Recovering from Covid-19: think outside the box but inside the grid

The official declaration of a global pandemic back in March triggered a stock market crash all over the world. But two industries – technology and health – emerged almost unscathed and have since seen a steady rise in their fortunes. Covid-19 has reshaped many of our behaviours. The fact that we’re now shopping online, meeting online, learning online, watching plays online, and so on, has given a huge boost to many companies in the technology sector. At the same time individuals and governments are investing heavily in health industry players who are trying to help defeat the coronavirus with vaccines, ventilators, testing kits and personal protection equipment (PPE). It’s easy to see why this has resulted in more billionaires, and more billionaire wealth, in these two sectors.

Business after the pandemic: it’s all about productivity

That, in a nutshell, is what has happened so far. But once effective vaccines have been found and we’ve learned to deal with Covid-19 as any other seasonal disease such as the flu, the pandemic will be over. What happens then? Chances are that the polarisation of wealth in tech and health will have a lasting impact on human productivity. To understand why, it’s important to understand the core purpose of these two industries.

The technology industry is fundamentally about improving human productivity. It’s about finding ways of better storing and processing knowledge (i.e. data) and communicating. With billionaires’ wealth already boosted, we’re likely to see another acceleration in this sector. Online meeting solutions such as Zoom will be faster, reaching more people and containing more functionalities. Online e-commerce platforms such as Alibaba and Amazon will allow more businesses to reach out to more potential customers conveniently. AI and other personal productivity solutions from companies like Amazon, Microsoft and Google will be smarter than they are today.

The health industry is fundamentally about extending and improving human life −and thus also closely bound up with productivity. Increased wealth in the industry will drive advances that will ultimately make us healthier and thus more productive for longer.

This improved productivity won’t be confined to the technology and health sectors. After the pandemic, we’re going to see gains in all industries, resulting in the highest levels of human productivity this planet has ever seen. At the same time, though, we have to realise that consumption of today’s products and services may not necessarily expand at the same rate. Given earth’s limited resources, we have to be extra-careful about our consumption.

Against this backdrop, two things are likely to happen – both of which business will have to contend with. Firstly, there will be increasing protectionism on a national or regional level to protect consumer power from foreign producers and service providers. Secondly, it’s going to be crucial for business strategies to include and go beyond productivity gains from technologies such as big data, smart supply chains, liquidity management, automation and AI.

The sectors affected include financial services. While central banks and other financial institutions have responded well to calls to ease the short-term financial impacts of the pandemic, the stimulus won’t go on forever. Credit risks lurk just around the corner. What happens if central banks are no longer able to assure liquidity? Technology may have answers to these challenges, but so far large sections of the financial services community have been relatively slow to harness digital tools to attract more customers, create ecosystems of services and attract and aggregate information. These tools used to be ‘nice to have’. In the ‘new normal’ they’ll be a core requirement.

How to re-invent products and services

Protectionism is harmful and self-defeating, and trade wars will damage global growth. Luckily, businesses can normally move faster than governments, so hopefully the private sector will adapt more quickly by reinventing products and services, creating brand new services and products for consumers and thus triggering new demand.

Inventing new products and services requires the ability to think outside the box but inside the grid. ‘Outside the box’ means that businesses need to think and try things that they haven’t done before. But at the same time they need to be relevant to the consumers who will end up buying these reinvented product and services – hence ‘inside the grid’. Thinking outside the box is inventing the first automobile. Thinking inside the grid is developing the world’s first mainstream car.

All this requires the entrepreneur’s direct attention because it involves a ‘greenfield’ rather than a ‘brownfield’ approach, designing a new solution from the ground up rather than reworking or upgrading an existing approach. And companies have to take more of an end-to-end, business value-led approach rather than a function-led approach − in other words considering at a business transaction level what the input is, what the output is, and what value the business adds, instead of merely working out how to enhance siloed functions such as finance, risk or HR.