Corona Diaries: three watchwords that will power the recovery

If our leaders, most notably Donald Trump and Boris Johnson, are allowed to ramble on about subjects they know little about, then so are you. And so am I.

Therefore take what I’m going to say about what might happen next in the countries whose economies are likely to be worst affected by the pandemic with a pinch of salt. Also bear in mind when you’re consulting oracles that experience is not the same as knowledge, and knowledge is not the same as wisdom.

The economic projections for the UK look pretty grim. One in three small businesses, says one survey, will shut for ever. Millions of jobs will be lost. But that doesn’t mean a decade of doom.

How many of us remember previous recessions? 1990-91? The dotcom collapse? 2008? It depends on how badly we were affected. Or possibly the extent to which we thrived. I say the latter because in recessions there are opportunities as well as disasters. And I’m not just talking about hedge fund owners adding to their billions by betting on a downturn.

I do have some personal experience to draw upon when saying this. Thirty years ago, a partner and I started a business. At the time, the UK was in a recession. Not as big as this one looks. But bad enough to put a number of businesses under severe strain. Some ceased to trade.

We flourished. Why? Because our business was designed for the current conditions, and those of some of our competitors were not. What that meant was that we had low overheads, owners who worked their backsides off and finance when we needed it, not when we didn’t.

Others in our field had high overheads and found themselves stuck with fixed costs they couldn’t easily reduce – big offices for example. They also had staff they didn’t need, whereas we had only who we needed to keep growing.

We did OK, and ended up selling the original business to a large American company ten years later.

Let’s think about now. In the UK, shareholders in large businesses will suffer significant losses. Some of these firms will go bust, others will be taken over by stronger competitors. Will the jobs of all the employees of failed companies also disappear? Not necessarily.

Take the airline business. If one of the major airlines that serves passengers in and out of Heathrow goes under, the slots that they rent off the airport operator will be up for grabs. Should we expect those slots to sit unused? Of course not. Some other airline will take them over. Perhaps a new airline.

Each slot, which entitles an airline to make a landing and departure, represents a number of jobs: aircrew, ground staff, security staff and so on. The travel industry might recover more slowly than other sectors, but recover it will, because we are unlikely to lose the desire to look beyond our local horizons even if options are limited today.

In our high streets, in the short term we will likely see many empty shops and business premises. Will they remain empty? Unlikely. Over the past twenty years charities filled the void and opened shops selling used stuff. In my high street one of my favourite shops is a second-hand bookshop ran by a hospice.

I’m not saying there will be twice as many charity shops tomorrow that there are today, just that you might be surprised at what emerges. For example, if we’ve all become used to walking again, as opposed to taking our cars to the superstores, how many new entrepreneurs might be tempted to open on the high streets as butchers, bakers and candlestick makers? Will we become used to pop-up shops taking empty spaces? How about a shop selling fancy French produce one week, and a hundred brands of coffee or cheese the next? Elitist examples, I know, but hopefully you get the point.

How have restaurants stayed in business? Some by providing a takeaway and delivery service. How will they operate in the near future, when half of their capacity is gone because of the need for their customers to socially distance? They might diversify. One restaurant in my high street has remained open during the lockdown because it’s not just a restaurant. It sells high-end Italian food products, from fresh pasta to pannetone, from prosciutto to dried porcini. You can still buy takeaway coffee, and sooner or later you will be able to sit down again for your favourite Italian dish.

I suspect that new businesses will thrive by doing one of two things. First by becoming even more niche than they already are. Take plumbers, electricians and heating engineers. If they become centres of excellence on smart homes, they will be able to capitalise on the demand for green technologies, both as contractors to builders and in their own right.

Second, by diversifying. Who would have imagined that Amazon would be delivering testing kit and PPE? Jeff Bezos perhaps, but not those of us who think of them as a retail company.

Equally, who would have imagined the armed forces running the drive-in test centres? What other public services can they provide that will help them keep their numbers high enough to provide for the nation’s defence needs? A good example of a multi-purpose military is the role of the US Army Corps of Engineers, who repaired the levees in New Orleans after Katrina. This was not just disaster recovery. They built many of them in the first place.  

In my last post I wrote briefly about three normals: the old normal, the current normal and the new normal. The current one is almost too volatile to be considered normal at all. But there is a common thread: people sitting at home wondering what the hell they’re going to do next.

Whereas in the old normal, change was a matter of evolution. Yes, new technologies have developed at a relatively rapid pace, but the vacuum created by a destructive bang is an entirely different dynamic.

When the physical world starts re-connecting, we shall have to cope with life after the shock. And if our economies are to recover, some of us will have to start from scratch. Businesses will have to be able to repurpose, and fast.

If James Dyson, just crowned as Britain’s wealthiest individual, can design and build a new ventilator in a matter of weeks as opposed to years, what can your company do? If we’ve suddenly discovered that a large portion of the workforce can easily and effectively work online, what will your new offices look like, and what will the property company that leased you your old office do with all the unwanted space on their hands?

If you’re a school leaver wondering what to do with your life, are your safe choices – perhaps leisure, retail, sport, accountancy or law – safe anymore? And if you’re in mid-career and suddenly find yourself out of a job because there’s no longer a demand for what you do, do you settle for long-term unemployment or try and reinvent yourself by learning new skills, as thousands of people did in the seventies and eighties by moving into IT?

There’s nothing new in any of this, except perhaps in the scale and urgency of the repurposing required.  The speed of recovery will depend on two things: the availability of investment finance and the willingness and ability of people to spend money. If we simply sit around in the next few months expecting governments to provide all the answers, we’ll be waiting a long time.

Financial institutions will need to play their part in coming up with imaginative new ways of investing. Educators will need to re-think their curricula. Businesses will need to think of the new normal as a blank canvas, or as a landscape full of open spaces, just as planners looked at London after the Great Fire of 1666 or the Blitz in 1945.

And we, those of us of working age, will need to think about how to repurpose ourselves. What new skills will we need and how will we acquire them? An opportunity for businesses in training and education, or maybe even for the state education sector.

Perhaps there will be new opportunities arising out of a move towards national self-sufficiency. You might think that globalisation failed its biggest test when faced with the pandemic. The scramble for equipment and materials needed to cope with COVID-19 has led to voices asking why PPE can’t be made in our home countries. Will we still trust international supply chains after seeing bidding wars for equipment sitting on airport tarmac in China?

Or perhaps we’ll think differently if an international effort to develop a vaccine produces results in months where previous efforts took years.

I have no idea how long it will take us to emerge from the current economic shock. I’m inclined to be optimistic. Perhaps our new normal will stop being a matter of pain rather than prosperity within two, maybe three years.

But what I do know is that recovery will only happen quickly if governments, institutions, businesses and individuals focus on three tasks, not as a response to a crisis but as a continual process:

Reimagine, Repurpose, Reinvent

When I was hiring new people in the business I co-owned thirty years ago, I made them one promise: that if they stayed with us, the company they would be working for in a year’s time would not be the one they joined today.

Hyperbole, perhaps, but certainly a statement of intent. If I was starting a business today, the three Rs above would not only serve as my mantra, but would be written on every home screen, every office wall and in every job description.

To hell with missions, vision, values and all the other corporate bullshit. This is what the new normal should be about.

None of these three processes imply revolution that might first bring more pain in its wake. Evolution is still possible. But it needs to be urgent and rapid. A return to the old normal is not an option.

There is, however, one big proviso: that we can resist another outcome that looks distinctly possible under the current leaders who control most of the world’s economies: more corruption, more cronyism and the further consolidation of power and resources.

Things are finely balanced, for sure. But I’m inclined to imagine on the bright side.