EY sees three main phases of response to the pandemic: the immediate emergency response (the now); the move to stabilization and resiliency (the next); and the longer-term plan for a new market (the beyond).
Now, next and beyond are not defined phases that follow sequentially: rather leaders have to keep all three horizons in mind as they navigate the post-crisis phase. While the “now” of immediate crisis management has largely abated, there is every reason to expect there will be further resurgences of infection that put communities, and businesses located within those regions, into lockdown and emergency response. The “next” phase, in which resilience and agility are rebuilt, isn’t universally applicable. Some industry sectors (airlines, hospitality, fitness gyms, for example) have not yet emerged from the emergency response phase. And while leadership must learn how to switch gears between these two phases, they must also look to position themselves for the environment that emerges after – the “beyond”.
In a recent EY article, we argued that economic recovery is likely to be saw-tooth shaped. We have already seen this choppy return to growth with setbacks following swiftly on rebounds. Recent encouraging spikes in US employment figures, for example, have not recovered the jobs lost to the pandemic and returned the global economy to pre-pandemic levels, and markets remain dominated by VUCA (volatility, uncertainty, complexity and ambiguity).
Heightened uncertainty driving divergence…
Moreover, volatility is exacerbated by another phenomenon that we are only just beginning to understand: how COVID-19 has acted as a force for divergence. We see an acceleration in the decoupling of stock market performance from GDP; of business performance from the broader economy; of employment levels from economic growth. The historic indicators that were once in lockstep are now decoupled, increasing pressure on executives to build agile response mechanisms as they navigate confusing market indicators.
The shifts are not just economic – they are also social and psychological. The immediate impact on public confidence and trust is likely to have a long tail, as are the accelerated moves to digital. Even after lockdown restrictions have lifted in many parts of the world, the public has been slow to board buses or trains, for example. In the U.S., public transportation use is down 85%, with 70% of survey respondents reporting cleanliness concerns as the principal reason.1 In the EY Future Consumer Index survey, 51% of consumers in Germany say they are uncomfortable traveling on public transport.2 Conversely, from Los Angeles to Taiwan, bicycle ridership levels are soaring. The world’s largest bike manufacturers, and a Japanese maker of bike gears and components have seen 40% - 50% rises in sales as city dwellers eschew public transportation in favor of two-wheeled commutes.3
… and convergence
In other areas, confluences are driving change: the growth in virtual health, for example, can be attributed to technological developments, a higher level of trust by the public in using digital tools, and a more benign regulatory environment. In the U.K., 42% of consumers plan to increase their use of telehealth post-COVID-19.4
Company executives have to consider the potential impact of all these changes on their own value proposition: economic, social, psychological and operational. And as they focus on how these shifts will likely play out over the long-term, the beyond, they must also transform their operations to meet these new, uncertain, challenges.