Back in early March, my team at Humanise.AI were asked to immediately evacuate the co-working space that was our base. There’d been a suspected case of COVID-19 in the building and, at that early stage, nobody was taking any risks. Turfed out onto the streets by our blue-gloved (!) hosts, we were left in a state of confusion. Soon after, the UK entered lockdown and it’s fair to say that, ever since, each week has brought further confusion to our lives.
But it’s time for the confusion to stop. It’s time for us to start to understand what’s happening; what COVID-19 might mean to us, to our society and to business. It’s time we started to plan for a new future.
Whist many have been hoping for a return to “normal”, I don’t think that “normal” is coming. By the time COVID-19 has finished with us, it will have crammed twenty years of disruption into just two. The implications of this are far-reaching and will have a big impact on economies, business and our personal lives. In this post I hope to shine some light and clarity onto these topics, in the hope that I can bring some understanding.
😶 2020, the year our world fell silent
Let’s first pause to consider the momentous events we’re living through. Because, whilst in the midst of these changes, it’s sometimes difficult to fully understand the significance of what’s occurring. These facts have a UK-focus because that’s my home, but many countries can tell similar stories.
- 💵 29.5% of workers have been furloughed, having their wages paid by the state
- 👩💻 UK home working has increased 8x, approaching 40%
- 🚂 Train usage has plummeted to less than 5% of normal
- 🏙 City-centre footfall in London has collapsed and is still around 15% of normal
- 🛍 In less than a month, the value of online grocery sales over doubled
In terms of government response, in the UK we’ve seen:
- 🏥 Private hospitals taken over by the NHS
- 🏠 All homeless people given shelter
- 🦵 Home evictions legally banned
- 💻 Government distribution of over 100,000 laptops/tablets and 50,000 4G routers, empowering disadvantaged children to be educated remotely
- 👮♀️ Our ability to meet family and friends limited by law
The actions of a far-left government? No, the actions of one of the most right-leaning governments we’ve had in the UK for some years.
Strange times, indeed.
💉 But surely vaccines will save us?
If we look beyond the hype, there are reasons to be cautious about the short-term impact of new vaccines. Herd immunity is unlikely to be achieved in 2021 and major obstacles to widespread immunisation remain.
“A major challenge is that the global manufacturing capacity for vaccines is vastly inadequate for the billions of doses that are needed, and the UK manufacturing capability to date has been equally scarce.” — Kate Bingham, Chair of the UK Vaccine Taskforce, 27th October 2020.
Manufacturing, distributing and inoculating millions of people is a Herculean task. Some vaccines need to be kept at –80°C, with UPS said to be constructing warehouses of freezers for the task. Manufacturing plants are still being built. Teams of people to administer the vaccines have yet to be trained. Although the advent of effective vaccines is excellent news, it is not a quick fix and we still have many months of social restrictions ahead of us. That’s more months in which to further embed the changes that COVID-19 has already brought.
🎓 We’ve learnt new behaviours
At the start of the pandemic, many of us felt that COVID-19 was just another flu that would “soon blow over”. When it became clear it was more than that, our focus shifted to the positive of a “flattening curve”, as we headed into summer. Governments relaxed restrictions and even encouraged people back into restaurants, public transport and offices. For a while, it was possible to believe that COVID-19 was another one of those blips.
However, we’re now well into the second wave and “normal” suddenly feels much further away. Nobody expects things to get better until the spring (at least) and there’s a good chance things might get worse before they get better. When we do get to the spring, we will have lived with COVID-19 and its societal implications for over a year. I contend that a year is long enough for changes to embed themselves long-term.
“Normal will become something different, because I think people are learning that there are aspects of this that work well. So I don’t believe that we’re going to go back to where we were.” — Tim Cook, Apple CEO.
For many people, COVID-19 has meant a wholesale transformation of the way they live and work. 100% remote work, socialising via Zoom calls, 100% online shopping, no travel. Many of us look at our car(s) and wonder if we really need them, or if we’re really still a multi-car household.
Of course not everyone has had a positive experience, but enough of us have in order to think there’s change afoot here.
🔀 The big question, of course, is which changes might stick with us once COVID-19 has left us? These are my bets…
🏡 Home Working changes everything
One of the biggest drivers of change is the dramatic shift to mass remote working that we’re currently experiencing.
At Humanise.AI we’ve interviewed and recruited people remotely very successfully. We have a team member we’ve never met in person. In fact, none of my team has met in person since before the UK’s original lockdown. We talk every day over video calls — both to get work done and to have a laugh. We’ve closed significant sales, delivered client projects and forged ahead in developing our product — all without meeting anyone in person.
Thanks to the UK’s rollout of fibre-optic internet, I’ve recently had a gigabit internet connection installed in my house. It’s faster than the internet we used to have in our co-working space at the start of the year.
Sure, I miss the serendipity of meeting random people in the office. But the positives more than make up for that. More focus on getting work done and fewer distractions. No lost time and money for tiresome commutes. More freedom to structure my day in the way that works for me, rather than have this “in the office” routine.
Humanise.AI, of course, is not alone — over 30% of us in the UK continue to work from home — a dramatic increase from the 5% before the crisis.
It turns out that, for a lot of us, this works.
Of course not everybody agrees with that — some have roles that make home working impractical, some find it inefficient or don’t have the infrastructure or place to work from home. Still others worry that if they are remote, their employer may be tempted to replace them with another remote person in a cheaper part of the world. All valid concerns. But the evidence we have is that enough work can be done remotely, with enough of us choosing to do so, for this to profoundly rewire society.
On a personal level, friends and colleagues that have always commuted into city-centre offices 5 days a week are now telling me, with strong conviction, that they have no intention of ever returning to that. Maybe they will swap their 5 days in the office for 1 or 2 days a week — balancing what they do with where it can be done best. That’s still a big shift. But one thing is for sure — presenteeism is dead. IF we go to the office, we do it only because we need to and not because we feel we need to be seen.
Matching behavioural change at the personal level, is growing evidence of change at the corporate level. Businesses are already restructuring around remote working. Hardly a day goes by without another corporate announcing a remote work / property portfolio rebalancing.
- Facebook: “50% of employees working remotely within 10 years” — Mark Zuckerberg
- Schroders: Chief executive Peter Harrison said Covid-19 had “changed society irrevocably” and demonstrated that offices will be ‘a convening place where you get teams together’, but work will be done in employees’ homes. The FTSE 100 investment firm has told staff that they are no longer required to come into the office, even when the pandemic has passed.
- Twitter: “If our employees are in a role and situation that enables them to work from home and they want to continue to do so forever, we will make that happen” — Twitter VP of People.
- Square: “Moving forward, Squares will be able to work from home permanently, even once offices begin to reopen. Over the past several weeks, we’ve learned a lot about what it takes for people to effectively perform roles outside of an office, and we will continue to learn as we go,”
- Shopify: “As of today, Shopify is a digital by default company. We will keep our offices closed until 2021 so that we can rework them for this new reality. And after that, most will permanently work remotely. Office centricity is over.” — Shopify CEO Tobi Lutke
- Slack: “It’s hard to not see 20% to 40% of our workforce be remote. We need to make real-estate decisions long in advance, two to three years, and are in the speculative conversation now if we have 30%, 40% fewer desks” — Slack CEO Stewart Butterfield
- Dropbox: ”Remote work (outside an office) will be the primary experience for all employees and the day-to-day default for individual work”
- PwC: announced that 60 per cent of its 22,000 UK staff could work some days each week from home. Chairman Kevin Ellis said the pandemic had “bashed away presenteeism for ever”.
This shift will have knock-on effects in other sectors — a reduction in transport use, fewer city-centre workers frequenting cafes and restaurants, the permanent adoption of a more informal dress code, the importance of digital infrastructure and communications technologies and more. Not all positive, but utterly unavoidable.
👩💻 Digital Communication is central to everything
This one is obvious: few of us can work from home without digital infrastructure — it’s the enablement of that change.
Fast internet connections — 5G and full-fibre landline connections — suddenly take on huge importance. A good connection makes video calls so much easier and more fluid. In many ways a remote employee is only as good as their connection — continued dropped calls and stuttering voice/video feeds directly impact the ability to communicate. It used to be that we were told to buy a new shirt and polish our shoes. Now we need to spend that money on a broadband upgrade.
Sure, there’s a risk that a remote role can be done from anywhere in the world — so maybe jobs will bleed to lower cost locations. But have you ever had a call with someone in those locations? There’s a world of difference between what feels like talking over a piece of string and a strong video call with a local employee who’s got the latest tech in their home office. Our job is the be the very best remote workers. The most reliable internet connections, the best quality microphones that ensure our words are heard clearly, the best communicators, the most reliable at reporting status and phoning our colleagues the moment there’s an issue. That’s how we avoid someone half-way across the world from taking our jobs, not by communting to an office.
Incidentally, I ordered my gigabit internet connection upgrade during lockdown by calling my telco — and speaking to a call-centre operative who was working from her home. It was a great experience and my call centre friend told me how much better her life was, now that she didn’t need to commute to a call centre any more.
Perhaps less obvious, but also critically important, is the importance of other forms of digital communication.
Online retail has been supercharged — UK online grocery sales over doubled during lockdown. In total, the proportion of online retail across all sectors is now around 30% and increasing. Retailers who don’t take digital sales and marketing extremely seriously probably don’t have long for this world.
Businesses can no longer rely on regular physical visits, attractive window displays and physical serendipity (customers walking past a business heading to their office), so need to find new ways to digitally attract and retain customers. In a much more digital world, brands need to find a way to be noticed online. Chat services, video calling, personalised online shopping appointments, and automated bots to ease mundane tasks, digital marketing campaigns — these are all important ways of communicating in this new world.
I find Apple to be one of the most impressive physical/digital retail operations, because of the way that clicks and mortar are mutually supportive and clearly designed as one whole. This has served them well during the pandemic — even as I write, we’re in another UK lockdown and yet I can still order a new device online today and pick it up from a store “curb-side” tomorrow, if I so choose. Impressive. Another good example is a nearby camera shop, who instituted personalised Zoom shopping service. A great idea — not just for when we can’t travel, but why not always?
Those that survive and prosper in the years ahead will be the ones that get to grips with exploiting the digital world and continuing this high level of innovation. Think digital marketing, customer communication, online delivery, “curb-side” pickup, online personalised shopping and more.
📈 Planned Economies are back (sort of)
The phrase “planned economy” sounds a bit 1970s to many of us. From the 1980s onwards it’s been de-rigour to leave everything to the markets. However, the pandemic has exposed the deficiencies of this approach — not least that the supply of some critical products has become subject to global politics.
At the height of lockdown, supplies of key medical equipment (PPE and certain drugs, like Paracetamol) were at best strained and worst exhausted. I even watched live televised coverage of planes waiting on the tarmac in far-flung parts of the world for supplies to be loaded. We learnt that there’s no local manufacturing capacity anywhere in Europe for Paracetamol — China produces the raw materials, with India turning it into pills. At the height of lockdown, India restricted exports to ensure a sufficient supply of Paracetamol for its own population — cutting off supply to Europe of a critical drug.
These experiences highlight just how dependent we’ve become on global supply chains — and how global events can see availability disappear at the flick of a switch.
As a result, planning our economies a little more and deciding what is “strategic” to the national purpose is the new pastime for governments. PPE, drugs and critical foodstuffs are obvious items. In the UK, 70% of PPE is expected to be manufactured locally by December 2020 and there are moves within the EU to bring Paracetamol manufacture back to the continent. We can bet that these moves will result in more expensive supplies, but supplies that are more easily guaranteed.
One other item that’s being added to the “planned economy” list — batteries for electric vehicles (EVs). A report by the Faraday Institution indicates that without any local gigafactory producing batteries, 114,000 automotive jobs would be lost in the UK by 2040. No surprise, then, that the UK government is providing active support to startups planning our first gigafactory.
And let’s not forget the strategic UK government investments in the bio-tech industry to produce local vaccine production facilities. Access to vaccines is about to become a highly geo-politicised subject — with both the UK and USA having purchased large quantities of vaccine from the same manufacturers, which one gets it first? And for other countries, who haven’t locked-in advanced orders, when will they get supplies?
As we start to recover from COVID-19, every country will be asking questions about its national purpose and how it can encourage local capabilities, rather than solely relying on global markets. Planning our economies, with governments strategically investing in business, is fashionable again.
💵 Debt & Cost reduction
COVID-19, sadly, has resulted in a huge amount of debt:
- At a personal level, employees faced with reduced wages or redundancy, are sustained by debt.
- At a company level, the existence of many airlines, retailers and restaurants is sustained by debt.
- At a government level, entire economies are sustained by debt that’s financed the furlough payments that have kept businesses and jobs alive.
Few individuals or businesses on the front line of lockdown (e.g. anything in hospitality or travel) could have survived without a combination of government support and debt — the cash reserves just don’t exist. Wherever you look, debt has kept things going.
But, whenever debt is accrued, it also needs to be paid off.
There can be only one result — ways will need to be found.
Businesses will be looking at cost reduction opportunities to run leaner and meaner. Bots, automation, AI — anything that promises to make a business more efficient will be a thing of interest.
For those that can’t find a way, we can expect the debt collection industry to ramp-up. If there’s a debt to be paid, someone is going to get paid for chasing us to make that payment.
🌱 Building back green
Pre-Covid, it was already apparent that The Environment was becoming politically important. But there was also a big anti-green movement — there’s a lot of money behind carbon-producing industries that doesn’t want to be disrupted.
Post-Covid, governments of all political persuasions are looking for things to spend money on to stimulate economic activity. And they are looking for a positive vision of the future to rally everyone around. It looks increasingly like local and global politics are coming to one conclusion — that investment in building a green economy can stimulate activity, revive economies, and deliver that positive vision of the future we so need.
The Green Homes Grant was one of the UK government’s first tentative stimulus give-aways. The German government has doubled its grant for new electric cars and allocated €2.5bn for new charging infrastructure. And the UK government just announced ambitious plans to “Build back greener”, make the UK “the Saudi Arabia of wind”, generate 40% of UK electricity from offshore wind farms and ban petrol/diesel cars by 2030. Ignore the politics of this for a moment and consider that the UK opposition parties are probably even heavier green supporters. That all mainstream parties are now singing from the same hymn sheet tells us this is inevitable. Green is no longer a political football, it’s our future.
But green recoveries are also being planned at the city level. Not to put too fine a point on it, some cities are in crisis, so have no option but to rethink what they are.
Weekday city-centre footfall in London has collapsed to, and remains consistently, around only 15% of normal. London workers, it seems, ignored the summer pleas of officials to return to the office.
This has big implications. Reduced footfall means fewer office workers, means fewer passengers for trains and busses, means less demand for office space, means fewer people visiting retailers, means fewer visits to cafés and restaurants and means fewer guests in hotels. In case it’s not clear, this means greatly reduced revenues that imperil the future of many such businesses. The whole economy of previously busy cities like London has effectively collapsed. And it’s not just London — see how New Yorkers feel about what’s going on in their city.
We are officially AB: After Bandwidth. And for the entire history of NYC (the world) until now, we were BB: Before Bandwidth.
Remote learning, remote meetings, remote offices, remote performance, remote everything.
Everyone has spent the past five months adapting to a new lifestyle. Nobody wants to fly across the country for a two-hour meeting when you can do it just as well on Zoom.
So, a completely legitimate question: “what’s the purpose of a city if we don’t go there to work?”
Cities need to find new purpose and to create a new vision for why people should visit them. We’re AB and we don’t need to physically congregate in the same location any more.
Early city responses have been to reinvent city centres for “active” transport, with big investments in walking/cycling schemes in cities like London, Paris, Milan. Rather than assume a bounce-back to “normal”, many cities are looking to reinvent themselves as vibrant new healthy and green places to live/work — banishing the dominance of cars that previously choked our streets. Just as at the national level, there’s a big opportunity to “build back green” to stimulate economic activity and build a vision of a healthy, active, green space.
We’re seeing the emergence of the “15 minute city” concept, where everything you need is within a 15-minute radius on foot or bike. The aim is to cut car use, resulting in fewer CO2 emissions and cleaner air.
In the USA, COVID-19 has been a factor that influenced the recent presidential election. The changing of the guard means that we will soon have a US president that places climate change at the heart of his policy choices. The importance of US leadership on the topic should not be underestimated.
So maybe COVID-19 will lead to a green revolution.
But, to the cynical, I get it. Some of today’s politicians probably are “greenwashing”, with announcements that are long on ambition and short on committed funding. I don’t trust them either.
But I’m optimistic.
Politicians that don’t deliver will be gone tomorrow and there’s a real and growing consensus about greening our cities and nations that crosses a lot of traditional political barriers. It’s no coincidence that we’re seeing similar ideas and proposals pop up all around the globe. Green is something that politicians of almost all flavours want to claim for their own. That means it’s probably inevitable, even if we have a stumble or two along the way. This thing is bigger than any single politician or political party.
🙏 Educate, build new businesses & provide hope
“Increasing public investment in advanced and emerging market economies could help revive economic activity from the sharpest and deepest global economic collapse in contemporary history. It could also create millions of jobs directly in the short term and millions more indirectly over a longer period.” — The International Monetary Fund (IMF).
Once we see the full economic impact of COVID-19 — yet to hit us — it’s likely to be severe or, as the IMF describes it, “the sharpest and deepest global economic collapse in contemporary history”.
Doubters of the severity of the economic impact of COVID-19 only have to look at how it compares in a long-term historical context. It’s not as bad as the Black Death, but that’s not really something you want to compare against (it killed 30–60% of the European population).
We should be in no doubt about the severity of our times and the likely impact on jobs, business and the economy.
Some sectors of the economy will shrink and may never recover. Some businesses may not survive and (possibly many) jobs will be lost. Disruption is tough.
We will need to build ourselves back and leaders will need to give their people hope. This means investing to educate people in the skills they will need and investing to support and foster new businesses.
Society and its needs are changing — whilst some traditional businesses may no longer be viable, there will be demands for new services. For example, if many of us continue to work from home, perhaps the need for city-centre cafes will not return. But perhaps the home-workers have new needs — local sandwich delivery to residential areas, for example?
Disruption means addressing big challenges like “what happens to oil workers when we’re all driving electric vehicles?” Or “what happens to shop workers when we’re all shopping online?” Or “how do you finance a city’s transport system when only 20% of the people who used to use it, do so.”
When economic circumstances get tough, the impact is always worse on those at the bottom of society. This time around restaurant waiters, kitchen porters, hotel cleaners, shop assistants and more have been on the economic front line. These are people who already earn the lowest of salaries and have no financial buffer to fall back on.
Those impacted don’t need grand words from politicians, but tangible actions on the ground that present new opportunities to those who have been displaced. Not words, actions.
If we apply an optimistic lens, we can perhaps see potential opportunities in a society that’s being reshaped by COVID-19. However, that opportunity is distant from many of those most impacted by the virus. It’s not practical to suggest that displaced restaurant works, taxi drivers and shop assistants transform themselves into software engineers (or cyber experts), for example. Most people would not consider such a radical change in direction as achievable, even if they had the financial resources to re-train (most don’t). Those impacted by COVID-19 will need help — just telling people that there’s new opportunities, as politicians sometimes do, is not helpful. They need to be given practical help along with the hope.
We need a new breed of visionary leaders that appeal across political and social divides. Those new leaders need to provide help in the form of education, financing, coaching and support — help that can empower people to re-skill, launch new businesses and take control of their lives. If we can do that, we can avoid the tragedy of COVID-19 creating a new underclass of the displaced.