12 minute read 22 Jun 2020
Ryf digger

Beyond COVID-19: Will you define the new normal or watch it unfold?

By EYQ

EYQ is EY’s think tank

By exploring “What’s after what’s next?”, EYQ helps leaders anticipate the forces shaping our future — empowering them to seize the upside of disruption and build a better working world.

12 minute read 22 Jun 2020

Building a better world beyond COVID-19 requires leaders to imagine the unthinkable. Here’s your guide.

This article is part of the EY Megatrends 2020 and beyond report 

The COVID-19 pandemic has unleashed changes that seemed unthinkable just a few months ago. In February 2020, it seemed unthinkable the entire white-collar workforce of many countries would soon be working solely from home. It seemed unthinkable air travel would plummet by 96%. It seemed unthinkable millions of migrant workers in India would be forced to undertake a herculean exodus, walking thousands of miles to their home villages.

Of course, COVID-19 and the extraordinary response were not really unthinkable – they just seemed that way to most of us. While the pandemic took the vast majority of the business world by surprise, epidemiologists and other experts had long warned it was only a matter of time before such a disaster struck. And though the crisis seems to have been with us for a long time, the reality is the pandemic is still in early days. It is likely to bring more changes in the months ahead that seem unthinkable now.

Understanding the pandemic’s impact demands scanning for risks and drawing insights from a wide range of domains. We convened more than 100 senior professionals around the world – futurists, non-governmental organization representatives, investors, CEOs and other business leaders – over four virtual sessions to develop a far-sighted view, imagine the unthinkable, and, crucially, identity the steps business leaders need to build into their thinking about the future. We are grateful to the professionals who generously shared their time and perspectives in these Ideation Jam sessions.

To shape these discussions, we used our EY Megatrends framework of future working worlds, which is designed to expose business leaders to trends and forces far outside their usual scope of analysis. We examined these four domains to understand not just how the business community can shape the world beyond COVID-19, but shape it for the better:

  1. The global order
  2. Societies and economies
  3. Firms and markets
  4. Households and individuals

The result? Leaders expect far-reaching changes but, critically, believe there’s an opportunity to enable a better working world across five dimensions: better health, better connectivity, better relationships, better ingenuity and better accountability. This article presents a high-level view of this potential world beyond the pandemic. It identifies what’s unthinkable — the low-probability, high-impact scenarios for the world beyond COVID-19 that should be on your radar — and raises key questions that connect to the five aspects of a better world. Finally, we offer guiding principles for leaders steering their organizations through a time of unprecedented uncertainty.

The woman looking over the city
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Chapter 1

How will COVID-19 alter the structure of the international system?

The pandemic will inevitably bring sweeping changes to the global order.

The balance of power and influence will be realigned

The already strained US-China relationship will likely become even more fraught, in the view of Ideation Jam participants. The pandemic also appears to be accelerating the weakening of multinational institutions and creating a vacuum of global leadership. This could create a return to multipolarity, with an expanded role for Europe or for smaller countries whose prestige was enhanced by their effective pandemic response.

Globalization will go local

There was a strong consensus COVID-19 will advance the backlash against globalization amid the sharpest reduction in international flows (e.g., trade, investment, people) in modern history. With vulnerabilities in cross-border supply chains exposed, we can expect supply chains to be restructured, with built-in redundancy and resilience at the expense of some efficiency. Manufacturing will come closer to home markets, boosting the trend toward regionalization and re-localization. Similarly, agricultural supply-chain issues which have caused shortages and gluts are accelerating the rise of local and vertical farms, which are more resilient.

How can business build resilience for what’s next?

The EY Enterprise Resilience Tool provides a broad assessment of your organization’s response to COVID-19. 

Request direct access to the tool

A new concept of human mobility will emerge

Labor mobility has fallen sharply since the start of the pandemic, as governments have clamped down on travel and immigration – restrictions that will likely persist. But even as the pandemic reduces the flow of people, it will enable a different concept of labor mobility. If people can’t relocate for work, work will relocate for people. For jobs that can be performed remotely, companies will move to global remote workforces. 

  • Imagine the unthinkable

    • Could we see the US dollar displaced as the world’s solitary reserve currency?
    • Is significant political unrest ahead — perhaps even the collapse of some national governments?
  • Questions for a better working world

    • Better connectivity: How are you restructuring your global supply chain for resilience and flexibility?
    • Better ingenuity: How are you rethinking your business model to enable a global remote workforce?
Lighthouse  under milky way stars
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Chapter 2

How will COVID-19 affect the structure of societies and economies?

COVID-19 laid bare existing weaknesses in social safety nets and systemic policy failures.

Our sessions highlighted some of the key risks, foremost among them worsening inequality and the social damage of billions being exposed to the virus and cratering economies.

Societies will address inequality and repair social safety nets

The pandemic is hitting low-income groups hardest — minorities, young people, women, and undocumented workers. Their lack of wealth and overrepresentation in jobs requiring physical presence exposes them to greater hardship and risk.

The crisis has also widened social disparities between the politically left and right, old and young, rich and poor. Labor unrest is increasing as workers demand better protections — personal protective equipment, distancing measures, higher pay, more sick leave, and improved access to healthcare. Participants expect government reforms in response, such as recognizing undocumented workers, investing in healthcare capacity or even the introduction of universal basic incomes in some developed countries.

Action on social justice will increase

Sustained protests against systemic racism are sweeping across the US and solidarity protests have emerged in other countries. While we didn’t explore this question in our sessions, which predated the protests, we think it’s no coincidence this is happening during the COVID-19 pandemic. When people are already thinking about a systemic reset, they may also be more inclined to think about correcting systemic racism. The Black Lives Matter movement may be a harbinger of increased awareness and action on issues of social justice — during the pandemic and beyond.

Urban landscapes will be remapped

COVID-19 will fundamentally reshape cities, accelerating trends already under way. Health concerns will drive residents of large cities to seek lower population density in suburbs and small towns. Remote work will make moving out of city centers increasingly feasible, since commute times will no longer be a factor. These shifts will have profound implications for societies and economies, affecting everything from tax revenues to urban planning and education policy.

  • Imagine the unthinkable

    • Could providing universal basic incomes become real in some societies — and how would it impact your organization?
    • Could the need for more responsive government spur the move to government by algorithm — and how would this affect regulation in your sector?
  • Questions for a better working world

    • Better health: How will your company lead in addressing the intertwined social issues of health, income inequality and racism?
    • Better accountability: How do your actions (e.g., job cuts, investments, supply chain) contribute to societal inequality? How can you mitigate these inequities?
    • Better ingenuity: How could your innovation strategy change if you had innovation clusters spread across suburbs and small towns?
Mother & Son
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Chapter 3

How will COVID-19 change the ways in which firms and markets operate?

Companies may find they need to appoint a chief culture officer to enable these changes.

Our sessions identified several trends accelerated by the global pandemic which will transform talent management and business models.

Remote work will transform talent management

Participants overwhelmingly believe remote work is here to stay. Many people now working remotely have found they prefer it, while employers have discovered they can manage remote teams effectively and see potential to reduce real estate expenses. This has sped up the arrival of a long-anticipated trend: the delinking of talent from place. 

As a result, participants said that new corporate talent models will be required, which will likely include the following dimensions:

  • Recruiting talent globally and convening the best teams for projects rather than maintaining standing headcount
  • New metrics and rewards for onboarding, promotion, succession planning and leadership, with empathy and soft skills coming to the fore as success factors
  • Convergence of human resources and operations
Digital transformation and long-term value will create new business models

COVID-19 also accelerated two trends driving change in business models: digital transformation and the corporate shift to long-term value. With virtual and digital replacing physical wherever possible, adoption of automation, AI, and AR/VR will surge, participants predicted. The ability to deploy computing power, bandwidth, the cloud and cybersecurity will define winners. Success will depend on continuous business model innovation with agile, open collaboration.

At the same time, several participants observe that the pandemic has put human welfare and sustainability front and center. Consumers see a new role of companies for good and will value companies demonstrating a long-term value agenda in culture, purpose and ethics.

You may need a Chief Culture Officer

Corporate culture will be central to success in the post-pandemic world. Yet with a remote workforce and distributed governance, establishing and maintaining a corporate culture will become even harder, participants noted. A few of them suggested that companies will appoint Chief Culture Officers to lead investments in culture-building from the top down, and from the bottom up.

  • Imagine the unthinkable

    • Could suburban corporate campuses and central business districts be hollowed out? How might they be repurposed?
    • How quickly will today’s video call platforms be replaced by avatars and virtual reality?
  • Questions for a better working world

    • Better accountability: Which of your assumptions about talent are no longer valid?
    • Better ingenuity: Will your culture drive success in the post-pandemic world?
    • Better health: How can health and safety become an asset for talent management?
Large murmaration of  starlings
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Chapter 4

How will COVID-19 affect individual behavior and household structures?

Themes emerged that could reframe the long term: trust, changing consumption and a new focus on mental health.

Trust will go smaller and local

Amid social distancing, people are relying on social media more than ever, which could worsen polarization and diminish societal trust if they stay within known social circles and filter bubbles. Additionally, many participants expect trust to shift to the local level as confidence in some national governments decays thanks to mismanaged pandemic responses. If neighborhoods become like-minded enclaves, this could increase polarization, increase xenophobia and heighten stranger anxiety.

The absence of real-world interactions could also make it harder to build trusted new relationships — affecting everything from dating and marriage to the integration of new team members in the workplace. Companies will need to pay special attention to closing such deficits.

Minimalist and self-sustaining lifestyles could endure beyond the pandemic

Consumption has declined sharply amid the pandemic, thanks to a deep recession and historic unemployment. Households are engaging in more mindful consumption with a greater focus on sustainable and essential purchases. Do-it-yourself behaviors are also on the rise, whether cooking from scratch or undertaking home improvement projects to accommodate working and schooling from home.  It’s likely that these shifts will continue in some form after the pandemic is over. 

Mental health will come into focus

COVID-19 is taking an immeasurable toll on mental health, due to numerous factors, including social isolation, financial and healthcare worries, and the strain of adapting to remote work and home schooling. Participants expect this will have long term impacts akin to post-traumatic stress disorder (PTSD); yet, some are hopeful that the new focus on mental health issues may reduce stigma and increase availability of support services. The world beyond the crisis may be one in which mental health is more honestly recognized and supported.

  • Imagine the unthinkable

    • Will companies add Chief Mental Health Officers beyond the pandemic?
    • Will health certificates become a prerequisite for residence in certain communities or neighborhoods?
  • Questions for a better working world

    • Better health: How are you transforming the approach to mental health in your organization?
    • Better ingenuity: How will your business model anticipate post-pandemic consumer behavior?
Guiding principles for leaders

The pandemic has unleashed a world of uncertainty. It can feel challenging to envision what the next month will bring, let alone the next year. How do you proceed? We believe leaders should follow a few guiding principles in charting their path through the pandemic and beyond:

  • Plan for the unthinkable. “Unthinkable” scenarios are no longer dismissible; they should be a core part of your strategic planning process. The challenge is to do this in a structured and considered way that minimizes risk while allocating resources efficiently. Striking that balance isn’t easy, and it’s a topic we’ll explore in future articles.
  • Scan — and wait. The journey ahead is uncertain. We will likely see huge swings in public-health outcomes, economic recoveries, investor sentiment, political stability, public policy responses and more. The situation will move at different speeds — and sometimes in different directions — across individual markets. Rather than act too quickly, continuously monitor the situation, which includes scanning widely and identifying the appropriate metrics and tipping points for your organization, sector and geography.
  • Be flexible — and move quickly. The challenge is to build flexibility, so you can move quickly when the time is right. The changes catalyzed by the crisis should facilitate this. The responses to COVID-19 are accelerating the move from the physical to the virtual — replacing corporate headquarters with virtual work, business travel with Zoom meetings, global supply chains with more flexible approaches. Adopting these shifts will not only help you weather the crisis; they might also give you more flexibility to respond quickly in the world that lies beyond it.

Summary

The COVID-19 pandemic has unleashed changes that seemed unthinkable just a few months ago. Understanding the pandemic’s impact demands scanning for risks and drawing insights from a wide range of domains. EYQ convened 100 senior professionals around the world to develop a far-sighted view, imagine the unthinkable, and, crucially, identity the steps business leaders need to build into their thinking about the future. The changes will be profound, but guiding principles will help leaders chart their path through the pandemic and beyond.

About this article

By EYQ

EYQ is EY’s think tank

By exploring “What’s after what’s next?”, EYQ helps leaders anticipate the forces shaping our future — empowering them to seize the upside of disruption and build a better working world.