The new Coronavirus and business
A new era of business, driven by COVID-19?
Will the current crisis lay new foundations for businesses?
Emergency situations and drastic measures are characteristic of some types of crises. The world has suffered several, and these have led to significant changes in economic models and government regulations. A clear example was the Black Death in the 1300s, which transformed the feudal era through the introduction of labor contracts. Wars were also essential in changing economic models, such as the wars between England and France, which subsequently led to improved productivity models to address famine and economic crisis.
The current decade
It also underwent changes that shaped the current state of commerce. SARS, a type of coronavirus that emerged between 2002 and 2004, led to immense growth for the company known as Alibaba. The fear of contact between individuals due to SARS propelled e-commerce to new heights. Airbnb and Uber were digital platforms created in the wake of the 2008 financial crisis. Due to the cost optimization and business model these digital applications offered, they were well-received in the market, not only by users but also by investors.
Covid-19 has begun to generate changes in companies, which are now promoting remote work among other activities that will allow them to survive in the long term and face the crisis in the short term. Several companies, such as airlines, retailers, and resellers, face a less than positive scenario in the medium term, since reactivating their sales flow will be relatively complex depending on their size. However, these changes over time are simply pointing business owners toward a solution to develop and fully exploit: digital platforms, work models, or autonomous development?
To what extent does a crisis affect us?
To understand how a crisis affects the world, one must understand which general dimensions of it it modifies or restructures.
Consequently, a crisis affects three dimensions: biological, psychological, and economic. Its variability depends on the mortality and morbidity it generates, as well as its degree of spread.
Covid-19 has reached such a high level of contagion, affecting more than 100 countries. Its biological impact is extremely high and growing, giving way to a global collective hysteria that has caused stock markets to plummet, disrupting their functioning due to prejudices and negative outlooks, leading investors to sell their shares at any price. The psychological impact caused in society by mandatory confinement or choosing the possibility of death puts many people under stress.
And finally, the significant economic impact on the world: supply and demand has been geared towards strictly necessary products, leaving aside the large supply of various products.
According to Mudassir, pandemics tend to enable entirely new business categories. It's also quite clear that both pandemics and recessions accelerate innovation rather than directly causing it. In other words, these new businesses and business ideas already existed, but they gained popularity at a faster pace thanks to a particular crisis event.
Covid-19 has forced macro changes in business activities; these are currently working and are expected to continue to be applied. Some of these macro activities are:
Supply chain consistency
A problem perceived in several countries affected by Covid-19 is the lack of supplies due to the disruption of transportation chains. There are so many companies and supply chains, all operating independently until now. Covid-19 has demonstrated that this system can be easily disrupted, leading to problems in various market sectors.
But this problem can be addressed, and is being addressed, from a more coordinated and strategic approach so that geographical points can connect with each other with suppliers from different areas and the supply chain is not broken. This implies a necessary application of cutting-edge technologies such as 5G, robotics, blockchain, among others, in order to connect large groups of buyers with large groups of sellers.
Elimination of bureaucracy and use of technology
The digital world could govern process management in the long term. The lesson that Covid-19 leaves for countries that must act quickly: China built a hospital in just 10 days, and South Korea carried out more than 200,000 tests on its citizens and generated a tracker of infected people and their routes to monitor and warn the uninfected about these routes in real time.
Smart cities are becoming possible as government bureaucracy diminishes. The landscape that the Covid-19 pandemic is expected to leave behind presents an opportunity to invest in technology to create smart cities, as this will at least ensure a faster response to future crises.
The psychological well-being of the population is fundamental
Remote work is a modality being driven by Covid-19, but what are the consequences of this change? The isolation of workers and students could lead to psychological complications, and if companies are willing to adopt this work method, they will initially need to support their employees in overcoming problems caused by isolation. However, it is a method of adaptation. The psychological aspect will play a fundamental role in shaping the new remote worker.
Covid-19 is a major shock to the global economy; now, business competition and the human factor will be managed differently. Companies that choose to capitalize on these underlying changes will succeed, while those that don't will be negatively impacted.