The shock phaseSuch initiatives – employee job reassurance, CEO salary sacrifices, donations, the support for healthcare professionals and vulnerable customers, the manufacturing of PPE, mortgage holidays and so on – characterised the ‘shock phase’ for businesses. In the context of Maslow’s hierarchy of needs, the shock caused us to take a collective drop from the top of the pyramid to near the bottom – from self-actualisation, where we aspire to become the most we can be, to safety, where our dominant concerns are the preservation of our personal security, health and employment. This phase began in mid-March and saw us unite under a banner of “we are in this together”. That period ended towards the middle of April, which brought in a more pragmatic and deeply questioning phase that I will come to. Solidarity, fairness, responsibility and compassion have provided the much-needed hope and resources to deal with the sudden shock caused by the pandemic. There has been a strongly-held belief that human ingenuity and pulling together will enable our survival.
We found that during this ‘shock phase’, actions focused on the production of medical equipment and employee health protection were the most likely to impact positively on a business’ reputation. The impact of executive pay reduction schemes and vulnerable customer support was also high.The highest ranking initiative in terms of impact was the electric car giant Tesla’s announcement that it would turn over its production facilities to building ventilators. This was seconded by French luxury brand LVMH’s announcement that it would manufacture hand sanitiser, followed by Facebook’s $1,000 bonuses for all of its 45,000 employees. Other high ranking initiatives included Apple and Google’s joint contact tracing app, and Lidl’s checkout protection screens. But there has been a shift in corporate attention away from philanthropic announcements regarding support for communities. Businesses are seeking to gain a better understanding of the impact of the pandemic and make more pragmatic decisions, balancing their own survival with their future focus. Since mid-April we have entered this ‘existential phase’.
Into survival modeOne of the early features of this phase has been an increased focus on employee support and reassurance as part of a back to work drive. But I expect this shift to go further. Businesses are beginning to juggle different competing demands on resources and financing, as they seek business survival while preparing for future dynamics. This is forcing companies to ask themselves some fundamental questions, and to realise that the problems that were identified before the pandemic have become more vivid.
COVID-19 is seen by many as an accelerant to many of the paradigm shifts already under way: shifts such as deglobalisation, the rise of populism, and the demise of shareholder capitalism in favour of a stakeholder model.As governments move to intervene to bail out entire industries to minimise unemployment, we may see businesses moving away from the rule of shareholder primacy.
Moving forwardAnother dominant theme we expect to see more discussion of is the threat of ‘Big Government’ and the threat of social control due to the combined effects of the Coronavirus Act, new contact-tracking technologies and existing data-gathering powers. In the coming weeks and months, we are likely to see that as businesses are forced to do more with less, many will find better, simpler, less expensive, and more inclusive ways to operate. We should expect businesses to be forced by their stakeholders to question the suitability of former practices and business models. And we will see new models to tackle what are likely to be the next big themes: global healthcare, global equality and global climate change. Firms unwilling to adapt are unlikely to make it.
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