Out with the old
Since the start of the coronavirus pandemic, experts have talked about adapting to a post-COVID ‘new normal’. These plans are noteworthy, but a fundamental point is overlooked – markets and companies do not change at the same rate or in similar ways. The way the airline industry adapts to the crisis will not be not the same way that the retail industry adapts.
A more nuanced view is to consider multiple new normals. Markets and companies have varied challenges, based on their value chains, existing assets and technological maturity. Their adaptations will be based on how they use their resources to overcome their challenges. More importantly, these adaptations will be based on a response to new market demands.
As confinement measures relax in different geographies, new market demands will be created for another short period of time. Hence, we will witness multiple new normals as firms match their capacities and resources to new market demands.
A brave new world
Adapting to uncertainty and changing demands will always involve trade-offs. Prior to the pandemic, firms prioritized efficiency over resilience, so that they could respond quickly to anticipated demands. But as new normals get created, reactivity to new demands means that responsiveness trumps preparedness: speed takes precedence in strategic decisions.
Take the example of Epic Games. The software developer, which specializes in creating engaging online experiences, saw that people isolating at home due to COVID-19 were hungry for real-life experiences. Epic responded quickly to this new demand in a matter of weeks.
Development teams in Asia created an event for musician Travis Scott on Epic’s Fortnite gaming platform. The event was like a real-life concert but included immersive visuals that would only be possible in a virtual concert. More than 12 million people participated in the concert – and its success demonstrates how rapid responses to changing demands can reap big rewards.
As new normals emerge, all firms will need to build for speed by detecting emergent needs, forging new partnerships, and leveraging technology to provide new solutions cheaply and quickly. Such flexible systems might involve a loss of efficiency, but they can help businesses to take advantage of opportunities in ways that optimized systems cannot.
Hand in glove
Technology will be a key ally in helping businesses to survive and thrive in our fast-shifting landscape of multiple new normals. We believe data will be of critical importance – having the ability to detect needs from raw data, and develop measures in response to these detections, depends on having the ability to separate insight from noise.
For example, Texas grocery chain H-E-B used data from Chinese and EU retailers, who were further along the COVID-19 curve, to respond to a shift in demand. They partnered with local restaurant suppliers to fill gaps in stock and distribution. Similar data-based actions are now being executed by actors in plants, supplier factories, distribution centers, and retail outlets. The importance of data will only grow as firms adapt to new normals.
If the value of data is changing, so is the way it is created and distributed. Decentralized development efforts in combination with incumbent R&D teams are powering technological advances in artificial intelligence (AI) and blockchain. Decentralization and AI provide a scaffold that will help companies to reduce the cost of IT operations and provide new revenue streams. A new modus operandi is being created, where distributed business models and transparent rules of engagement define the balance between efficiency and resilience. For example, the OpenAI initiative provides the ability to leverage a distributed network of developers, data scientists and small businesses to create AI based solutions. Attracting support of big tech players–like Microsoft and their Azure cloud platform– enables AI workloads to be processed at scale, enabling enterprises to access a decentralized development ecosystem and deploy it rapidly to fuel their innovation agenda.
However, the development of scalable solutions based on decentralization and AI will only occur if clear rules exist that provide clarity to stakeholders and which establish incentive structures. That’s why we believe security and standards will also grow in importance, as it is via agreed norms that ecosystem actors decide who to collaborate with and why. Trust, after all, is a valuegenerating commodity, and standards and security act as stewards of trust.
Crises are milestones of history that always create new normals. As we embark on a journey shaped by the COVID-19 crisis, business and technology will need to act as one to navigate new uncertainties. This is an undertaking that must be led by executives of the enterprise, to open up vast expanses of global opportunity in an age of multiple new normals.