5 Ways How the Corona Crisis Will Change Organisations
Humankind is facing the biggest crisis of our generation. Across the globe, economies are coming to a standstill. Globalisation has been put on pause, and once the virus recedes, we will have to get used to the ‘1,5-meter economy’. For social creatures like humans, this social distancing will prove to be difficult.
The longer it will last, the more significant the impact on our daily lives once they end the measures. Especially because temporary measures taken during a crisis have a habit of remaining in place after the crisis is over. In 1-2 years, the Corona crisis will be over, but the changes in our economy will be long-term. Let’s see how Corona will affect our way of doing business:
1. The Digital Employee Will Prefer Remote Work
Many organisations are going through an unprecedented social experiment; all of a sudden, all employees have to start working from home. Before the crisis, remote work was a no-go area for a lot of companies, but now they are forced to allow their staff to work remotely. Large corporations had to get organised quickly, while for some companies, it was just business as usual. This rise of the digital employee will be long-term, and it will have a significant impact on how we organise our work, the housing prices and the commercial real estate prices.
First research in The Netherlands shows that after a few weeks of getting used to the situation, people are now starting to see the benefits of working remotely. Sure, there are still some challenges, but the longer we will have to work from home, the better we will get at it. Once we are allowed to go back to the office, it is likely that some of your employees don’t want to as they have experienced the benefits of working remotely.
The result is that a part of your office staff will move away from the city and the office and will decide to live more rural. They will get more house for their money in rural areas, and an added benefit is that they can create a dedicated office space to work remotely. Depending on the number of people moving away from the city, this will affect the housing prices.
However, fewer employees in the office also means that companies require less office space. In plenty of cities around the world, the supply of office space has soared in recent years. However, if all of a sudden, the demand will drop, prices will go down as well. This will not happen directly after the crisis is over but will probably take some time.
Fewer people in the office, also means fewer people on the road and in trains, directly affecting planned and future infrastructure projects. On the other hand, the digital infrastructure will need to be expanded, which is where 5G could come in. In a lot of rural areas, there is limited broadband internet available, but 5G could change this.
2. An Augmented Workforce Results in Fewer Jobs
Many organisations are now forced to go digital. This applies not only to enabling remote work but also to digitally transforming the business. An augmented workforce is a blend of human workers and technology collaborating on certain tasks. The future of work will be more effective and efficient, meaning fewer employees can do the same amount of work.
This is a narrative that happens after almost all crisis. Once a crisis is over, and business is back to normal, the economic production generally restores, but those people fired won’t be hired again for the same job. Research showed that after the Great Recession, workers earned 17,5 per cent less than in their old jobs. It means that companies find other ways to restore production and, increasingly rely on technology instead of humans.
With technologies such as artificial intelligence, robotics and blockchain, companies can augment many of the current jobs. Consequently, the economy will recover, albeit it might take time, but the same amount of work can be done with fewer people. This means that a lot of people will have to work part-time (the four-day workweek was gaining traction before the crisis, and this can be accelerated after) or employees will lose their jobs.
3. Where Possible, Robotics Will Begin to Take Over
An augmented workforce is one thing, completely replacing your workforce is something different. In the coming years, we will see an explosion of robotics put to work in factories, retail, agricultural, the travel industry and service-oriented industries. The rise of the robots has been predicted for a long time, but this crisis will be a catalyst for it. In the past months, in China, we have seen this already happening, where companies looked for ways to re-open their business without employees.
Robots cannot become sick, they can work 24 hours, and they do not complain about social distancing. Over time, the investment offers a positive ROI. As a result, we will see more robots get to work, and we will see more dark factories, where humans are no longer required and as, a consequence, lights can remain off. Of course, ‘hiring’ robots takes time. Still, the combination of remote work, an augmented workforce and the benefits of artificial staff will be a catalyst for this move to become a data organisation.
4. Globalization Will Slow Down
The crisis has clearly shown how complex and vulnerable today’s supply chains are. With Just-in-Time management, everything has to work, or the supply chain will break down, as we have seen happening all over the world. For example, many car manufacturers had to close down their factory because of the lack of supplies being delivered from China.
Shutting down the intrinsic network of supply chains is easier than starting it again. As a consequence, depending on how long this crisis will last, companies will try to source their (raw) products more locally. Many companies will want to know where all their supplies come from and will look into the possibilities of sourcing closer to home to ensure stability in delivery. The decoupling from China will start, but it will be a long and challenging road.
However, supply chains are only one part of globalisation. Companies are now forced to use virtual meetings instead of in-person meetings. Especially within multinationals or companies doing business around the world, they now experience the advantages of video calls over in-person meetings: it is faster, cheaper and more efficient. Once we go back to normal, this habit hopefully sticks, resulting in less international business travel.
5. The Role of the Government in Doing Business is Back
Whether you live in a democracy or an authoritarian regime, the government will become more important. Depending on how long this will last, the government aid ranges from government-backed loans, subsidies for the unemployed to the nationalisation of vital infrastructure such as airline companies.
During the 2008 crisis, the only companies (temporarily) nationalised were banks. Now, the list of companies can become a lot bigger. Those companies considered too-important-to-fail will be nationalised if they are under threat of bankruptcy. For years, it was unthinkable that nationalisation would become possible again, but one virus can change everything.
An old saying is: “he who pays the fiddler calls the tune” and depending on the country you live in, the role of the government in doing business will be positive or negative.
The Rise of Digitalism
Before the crisis, organisations knew they had to digitally transform their business, but there was no urgency. Now the urgency is there, and many organisations will speed up the process of digital transformation. As I wrote last week, the rise of digitalism can be very positive for you and me or become a disaster. Therefore, we have to resist many of the mass surveillance apps being implemented now across the world, and we have to ensure that any nationalisations of critical companies are temporary.
Apart from that, there might be a silver lining to this crisis: we could travel less, live better, become more relaxed and enjoy a cleaner climate as a result of that. Until then, we have to think carefully about how we want to come out of this crisis. As Yuval Noah Harari recently wrote: “This storm will pass. But the choices we make now could change our lives for years to come.”
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