Corporate Governance

After COVID-19 came to stay!

After COVID-19 came to stay!

This virus has changed the way we are currently living in India and a lot of other places in the world – in a lock-down. More – even after the lockdown, we are NOT going back to life as it was. For better or for worse, life on earth has changed – forever! There is no going back. And, hey, it’s not a doomsday declaration. I, for one, believe we could make a better quality of life for human beings and the rest of this living planet – if we choose to learn from COVID-19. Instead of worrying about the here and now, which a lot of people have to do anyway, let’s take a look at what comes after.

First things first. Let’s understand that COVID-19 will not go when the lock-down is lifted, gradually or otherwise. COVID-19 will stay, lurking in some person or another, hopefully, unknown to most of us, till we acquire the herd immunity we need to. This may take 2 years, based on recent experience. Even after a vaccine is developed, it will take a long time to administer it to all 1.3 billion Indians, growing at net 1% per annum – net. That means 13 million souls added each year – to be vaccinated and protected. That’s just this corner of the planet. What about elsewhere – from where it came in the first place?

Secondly, there could be more such viruses around the corner. SARS came in 2002 in China, spread worldwide and died down by 2004. MERS came in 2012, within 10 years from SARS, and was less virulent than SARS. COVID-19 has come with a 7 year gap. It is more virulent than the previous two combined. COVID-19 is a Black Swan event. The next pandemic, which could occur within the coming 3-6 years, will not be one. China was where 2 of the last 3 pandemics began. It may well be the source of the next.

Third, we are likely to see a lot of change in global economic activity. The steps that China, the US and India took last quarter, and what they and others will do through the rest of 2020, will be one key guiding factor. I’ve clubbed them into three broad categories below:

Protective:

  • Globalisation of supply chains will ebb: at least in those goods and services that nations see as critical to national survival and security. New risk metrics will include country vulnerability. Geography-based or ‘friendly-nation-based’ supply chains may replace global supply chains
  • Economies or contiguous economic blocks that can generate both demand and supply will likely emerge – SAARC, ASEAN, China+Mongolia, Russia, Former USSR Members, Eastern Europe, European Union, Northern Africa, Middle East (including Iran, Iraq and Afghanistan), Africa composed of 3 or 4 blocks, NAFTA, South America in 1 or 2 blocks – composing some 15-18 blocks rather than the 190 nations we see in the United Nations today. This should happen by 2030. No single economy or block will be able to impact the world – as is happening today. Duty and other trade variables will be sought to be equalized intra- and inter-block. WTO is already collapsing into something like this, and the process will accelerate.
  • Energy, water, food will become strategic national issues to be taken care of within national economies or at most the afore-mentioned blocks
  • Dependence will reduce on fossil fuels or natural resources that are alien to a geography – this will happen faster than imagined so far
  • Appreciation of natural resources available within the concerned geography will increase and with it will come an improvement in the environment
  • Ownership of corporations may become restricted to national or block entities – with a reduced percentage of ownership permitted outside these boundaries
  • Global administration of Health and Security could become far more real and necessary than ever before in human history minimizing and later eliminating small intra-block and then inter-block battles and wars

Reactive:

  • Health rather than illness will become the focus of government activity and budgeting over the medium and long-term while medical data tracking will become the short run goal for the coming couple of years
  • Urbanisation, space utilization and Public Transport will undergo dramatic change: office-space, physical meetings, travel (shared mobility) will all be less attractive and will reduce
  • Resultantly, Personal Mobility will become low cost, easy and environmentally friendly – supporting infrastructure and industry will emerge
  • Spectator sport and mass entertainment will move from gathering crowds to providing personalized pleasure – computer & video gaming especially the MMOGs will acquire greater acceptance
  • Government (legislatures and executive) and judiciary will rapidly change – much less human intervention & interactions, and far more IT dependence will become the norm
  • Education will be much less dependent on physical infrastructure, distance education from school to doctoral will become the norm, with student gatherings becoming infrequent and purposed
  • Organised religions that require congregation of people, will face their most serious existential challenge – even more than the Catholic church faced during the Renaissance – and will change significantly, if they are to survive
  • Politics too will have to find new ways to organize congregations of the faithful
  • The press is already moving from paper to electronic media, the next few years will complete the transformation – paper will become historical oddity

Responsive:

  • Manufacturing/ Industrial organisations may at best remain intra-block, truly global organisations may become things of the past – only intellectual activity-based businesses may remain potentially inter-block
  • Buggy-whip or copier like change will occur in several industries – small and big – tobacco & related products, fossil-fuel engines and automobiles, etc
  • Digital transformation will become a basic business building block – business will become more digital and less person-dependent wherever possible – process automation and robotics will become routine
  • IT and communications industries will become key infrastructure utilities with their basic products becoming both low cost and ubiquitous – only where human intervention or curation are required will premium pricing be possible
  • Secure and dependable Information-networks will become the basis for both private & public activity
  • Both governments and businesses will focus on understanding Risk and developing methods for Risk Management, which will become a key component of any large enterprise

While we have stayed global in scale and 30,000 ft in height, in the next article we will become local to India, and 3-6 ft in height as we come to the individual. In the article after, I will discuss one ‘global/local’ activity – the judiciary.

(All the above images were taken on March 30th/31st, 2020 in Delhi by Mr Himanshu Jain)

(19) Comments

  • Shailesh Ayyangar Tue Apr 7 2020

    Very good write-up forecasting positive changes which we can choose to adapt and make a better world for ourselves. Every crisis and every failure teaches us so many life lessons. We can ignore those lessons and we would be inviting another crisis and a failure! This blog paints a positive scenario emerging out of the current crisis. Thought provoking.

  • Sheetal Joshi Tue Apr 7 2020

    The thoughts expressed compelled me to have a insight..Yes the lifestyle changes will surely occur and we will have to adapt with them to sustain. The thoughts expressed about supply chain management and digital transformation are mind boggling… I look forward for the next connected article soon!

  • Anup Sahay Tue Apr 7 2020

    Good lines of thought. There could be a few variants of the approach, eg the members of various geopolitical blocks. But this is what is likely to happen. Very well articulated, concise.

    Looking forward to the next in the series.

  • Ram Mudholkar Tue Apr 7 2020

    Excellent umbrella perspective at the global level. The big elephant in the room -The Religion – will resist the change and will be interesting to see how countries and blocks will handle it.

  • Sunil Gulati Tue Apr 7 2020

    As Nietzche said ” What does not kill us makes is stronger”. I think this global crisis has the potential to make us stronger by selective changes that will alter our processes, modes of interactions, our “conventional truths” and importantly our attitudes.

    We will need to watch against many of the negatives that could emerge – jingoism, even more nationalism than exists today, state surveillance to name a few.

    However, it will be healthy if the human race realises the fragility of ita existence, gives up its collective hubris and joins hands in looking at global solutions to the many problems we face, many of them unacknowledged.

  • Arvind Nande Tue Apr 7 2020

    Excellent analysis of the current situation and future directions which must come in handy to the national and international governing authorities in their (assuming, well thought and researched) evolving actions and initiatives to address the unfolding unprecedented social and economic problems of gigantic proportions. Keenly look forward to reading and reflecting on your promised next articles. Warmest greetings and best wishes ~Arvind

  • Paritosh Tue Apr 7 2020

    So many different areas in a single essay.. Mighty impressive. I think this should spawn a series of books, one on each theme.

  • CN Bal Wed Apr 8 2020

    The old order will not just go away without resistance. The ruling power does not like competitors. Capitalism has come a long way from that proposed by Adam Smith of fair exchange of goods for mutual benefit to one wherein there is more take than give. There is a realization that Health is Wealth and more has to be invested in this direction to prevent or control bacteria or viruses rapidly progressing from epidemic to pandemic. The essay analyzes the problem and offers solutions that are pragmatic and possible to achieve.

  • Vivek Kulkarni Wed Apr 8 2020

    Excellent insightful comprehensive speculations.. Congratulations for the lucid expression…
    Would like to get some analysis on livelihoods and job scenario of future post Corona World.

  • Teji Wed Apr 8 2020

    Very well articulated. Organised religion may not take kindly to reform.

  • Akshay Kumar Wed Apr 8 2020

    Good thought process
    Most analysts seem to be in agreement about the shift in structure of supply chain in a post covid world from a global to a regional, friendliness based network.
    Of course, greed for profit might push us back to China, who knows
    India MUST not let this golden God given chance slip once more. Silver lining in the Covid cloud.

    Plus, of course WFH and Tele medicine might get bumped up a few notches

    Older folks might now find it easier to adapt to tech tools for communication as well as content consumption.

    My fond hope and desire
    Let humanity become more grateful, compassionate as well as concerned about nature /Earth.

  • Shravan Naravane Wed Apr 8 2020

    Overall an excellent article.
    I believe that, amongst others, the following changes will take place:
    1. Globalisation of supply chains will continue. Firms will factor the risks but try to reduce them too. Dependance on one major source, for example China will be reduced. This will give opportunities to other countries like India, Vietnam, etc to make inroads.
    2. National health management systems will improve because countries will invest more to set-up and upgrade the public health infrastructure for testing and patient care.
    3. Intrusion into personal space by governments will increase with the purported objective of monitoring and protecting the health and movement of people.
    4. Movement of people across the world will come with more restrictions and checks. Countries will demand more information on the health condition of the incoming people and immigration procedures may change for ever.

  • Ashok Krishnamoorthy Wed Apr 8 2020

    Here are a few counter views? Only significant additional impact because of COVID 19 likely to be stricter international travel restrictions with temperature checks and quarantine rules for foreigners entering a country. Some steps comparable to post 9/11 actions for air travel

    Anyway nationalism world over was resulting in protectionism and reverse globalization of supply chains. Prevalence of digital media and virtual meetings was anyway happening. If we think Working from Home will become a norm, it is quite possible that the ‘gatekeeper’ of corporate culture (HR) will strike back ever so strongly to preserve order and Control.
    Public memory is short, generally prone to compromise for convenience and material benefits. Do you know wet markets are back in business in China? Remember Saars, swine flue, Ebola to name a few. What really changed?
    Don’t mind being proven wrong this time..

  • saurabh Kumar Wed Apr 8 2020

    An excellent write-up, the first of its kind, initiating cogitation on the post-Covid world in specifics. Offers several insights, compliments for that. Rightly aims to get more granular henceforth, taking up one sector or theme at a time. Choice of judiciary for the next in the series is appropriate, as that should be a low hanging fruit orchard amongst vital sectors of governance and the economy.

    Some suggestions:

    I) Explain terms such as buggy-whipping and so on.
    2) Concentrate on aspects economic — they are complex, and expansive enough (in scope), without bringing in religion etc.
    3) Announce sequence of next themes, with invitations for lead contributors — unless AXAR is self-sufficient in all fields,
    4) Move to webinar format, to enable interactive discussion — advance of common understanding would be much faster than through the written word alone.
    5) Funding ? I have no idea how a business model can be made for this kind of a virtual discourse, hitherto unknown in the country (and abroad too). My suggestion would be to earmark such funding as is possible for initiation of this ‘Start Up’, and move to a self-sustaining model as it evolves. If necessary by seeking donations/sponsorships. Explore coverage under CSR.
    6) Publish in the national press concurrently, while the idea of this cogitation spreads and catches on.

    But do please accelerate this extremely good initiative. All power to your pen and elbow. I would be glad to lend a helping hand in every way I can.

  • Shailendra Pratap Jain Thu Apr 9 2020

    Indeed, extremely well-written and thought provoking article. Covers an amazing canvas in one sweeping stroke. And those of us who know Sunil know he is a visionary.

    Two broad thoughts come to mind:

    1. Are we over-reacting about the future because of the ‘uncertainty’ we are facing?
    In this regard, I cannot help but reminisce about the recession which hit the globe about 12-14 years back. Trillions of dollars were lost, as were thousands of lives. A few businesses went down under. We had speculated that the world will change irreversibly and become more frugal. Not sure if that happened. As Ashok said, memory is short. After 2 bloody world wars, did we stop warring? After the formation of the UN, did we become more united? Not sure. Greed, anger, foolishness have always been at the core of human psyche and they will never go away.

    2. Many of the predictions are already under way even without COVID. For example, digitization has been going on now for a decade. Supply chains have been undergoing metamorphosis since internet’s advent. Protectionism was always there and will be there forever. Organized religion has been under fire but even more so in the past decade or so.

    These 2 points do not take away from the intriguing nature of the article. It has genuinely thought provoking content.

    My 2 cents. Much of what will happen will depend on how soon we can successfully handle the COVID Situation.

    The article focuses on macro economic considerations. I’ll also be curious to know his thoughts on a more micro level. What will be human beings be like post COVID?

  • Capt Yogesh Bhide Thu Apr 9 2020

    Very well structured thoughts.
    In counties such as India, changes and responses are dependent on how well Political, Executive and Judiciary systems change.
    Looking forward to your next essay in this series.

  • Deepak Singhal Sat Apr 11 2020

    Very erudite and well articulated article.

  • Arun Panigrahi Tue Apr 21 2020

    A very succinct article which covers a plethora of fields which Covid 19 has / is / will impact. My two cents :

    Some say that a black swan event like the Corona Crisis contribtes to change – but I feel it contributes to the acceleration than the velocity.

    Many changes that we had envisaged for say 2050 will probably now materialize by 2025 – these include wholly online universities, robotic chefs, self driving cars, ultra high speed internet, complete shift to clean fuels, etc.

    We professionals need to be ready for these changes. The key is no longer merely intelligence or knowledge or diligence – it’s the ability to unlearn and relearn. We see even the the most affluent of people learning to make round rotis during the lockdown – survival !

    Lastly, an important lesson that a Global pandemic like Covid teaches us it the value of resilience. As an individual or organisation do we have a plan B/C or (maybe) even a plan Z. There will be increased stress testing across fields from manufacturing to portfolio management. Only the ones who can sustain and adjust to shocks will thrive. The rest have their work cut out !

  • Dr Poonam Ahuja Thu Apr 23 2020

    Enlightening n true, very well formulated with so much of research done , imbibing a positive outlook and something to look forward to , reflecting how deep a thinker you are , looking forward to have more of them . Thank you for such wonderful effort for the humanity , giving a better prospective to see things with a clearer vision

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