When will everything get back to normal? It won’t.

The changes the pandemic has wrought won’t all simply reverse once Covid is behind us. This phenomenon explains why

  1. Structural adjustments
  2. Changes in consumer behaviour
  3. Changes in workplace behaviour
  4. Government rules and regulations

1. Structural adjustments

The economists who first used the term hysteresis observed that, even after recovering from a major recession, the unemployment rate was typically higher than beforehand.
This long-term “scarring” effect was thought to be caused by a variety of factors, such as loss of skills, reluctance to invest, and adjustment costs in rebuilding.

  • Convert fixed costs to variable costs.
    The more turbulent the business conditions, the more you want to rely on contract workers and partners, so you can flex them up or down according to demand.
  • Don’t cut too hard on your investments in intangibles.
    Research by Ioannis Ioannou and colleagues from the financial crisis showed the companies that weathered the storm best were aggressive at cutting costs but not in R&D and stakeholder relationships.

2. Changes in consumer behaviour

There have been obvious changes in consumer behaviour since the pandemic started, and while some are clearly temporary (I don’t want to meet my friends for a drink over Zoom — I want to go to the pub) others are likely to endure because they are efficient (online shopping) and/or enjoyable (movie streaming).

  • Understand what’s changed in your transactions with users.
    Most businesses aren’t just “products” or “services” they are a combination of the two. As a general rule, most service transactions benefit from the human touch whereas most product transactions do not. So its worth mapping your online user journey and comparing it to what happened before, to help you figure out which changes will endure.
  • What business are you in?
    The pandemic allows you to ask this question afresh, and perhaps to come up with some surprising insights.
    For example, the education industry — which used to bundle networking, certification and tuition into a single offering — may never be the same again.

3. Changes in workplace behaviour

The wholesale shift to virtual working for formerly office-based employees was no less dramatic, and was also driven by necessity rather than expectation or demand.
We now have a good understanding of how effective this huge social experiment has been.
Most of us are at least as productive as before, our ability to get things done, especially tasks than can be easily subdivided, has improved, and opportunities for online learning are plentiful.
On the other hand, creativity and collaboration are being stifled, resolving tricky personnel issues is more difficult, and the opportunities for professional development — for example taking on challenging new assignments — are fewer than before.

  • Put some structure around the hybrid working arrangements for your staff.
    Make sure people are in the office for the collaborative, innovative and social-type activities that really benefit from face to face contact.
    You can be more relaxed about where they do their own individual work, and indeed many of their meetings.
  • Actively manage professional development.
    Especially while most people are working from home, you need to find ways of giving them new experiences, sometimes in areas they are less competent at.
    Its good for their long-term development, and for their short-term sanity.

4. Government rules and regulations

Finally, how will government rules and regulations change things post-pandemic?
As already noted, the government’s first economic (rather than health-related) task was keeping the whole system from collapse, and as soon as that is resolved, their next task will be to find ways to pay for their interventions — which will mean higher taxes and tighter public spending for years to come.

  • Be prepared for restrictions on movement to stay in place for a long time to come.
    Even when we as individuals are happy to mingle in crowds and travel again, governments and large companies will always err on the side of caution.
  • Be proactive about rethinking your physical footprint.
    The benefits of having your offices in a large city centre are fewer than they used to be, and that will be an enduring effect.

Two differences that look likely to stay

So what will the next few years be like?
Basic human nature hasn’t changed, so we will revert to most of the activities and behaviours that kept us busy before the pandemic.
But with two important differences.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Joaquim Cardoso @ BCG

Joaquim Cardoso @ BCG

17 Followers

Senior Advisor for Health Care Strategy to BCG — Boston Consulting Group