COVID-19: Businesses must adapt before the next crisisBy Frédérique De Simone | April 23 2020 02:38PM
Just as the economic crisis of 1929 marked a generation’s attitude toward debt, the COVID-19 crisis will probably shape the mindsets of a generation that is living heavily on credit, says Guillaume Lavoie, public policy entrepreneur and president of the Québec government working group on the collaborative economy, at a webinar presented by the Institut de leadership on April 15.
“The current crisis is nothing new. The human species is extremely vulnerable to novel viruses. When we consider restarting operations, we must therefore keep in mind that a crisis of this scale will happen again,” he adds. This event, the seventh webinar that the Institute has hosted since the start of the crisis, focused on historical and future perspectives on the fundamental transformations that lie ahead.
Although it is too soon to predict when Canada will turn the page on COVID-19, “we should see the crisis as a collective wakeup call that goads us to rethink our business model,” he said.
The same factors that have made the community stronger have also made it weaker. Urbanization, for example, has made the population wealthier and stimulated the development of ideas and services, explains Lavoie. “Urbanization has accelerated globalization and free trade, which has benefited Canada and Quebec enormously. Production stoppages in China affect us directly. When they sneeze we catch a cold,” Lavoie says.
The coronavirus crisis and the lockdown are providing an opportunity to look at what was working and what went wrong. “Some measures adopted during the crisis let us advance, particularly in services. It would be hard to reverse course after the crisis is over. For example, we never would have accepted remote notarial services, but we did during the crisis,” he adds.
Stripping human interaction from processes
The online model of businesses must be rethought, Lavoie adds. Enticed to shop online, baby boomers adopted new habits, he adds. Large players like Amazon and Ikea, which favour intuitive formulas, were the big winners.
To prepare for a similar crisis, “companies must examine how to remove interaction from processes,” Lavoie says. For instance, nearly 20 years ago Estonia introduced a smartcard system that provides the public with access to 2,400 online services. Each citizen is issued a unique coded number that is used for myriad purposes ranging from public transit, health insurance, income taxes, and electronic voting, to a passport. Today, only marriages, divorces and real estate sales cannot be completed online.
“Many barriers will be shattered by the time we reach the end of the crisis,” he predicts. Each company must assess its vulnerability to a future pandemic or lockdown, and the potential impact of these two events on business, in terms of distribution and procurement alike.
When the crisis is over, the pendulum may well swing in the other direction. Yet “we shouldn’t think that debt will simply disappear.” Post-Covid, governments will have to find new sources of financing aside from the existing taxes. Online stores are a likely target, Lavoie predicts. “Expect governments to be more active in taxing online stores than they were before, because they will need new sources of revenue.”