Crisis and Opportunity. What will your ‘New Normal’ look like?

The COVID 19 pandemic has crushed so many businesses, and unfortunately, destroyed so many lives.

But there will be a New Normal. Every crisis ushers in new way of operating, and this global pandemic is no exception.

Learn from the past

But before I delve into the future, we need to examine the past. How do these crises unfold, and what can we learn from our experiences? The easiest business crisis to examine is the Boom and Bust Cycle.

Economic booms are periods when the prices of some underlying assets increase, slowly at first, then rapidly, then exponentially. The asset may be house prices, coal, tulip bulbs, sugar, oil, share prices, or anything else that can have a price ascribed to it.

Share-price booms are familiar to most of us. Many of you will recall the Tech Boom, or Dot Com Bubble, of the late 1990s–early 2000s, so I will use that as an example. Between 1995 and March 2000, the US stock market index of technology stocks (the Nasdaq Composite Index) increased by 400 percent.

During the latter stages of the Tech Boom, any company that had a vague connection to anything remotely related to the internet became a market darling. The fact that many of these hopefuls had no product and no market, and absolutely no hope of achieving either, did not prevent them from reaching astronomical prices. Everyone, it seemed, was in on the act, and the proverbial shoe-shine boywould be able to tell you about “the next big thing”.

Then it all collapsed. Trillions of dollars of sharemarket value vanished into thin air.

This potted history encapsulates the trajectory of all booms and busts. They are all the same general shape and evoke the same psychology in their unfolding phases as they play out. All of them. Up by the stairs, down by the elevator.

The boom–bust cycle unfolds in six phases.

1. The beginning and the precursor to the boom. There will be a precursor to the boom, usually something is invented or happens that creates a shift. In the case of the Dot Com Bubble, the precursor was the creation of the World Wide Web in 1993. The leaders and early adopters picked it up and started tinkering.
2. The awakening. Eventually, the media starts to notice that something is happening. The boom begins to accelerate.
3. The boom. As word spreads, more and more people want to have a piece of the action, the easy money. The price escalation accelerates, and any vestige of reason is dispensed with.
4. The tipping point. There is no way of telling what the final straw will be. It may be a single cause, or an accumulation of factors. Put simply, nobody rings a bell at the top. It is up to each of us to try to read the tea leaves and prepare for the inevitable – without a timeframe. The initial drop is always followed by a bounce. Bargain hunters scavenge for value and bid up prices. Almost everyone else is relieved. “Phew! We survived that scare, but now everything is back to normal …” Those who study markets now become active sellers, pushing prices back into decline.
5. Fear and selling. As the selling resumes, all sorts of emotions take hold. Denial is one. Fear is another, and fear leads to denial. Wealth is impacted. People feel less wealthy and therefore spend less. Eventually, the wealth-squeeze forces those who joined the party late to exit and crystallise their losses. The holdouts stay until the end, until they too capitulate, exhausted from the emotional and financial losses.
6. Despair, and a new beginning. At this stage, there is nothing good. Commentators expound gloom. Despair has taken hold. But at the same time, the foundations for a new beginning have been laid. Somewhere, someone has invented or done something that will eventually spark the next cycle.

What does that have to do with COVID 19?

As with every crisis, and the COVID 19 pandemic is no different, something (or things?) will emerge that will define the New Normal.

Our challenge is to continually scan the horizon for that thing,
and try to be one of the leaders into the next boom.

What will the “new thing” be?

Unfortunately, I’m not a clairvoyant who can see the future. However, there are some emerging trends that I believe will define how we operate our businesses as we emerge from COVID 19.

• The rise of the purpose-based business
• The Circular Economy
• Population movement to the Regions
• What we do about inequality
• Blockchain technology

Which one, or combination of these will define our New Normal? Or will it be something completely different?

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