In the light of Corona – Part 8: Winners, losers, and then some

While it is obviously too early to know how the world looks like after we emerge from the current global shutdown, for the sake of exercising the grey matter, today I’ll take a look at the tentative winners and losers of the corona disruption. 

Winners?

The Economist outlines (unfortunately behind a paywall) clearly one set of apparent winners of the current pandemic. The big digital firms, Alphabet (Google), Apple, Facebook, Microsoft, Amazon, in the west, Alibaba and Tencent in the east, are more successful and lucrative than ever, as all activities like work, education, shopping and social interaction have shifted from the physical realm to the digital realm. Like The Economist states, the digital infrastructures provided by the big digital firms have become equally essential utilities as water or electricity. 

The difference between the traditional utilities and the digital utilities is the fact that whereas in the majority of the globe the traditional utilities are at least to an extent governed by the public sector, the digital utilities are firmly in the hands of the private sector (except in China). This holds a seed of potential surprises for the firms: now that our dependence on the digital infrastructures is acutely outlined, to what extent are the governments happy to continue allowing such infrastructures to be governed by the private sector?

In addition to the big digi, also the smaller digital platforms, such as Slack, Zoom or zillion other service providers are basking in the glow of opportunities realized through the speeded bridging of the notorious innovation adoption chasm. Be it grocery and essentials shopping, yoga instructions, university or basic education or experiences like music or magic, the platforms that enable both the sharing and the monetary transactions when involved have now broken through once and for all. We have genuinely entered the era of platforms. 

When the shopping pertains to tangible matters, they have to be delivered. This has created an additional set of winners, consisting both of companies already in the delivery business before the current crisis, and agile entrants seizing the opportunity, like taxi firms that have changed their business models from transporting individuals to transporting for example groceries. What first emerged as responses to the acute needs resulting from the crisis, may well turn out to be the corner stones of new business models for many actors at the interface of digital and physical services. 

But purely in the physical realm, we have been reminded of the very basic comforts of life. We cook, we bake, we start long planned remodeling projects. We take the advantage of spring and the increased time at home to do meticulous gardening. We take walks, pamper our pets and tinker with our bicycles. We remember the local bakeries and order take-out, take off time from the traditional working hours to visit a nearby commercial garden for greens that normally we simply ignore as it is easier to stock up at the supermarket than to try to remember the short opening hours. 

In other words, when the time and energy consuming commute between work, childcare and hobbies cease, and the day is no longer structured around externally set check points, we spend time, money and effort in making our individual lives as comfortable as possible. The winning firms are the ones who cater to these needs, be they gardening equipment or bath salts, delicacies tricky to make home or local ingredients. 

While the rat race most likely will return to its hectic pace in some timeframe, these changes in the customer behavior are not only a crisis-induced fluke, but ride on more established trends that were already emerging before it: slow-food movement, ‘hygge’, ‘kotoilu’, field-to-fork producer rings, the appeal of mindfulness and yoga type activities, to name but few. To what extent also these areas of consumption have now leaped the chasm of wider adoption remains also to be seen, but if I was in the business of making people feel good at home, I would make the most of these opportunities. 

Losers?

While the pandemic will not make a dent in the desire of inviduals to be able to roam the globe freely, the emphasis of traveling will most likely shift heavily towards leisure activities. The golden days of business travels will most likely be over for good. This means that the air industry will suffer heavily, first through the immediate bans, and secondarily through the long-lasting decrease in business travel. This will drive the air fare up, which in turn will also have an impact on the leisure travelers. 

Most likely there will also be implications for other shared modes of transportation: even with the acute pandemic over, the memory imprints last and may make individuals to shift back to private automobiles from trains, buses or even the novel car-sharing services. It will be quite some time before I will think gladly about taking a cruise ferry to Stockholm – and even longer before I will allow my kids to step aboard. 

These personal level choices of transportation are however but a small part of a wider phenomenon. Globalization, i.e. the flows of materials, humans and data that cross the globe in increasing volumes and velocity, was for quite some time perceived as a predominantly beneficial phenomenon. It enabled the companies to source for materials, labor and markets in widening circles resulting in better and more affordable offerings, at the same time diffusing the innovations and wealth accumulated in the ‘developed’ world to the countries in and for the benefit of the ‘emerging’ economies. It was also assumed that the globalization of business would also spell the globalization of democracy.

In the last decade (or so), the tide has turned. The critics of globalization have become more vocal and stepped into the limelight from the shadows. Some of the criticism is well-founded: globalization has not created only winners, but also losers, especially in the ranks of the middle class constituting the backbone of democracy. While a part of the criticism is born less out of reason and rationales, and more out of xenophobia and the tribal tendencies of humans, it must be acknowledged that globalization has indeed played a notable role in spreading this pandemic. 

A flammable notion already in the times leading up to the current crisis, globalization is now viewed as the mother of all evil by some, and the humankinds’ best hope by others. However, as Harari points out, there are two issues that warn against assigning all blame to it: firstly, humankind has always suffered from pandemics, even in times of horses and sailing boats. Secondly, the global knowledge networks and collaboration are our best hope in fighting corona or any other new virus threatening the whole of human race.

Nevertheless, globalization is a notable loser. The governments have predominantly adopted the mentality of fending primarily for their own, as radically exemplified by the decision of Trump to cut the funding of WHO. The national institutions trusted for maintaining a safety net of vital equipment and food production have been taken by surprise as they have discovered how dependent they are on the suppliers in China and rest of Asia. The companies are thinking equally hard about the tradeoffs between cheaper and less vulnerable production: what types of risks do the long, streamlined global value chains carry, and are those risks worth holding on to?

Then some

An interesting thought that has been popping up frequently in both traditional and social media is the optimism toward a renewed appreciation of science, truth and facts. As was increasingly discussed, social media supports spreading not only information, but both misleading misinformation and malicious disinformation. Now, not only is the media turning to scientists, but even more notably, the services like Twitter have started to censor spreading corona-related mis- and disinformation. Are we on a watershed between post-truth era and a post-post-truth era where science, scientists and knowledge are newly appreciated?

Relatedly, there was a nice meme capturing the essence of another promising insight: “The parents are starting to realise that the teachers were not the problem”. Have we been taking basic education for granted for so long, that only now with the majority of children everywhere home-schooled, we see and appreciate it again? And if so, could it lead to improvements in the basic school infrastructures in terms of additional support and salary for the teachers, a renewed appreciation of the work they do to ensure the civility of future society?

These themes are but a tip of the iceberg, outlined here in no particular order of importance. In the next posts I’ll be digging deeper into some of them, in addition to coming up with more – but for now, take care and cozy up!

Milla

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