acute first phase of the COVID-19 crisis passes. Especially interesting will be the evolution of the platformed business model, which is now posing new and immediate ‘challenges for regulators, workers and established businesses in the formal economy^cccxviii.’ 

Businesses everywhere now should accelerate their plans for creating, staffing and sustaining the jobs that will drive their planned-for future success. Likewise, those that have managed to partner widely, collaborate and enter new markets generally have a greater opportunity to climb out of the depression that COVID-19 could leave behind – whether through access to talent or by using technology to switch business models^cccxix.  

Indeed, the issues of collaboration and colliding markets are likely to rise in importance the longer the COVID-19 pandemic and aftermath last. Bain, for example, suggests that to survive many CEOs will need to explore ‘…public-private partnerships wherever applicable.

Companies’ best partner in recovery may be a local municipality, mayor, governor, a regional committee, or a country’s governing body^cccxx.’

Appearing/disappearing

• The extraordinary impositions of the pandemic could lead to more automation. 
• Innovation acceleration: The solutions implemented during crises often endure, recession-launched services and products often become market leaders while behaviour shifts can be permanent^cccxxi.
• Economic resilience in the face of COVID-19 and other wildcards requires companies to do things differently^cccxxii and to do different things.
• New partnership and collaboration sources.
• The assumptions that we have based many of our models and practices on.
• Colocation as the default.

Challenges

• The benefits of digital workplaces are fast becoming realised but are increasingly unable to provide competitive advantage. It’s table stakes now.
• Build, source and manage the talent for the future.
• Build the ecosystem and partnerships to deal with the evolving environment.

Opportunities

• Orient processes and practices around consumers and employees.
• Use talent, expertise and data capability to open new revenue streams or business models.

Conclusion

Rules governing politics, economics, social norms, work and more are being rewritten at pace, leaving yesterdays’ assumptions increasingly invalid. For example, distance, long minimised as a critical factor thanks to globalisation, is back to some degree as both a social and economic factor. Trends and drivers that were set to materialise over the next 5 to 10 years are appearing now, leaving many companies with shorter planning and strategy horizons in unenviable situations. Digitalism is fast becoming a bare minimum for survival, while redesign, adaptation, restructuring and rebuilding will become critical pillars of future business. COVID-19 may or may not be the only pandemic to impact our lifetime, but it will not be the only ‘black swan.’ Resilience is critical and must be realised by design.

Tactics devised to survive the acute phase of the crisis, must evolve into a more strategic view of change. The groundwork for organisational recovery and renewal must be laid now, using tools capable of incorporating a wide range of forces larger and more complex than many standard industry-level trends that are interrogated by tools such as Porter’s Five Forces. It is essential that business reconstructs and redesigns for the future and is not driven towards solving the problems of the past. 

The long-term view, although imperfect and beyond many leaders’ likely job tenure, is a key facet of organisational sustainability and resiliency. Foresight seeks to redress the dangerous, short-term weighted imbalance evident in planning by providing a systemic framework for thinking about, imagining, and planning for the future. At its core, foresight allows stakeholders to have structured conversations about uncertainty, which is perhaps the only certainty right now. Done correctly, it can reveal challenges and opportunities that are easily dismissed in a business-as-usual environment. 

The brands, industries and ideas that will come to dominate their sectors and beyond are still being created. This crisis, for all its human and economic suffering, will compel us to do things better, to do different things and establish a new set of rules. For those that dislike change this is set to be extremely uncomfortable as we enter an era of unprecedented disruption and challenge. For those that embrace change, the post COVID environment will provide a range of opportunities, ideas and innovation that help rebuild our communities, businesses and the world may even be a better place. In the post-COVID economy, thinking about the future is no longer an indulgence or useful thought exercise for business, but rather a key tool for interrogating uncertainty while building more sustainable and resilient futures into the ‘New Normal’.

Call to Action

After we’ve learned to survive the economic and social disruption of the pandemic, we must plan for the changed future our organisations will need to operate in afterwards and test our current assumptions, offerings and goals. Apart from the pandemic, we are at the start of the greatest impact of technology on our lives and organisations that we have ever experienced, and the rate of impact is accelerating.

Traditional strategy and planning tools have been barely adequate to-date but we now need to look deeper at the drivers of change, determine their possible impact on us and prepare strategies for adapting to them or even better, grasp the opportunities they present.

Several tools are excellent at this. Horizon Scanning, scenario planning, Three Horizon mapping, Impact Wheels, to name but a few. These are neither difficult or time consuming to use and they produce instant feedback to participants and subsequent reviewers.

I’ve long said that ‘if you want to get ahead you need to look ahead’ and there isn’t a better time to do this than right now. Consider:

“The root causes of decline in public companies are;

“Strategic risks (60%) rather than operational risks (30%) or financial risks (10%).” The Society of Actuaries

“The assumptions on which the organisation has been built and is being run no longer fits reality.” Peter Drucker

We are expert in leading such processes and have skilled marketing, strategy, technology and economic capabilities, amongst others, which we bring to bear. Alongside you, we can create a compelling view of your potential future and help you remain relevant.

Visit www.thegff.com or just David a call on 07932 408901 or Graeme on 07446 879958

About the authors 

David A. Smith

Chief Executive

Global Futures and Foresight

David Smith is recognised as a leading strategic futurist who combines the experience gained from a 35 year IT, marketing and business career with strategic visioning to help organisations better prepare for the future. His career has spanned European and US corporations. He is a much sought-after keynote speaker and is the author of many works on embracing change and the drivers of change. Before establishing Global Futures and Foresight, an independent futures research firm, he created and ran the Unisys internal Think Tank, The Global Future Forum. Prior to this he was head of strategic marketing for their $2bn global financial services business. 

[email protected]

Graeme M. Leach

Director of Economic

Global Futures and Foresight

Graeme Leach is Director of Economics at Global Futures and Foresight. He is one of Britain’s leading economists and a former Chief Economist and Director of Policy at the Institute of Directors (IoD), where he was also a member of the Board. Graeme represented the IoD in economic discussions with the Chancellor and 10 Downing Street. He is a visiting professor of economic policy and a senior fellow of the Legatum Institute in London. He is also a member of the IEA Shadow Monetary Policy Committee (SMPC).

[email protected]

About Global Futures and Foresight

Global Futures and Foresight is a research and consulting firm that helps organisations be better prepared to embrace change, innovate and develop new strategies and solutions and helps clients to avoid the risk of being blindsided by external disruptive change.

The GFF has been engaged by some of the most prestigious firms from around the world including: The

The European Commission, NATO, BBC and financial services firms including HSBC, Lloyds/TSB, Atom Bank, RBS, Lloyds, More than, e-sure, Travelers, Allianz, QBE and Lloyds syndicates, CSC, Unisys, Cisco, Microsoft, Siemens, Deloitte, Ernst & Young, PWC, Linpac, Kraft, Heinz, John Lewis, Roche, Philips, Ogilvy etc. 

The GFF is a Futures Framework supplier of futures methods and insights to the UK  government via the Department for Business, Energy and Industrial Strategy. 

https://www.thegff.com
t +44 (0) 1372 210941,  m +44(0) 7932 408901

References

Full details of all information references and sources used in this report appear in the full ‘Big Break’ report, which is available free of charge on request.

Request a full copy of the Big Break Report here