Once the COVID-19 crisis has passed, many experts claim, we will not be returning to the same economic reality that we knew before 2020 – instead, a new standard will dominate social and economic life.
Preparing for that new standard will require foresight and a balance of strategically arranged initiatives that address each stage of the forthcoming transition.
In order to plan for the post-viral era, it is necessary to look past the current crisis, but since the path forward is fraught with uncertainty, businesses will need to maintain a certain level of flexibility in their planning efforts.
Below, we’ll learn more about what the new standard will look like, why preparation is so critical, and the steps that organizations should take in order to move forward.
Why Will There Be a New Standard and What Will It Look Like?
Many people probably hope that the world will simply return to the way it was before 2020, the current outbreak has fueled too much change, much of which is irreversible.
For instance, a number of digital trends and technologies have evolved rapidly during the first few months of the outbreak, such as:
On top of these technology-driven changes, we have also seen the financial collapse of entire industries and business sectors, which will permanently alter the competitive landscape in the years to come.
Increased public health concerns and government involvement in this area represents yet another force that will continue to affect the structure of society and the economy in the coming years.
Organizations’ ability to survive in these years will depend heavily on their ability to transform quickly enough, but proper preparations must begin with a proper understanding of the circumstances.
According to an article on the World Economic Forum website by Marco Albani, one of the best ways to understand this new standard is through a McKinsey concept known as the three horizons.
The Three Horizons of Growth
McKinsey developed this model as a way of understanding how organizations can remain innovative and counteract inertia and stagnation.
Here is a short recap of these three horizons:
- Horizon one. This horizon focuses on the core business model, and the strategic aim revolves around improving performance and value.
- Horizon two. The second horizon includes emerging opportunities and investments that could give rise to future profits.
- Horizon three. The final horizon embraces those ideas that could become profitable further down the road, such as pilot programs or research projects.
Though this model was developed quite a while ago, as McKinsey notes on their website, “the framework continues to be useful, especially in uncertain times.”
However, as Albani’s post on the World Economic Forum blog notes, the current crisis has flipped the framework: in just a few months, the third horizon has become the first horizon, and the first horizon has become the third.
As we approach mid-2020, the first horizon – everyday life where people can travel and move about freely – has become the distant third horizon. Returning to a sense of normalcy, in other words, has become the current long-term goal for most companies.
The third horizon, on the other hand, has become the first: “fashion houses scramble to convert production lines to make surgical masks, automotive companies to produce ventilators, and brewers and perfume house to make hand sanitizer.”
Other organizations have taken their third-horizon projects and pushed them into the front seat. Accenture, for example, chose to compress three years’ worth of digital transformation efforts into three months.
How to Understand and Plan for the New Standard
Today, the third horizon may be equated with a sense of normalcy, but only a relative sense of normalcy. As mentioned above, we will not be returning to the same normal we once left, but a new normal or a “next normal.”
McKinsey’s model can serve as an excellent planning tool, but only if it is reframed to suit the current context.
By reorienting ourselves to the current state of affairs, says Albani, we can begin to understand what is in store: the current emerging crisis represents the first horizon, the gradual relaxation of restrictions represents the second horizon, and the final horizon represents a return to relative normalcy.
Deloitte echoes this sentiment in an analysis of their own, suggesting that organizations create several plans that are suitable for each of these phases.
According to their report, in order to maintain business continuity, organizations’ plans should revolve around government-imposed restrictions that will impact their operations.
Three sets of plans can be useful:
- Rising-peak plans that are designed to be implemented during peak restrictions
- Post-peak plans to be used as those restrictions begin to relax
- Towards recovery plans for use when most restrictions have been lifted
Like the McKinsey model, this approach helps organizations accurately understand and predict the fluctuations in the current crisis.
By understanding that we are moving towards a new normal and implementing scenario planning methods such as those covered here, businesses will stand a much better chance of performing successfully in the coming months and years.