Identifying the societal changes post pandemic


Let’s first consider how attitudes and behaviors are shaped by a deep societal crisis. Major disruptions can cause fundamental shifts in social attitudes and beliefs, which pave the way for new policies, ways of working, and consumer needs and behaviors.

HISTORICAL EXAMPLES OF SOCIETAL CRISIS-INDUCED SHIFTS


The 9/11 terrorist attacks similarly reshaped transportation and security policies worldwide. There was a collective shift in societal attitudes about the tradeoff between personal privacy and security. As a result, citizens accepted higher levels of screening and surveillance in the interests of collective security.

Societal crises can also have lasting effects on consumption patterns. For example, the 2003 SARS outbreak in China changed attitudes toward shopping: because many people were afraid to go outside, they turned to online retail. Though the crisis was short-lived, many consumers continued to use e-commerce channels afterward, paving the way for the rise of Alibaba and other digital giants.

COVID-19 SHIFT BELIEFS AND BEHAVIORS


These attitudinal shifts could in turn be reflected in significant policy shifts in many areas, including trade, border controls, health care, crisis preparedness, foreign affairs, employment, and social welfare. National security agencies are already drawing analogies between COVID-19 and cyber warfare, and rethinking and bolstering cyber defenses as a result. The pandemic could also shape national politics, as citizens judge the effectiveness of their government responses

Attitudes, policies, and the direct experience of the pandemic are already changing how we work, including greater emphasis on remote working, digital collaboration, workplace hygiene, and protections for temporary workers, for example.
And we can already see significant shock-driven shifts in purchasing patterns in our analysis of credit card activity for hundreds of thousands of consumers. Groceries and pharmacy products have increased by more than 50% compared to pre-crisis levels, and online shopping on Amazon, Flipkart, Big Basket has also increased. On the other hand, travel spending has declined by 90%, and apparel purchases have declined by more than 80%.

We should not expect that all of these shifts will stick, however. For example, there was a marked reduction in air travel after the 9/11 attacks, but it returned to its previous trend line within 15 months. Undoubtedly, we will see some consumption patterns reverting to long-term trend lines, albeit at different speeds. “We must distinguish between temporarily postponed, accelerated, or disturbed consumption, and new, more permanent patterns of consumption.”

Furthermore, we should not expect consumption to shift only among existing products. New ideas often emerge or are developed in response to extreme needs arising during a social crisis. World War II, for example, forced innovation or accelerated development and commercialization of the jet engine, pressurized aircraft cabins, helicopters, atomic technology, computers, synthetic rubber, rocketry, radar, and penicillin, with lasting effects. “New needs born in our current crisis will likely drive lasting innovation in other areas, such as mass disease-testing technologies, digital collaboration tools, or affordable home office setups.”

We should not, however, expect permanent shifts to be easily discernible through observation and analysis alone. We cannot know for sure what shifts will persist until after the crisis is over, by which time pioneers will have already established leading positions.

Pioneers will not only adapt to shifting needs; they will also proactively shape perceived needs and outcomes through innovation, education, and promotional activities. We can visualize the field of possibilities by observing fundamental attitudinal and behavioral shifts and creating branching trees of potential ramifications.

“Fundamental shifts among consumers could include more time at home, more emphasis on hygiene and health, or greater emphasis on family security. Producer shifts could include embracing remote working, streamlining operations, decentralizing supply chains, and emphasizing crisis preparedness and systems resilience. Each of these basic shifts has manifold potential consequences.”




DIVINING AND SHAPING THE POST-CRISIS REALITY


What practical measures can companies take to sense, exploit, and shape the post-COVID-19 reality? We suggest eight steps:

1. Expect change and look ahead:


Organizations tend to become myopic and insular when under threat. But crises often mark strategic inflection points, and a necessary focus on the present should not crowd out consideration of the future. The key questions become, what next, and with what consequences and opportunities?

2. Understand broader social shifts:


Addressable opportunities are often born out of new customer needs and frustrations, so listening to customers is vital. However, traditional surveys tell you only about existing product and category needs and uses; consumers may not be explicitly aware of their emerging needs.
Companies need to look more broadly at how social attitudes are shifting to understand which observed changes in behavior and consumption could be lasting. For example, if leaders’ and workers’ attitudes toward remote working shift after a few months of experiencing it, that could have significant consequences for office equipment, office real estate, home remodeling, transportation, and other sectors and segments.

3. Scrutinize granular, high-frequency data:


Aggregates, averages, and episodic statistical data will not reveal the weak signals of change. Companies need to access and analyze high-frequency data, such as data on credit card transactions, at a very granular level in order to spot emerging trends.

4. Identify your own revealed weaknesses:


The crisis will undoubtedly expose needs for greater preparedness, resilience, agility, or leanness in different parts of your company. Those weaknesses also signal opportunities to renew your products and business model and serve customers better. They may also help you understand broader customer needs, since others are likely to be experiencing similar stress.

5. Study regions further ahead in the crisis:


China and Korea are many weeks ahead of Western countries in their experience of crisis and recovery. By studying what happened in these markets, leaders can better predict which changes are likely to stick or could be shaped. A geographical fast follower strategy may be available to agile players.

6. Scan for maverick activity:


Some companies, often smaller players on the edges of your industry, will be making bets predicated on new customer needs or behavioral patterns. Ask yourself, who are these mavericks, and which potential branches and leaves on the tree of possible shifts are they betting on? Are those bets gaining traction? What are you missing? From there, you can decide on the appropriate response to each opportunity or threat: ignore, investigate further, create an option to play, replicate and exceed, buy the maverick, or act with high priority.

7. Look at which new patterns reduce friction:


Frictions are unnecessary delays, costs, complexities, mismatches with needs, or other inconveniences that a customer experiences in using a particular offering. We may be forced to eat only canned food from our pantries in a crisis, but many are likely to return promptly to consuming fresh food when it is over. On the other hand, forced habits that reduce friction are more likely to stick: how many of us relish the thought of carving out a couple of hours each day to reach our workplaces? High-friction areas are also ones where it is logical for mavericks to innovate and where they are more likely to succeed.

8. Maintain hope and a growth orientation:


It’s almost inevitable that we will face a deep post crisis recession. This is not a reason to postpone innovation and investment. Counterintuitively, 14% of companies grew both their top and bottom lines during recent economic downturns, and our analysis shows they create value mainly through differential growth. This is true across all industries. The evidence is clear, the best time to grow differentially is when aggregate growth is low. “Flourishers” in a downturn do reduce costs to maintain viability, but they also innovate around new opportunities, and they reinvest in growth pillars in order to capture opportunity in adversity and shape the postcrisis future.