“Anyone who believes in infinite exponential growth in a finite world is either an idiot or an economist,” as the renowned American economist Kenneth Boulding once aptly put it. But why is that? Do economists know something that we don’t know? According to economist and fellow countryman Bernard Lietaer (1942-2019), it is the nature of our money that requires economic growth. However economic growth now, is at an all time low. Or is it?
There are different types of money. Coins that have the value they express, such as gold coins. Paper money that can be exchanged for a standard (usually gold or silver) such as the US dollar between 1947 and 1971. There is fiat money such as currently the euro, dollar, yen, among others. There is money based on mutual credits such as the LETS coins, and there is also cryptocurrency such as bitcoin. During the Covid-19 crisis, however, it certainly has become a subject of heated debate. More companies are struggling; even celebrities are unable to continue their work of entertainment and make money. Celebrities across the world, from Robbie Williams to Demi Lovato, have had to halt their work. Proving that the way we work and the way that we earn and view money has now changed quite drastically. But what exactly has changed this year and is the change here to stay?
Gold price rises: investors seek ‘safety’.
The price of gold has been going up gradually for months, due to the turmoil in the financial markets because of coronavirus. The price of a troy ounce of gold (31.1 grams) rose to more than $1,573 in London in March, hitting the highest level since 2013. In troubled times in the stock market, the precious metal is often considered a haven. The prices of other precious metals such as palladium, platinum and silver were also on the rise.
Oil price is falling: petrol and diesel prices are following.
Oil prices remain under pressure due to waning demand for the commodity due to concerns about the coronavirus. Even all these months later, the price is still steadily falling. The oil-producing countries of the oil cartel OPEC want to agree on additional production cuts with their allies to support costs. The fall in oil prices is also starting to affect gasoline and diesel prices. The average price now, for a litre of unleaded petrol was 1.67 euros at the beginning of this March.
A worldwide shortage of masks and gloves.
There is a threat of a structural shortage of masks, gloves and other resources that offer people protection against the coronavirus. The World Health Organization (WHO) is investigating what manufacturers and distributors need to supplement the supply. The demand for protective clothing has risen to 100 times this year, and many people are buying up large numbers in one go, which has also pushed up prices. “This is a serious disruption to the offerings intended for patient care, and not for personal use,” said WHO. However, most countries have caught up to a significant amount; but some staff workers in hospitals are re-using their PPE.
Smartphone production is stagnating.
The outbreak of the coronavirus, caused smartphone production to drop by one eighth in the first three months of this year. This was predicted by market researcher TrendForce, who thinks that Huawei and Apple, among others, will be most affected by the virus. The decline meant that production would reach its lowest level in five years. For example, electronics manufacturer Foxconn, which assembles Apple’s iPhone, among other things, was not allowed to open a factory in Shenzhen by the local authorities until the company takes additional health measures. Incidentally, the measures to prevent the virus from spreading do not only affect tech companies. Several car companies have also indicated that they have had to reduce production because they receive fewer parts. Ironically, though, more and more of us are being forced to use our Smartphones to buy things online, instead of physically visiting stores.
The future of technology and business after Covid-19.
In this time of crisis, a forward-looking approach is essential. Traditional theory holds that companies look at their current situation, at what they have in terms of business units, assets, products, markets, customer segments and market shares. And from there look at aspects where improvements can be implemented step by step. It is very natural to analyze the current state of affairs and then think about a sequential and linear route to the future. But in times of significant change, such as earlier periods of economic downturn, it can be seen that companies that achieve exponential value growth often owe this to their forward-looking approach. The leaders of exponential growers are looking ahead and wondering if their business will still be relevant in the future. Then they use their purpose to explore all possibilities and use their vision to develop future-oriented scenarios that make them relevant not only today but also in 15 years’ time, after Covid 19.
The working environment is changing. Many people are now working from home more than ever before, although some CEOs aren’t happy about this. A lot of companies are losing money because of the pandemic, yet they are spending more by sending new equipment out to their workers’ at home as well as expenditures on phone systems and having to set up Skype calls with the whole team. There is, however, a way to look to the future with a positive mindset. Money can return to the pockets of businesses. However, a new concept must be adapted to succeed.
Focus on people.
Companies that are the most people-oriented and most involved with both their customers and their employees will go through the phases of recovery, decisiveness and restart more quickly and better. In times of crisis, people want to know that they matter and that they are being taken care of. Customers want companies to listen, show understanding and adapt to changes in behavior, values and needs. In concrete terms, this means more attention to personalization, predictability and authenticity. For employees, it’s about feeling that they are genuinely cared for, and that management is thinking about their health, well-being and productivity. The most committed customers and employees are always ready to assist companies in all developments.
Rapid deployment of new technology.
Large, established companies often face the limitations of many complex and outdated networks and systems. That’s why they take a two-speed approach, targeting today’s immediate needs while at the same time investing incrementally in new digital technologies to thrive in the future. This crisis has made it clear to many organizations that they have underestimated the speed of technological developments, and they now need to transform themselves so they can deploy technology at the pace their customers and employees demand. The faster companies adopt technology, the quicker they can gain a competitive advantage.
During this crisis, there is no shortage of opportunities for large-scale innovation. According to the traditional model, companies develop from an initial idea to a minimally viable product, followed by a prototype, several pilot versions, a test phase and commercial application. Today there is simply no time for that. The startup economy does find a way to make a quick turnaround. Startups don’t wait for viable products, prototypes or pilot versions. These young companies can immediately take the lead and bring new products to the market. It’s time to rethink how we view business; for a better future.