As the COVID-19 outbreak begins to subside, the world will be shifting to what McKinsey calls “the next normal,” which will be very different from the pre-COVID era. If organizations want to thrive in the coming years, all business leaders must make significant changes to their operations, focus heavily on the workforce, and accelerate their digital agendas.
Many people may prefer that life simply returns to the same normal that we knew before the outbreak, but that scenario is becoming less and less probable with each passing day.
A great number of changes are impacting virtually every level of society, including public life, private life, and the business sphere.
Such profound impacts lead many other research firms to concur with McKinsey – we must prepare now for a future that looks different from the one we have known in previous years.
Although different experts use different terms for “the next normal,” the substance of their predictions often aligns with McKinsey’s:
- The post-COVID world will result in major changes to people’s mindsets and behavior
- Economic and social structures will alter in very significant ways
- To adapt and succeed in the coming years, organizations will need to undergo rapid and sometimes radical changes
- Businesses should speed up their digital transformation plans in order to keep up with the current accelerated pace of global digital change
In this guide, we will discuss concepts such as these in detail, including:
- What the post-COVID “next normal” means for businesses
- Changes that we can expect to see in the coming years
- Planning strategies that can help organizations adapt both during and after COVID-19
- Why CEOs and CIOs should focus on a digital-first agenda
Before exploring these concepts, however, it is important to clearly define what the next normal is and what it implies for the business world.
The Next Normal: Key Definitions and Concepts
It is not hard to see that the COVID-19 outbreak has impacted the world in deep and profound ways, and it is also not hard to see that these impacts will have a lasting impact on the entire global economy.
Many research firms, however, predict that the effects of the outbreak will extend far beyond the economy.
These sweeping changes will not only impact our financial lives, but they will affect mindsets, behaviors, culture, and more, leading many to dub the coming era the “new normal” or the “next normal.”
How McKinsey defines “the next normal”
According to McKinsey, the post-viral era will bring about many important changes to the way we live and conduct business.
In fact, they even claim that the coronavirus precedes “an imminent restructuring of the global economic order.”
In the months and years that follow the crisis:
- The economy and society, within which businesses have traditionally operated, will be dramatically restructured
- People may support increased governmental responsibility in the shaping of economic activity
- There will be a shift in people’s expectations as citizens, employees, and customers
- Those shifts will, in turn, affect the way we live and work
Such deep changes will naturally carry major implications for businesses, who must adapt to those changing circumstances in order to stay successful.
McKinsey suggests that we will see fundamental changes in a number of industries as a result of the changes listed above.
- Online education will become far more common
- Businesses will readily offer remote working options to employees
- Public health institutions will improve their response capabilities
Similar changes will likely be carried out in virtually every industry, which is why organizations must begin pivoting their business strategies to match this new reality – if a company waits, then it may be too late to catch up with a new global reality that has already shifted under our feet.
Of course, at this point, many business leaders may require more evidence for such predictions and the strategic shifts that those changes would require.
Current trends clearly show why the world is moving to a new paradigm
Many people may still think – or at least hope – that the world will return back to the normal we once knew.
Others may argue that there just isn’t enough evidence that the current paradigm is over.
However, even a brief examination of current trends demonstrate that, at the very least, some of those trends will have a long-lasting effect on our lives, society, and the global economy.
Here are a few examples:
- The current crisis has become a catalyst for explosive growth in certain industries, such as telehealth, online education, and robotics
- The financial impact of the crisis has shocked the global economy, put the worldwide financial system under strain, and even caused the collapse of entire sectors of the economy
- Public awareness and concern over hygiene, health, and infectious diseases has reached an unprecedented level
- Governments, public institutions, and businesses have all had to play a direct role in the implementation of health and safety measures
The COVID-19 situation will likely only be contained with the development of a vaccine, and this may not occur until 2021. In the meantime, more outbreaks and disruptions could occur, further cementing these trends into social life and the economy.
The longer that the crisis lasts, in other words, the greater the chances that trends such as these will become permanent.
And certain trends – such as digital innovations being fueled by the crisis – simply will not be reversed at all. Those innovations and their subsequent adoption will therefore have permanent impacts that must be accounted for.
Undoubtedly, certain trends will revert to a certain extent, such as remote working. Even in this case, though, we can expect to see a greater global adoption of telecommuting policies, flex-time, and related measures.
Taken in isolation, a single trend would not be enough to warrant the type of shift that McKinsey is suggesting.
However, when all of these trends are combined, they will undoubtedly cause many significant changes to society and the economy – and they could very well result in a paradigm shift.
What the next normal means for businesses
In short, the current paradigm shift compels a rapid response from organizations.
While business continuity planning and protecting people are both vital activities to undertake, it is important to go much further.
Deloitte says that in order to survive the remainder of the crisis and succeed in the next normal, businesses must take several actions:
- Respond. An immediate response to any emergency or crisis should be to protect the organization’s people and its key functions. During this phase, all activities are defensive in nature and designed to minimize losses. Business continuity plans must be implemented and managed.
- Recover. After business leaders gain a better understanding of the circumstances, they can reassess existing business models, then strategize and pivot effectively. During a paradigm shift of this magnitude, pivots and extensive organizational changes are often a prerequisite of future success.
- Thrive. Thriving after the crisis will require a combination of innovation and agility, as well as aggressive digital initiatives. Organizations should be prepared to adapt quickly and even continuously, since instability may continue for some time.
It is undeniable that the current crisis has been difficult and even catastrophic for many individuals and businesses around the world.
However, as the world begins to recover, so too can businesses – and that recovery can present a number of potential growth opportunities for businesses willing to pursue them.
Before discussing planning strategies, though, let’s address some of the most common questions and concerns that business professionals have about the current paradigm shift.
Frequently Asked Questions (FAQ) About the Next Normal
Here are some of the most frequently asked questions about the next normal, the new normal, and how businesses can keep up during this difficult time.
How can I ensure business continuity during the rest of the outbreak?
Many experts feel that we have moved beyond the “crisis” stage of the outbreak into a period of relative stability.
For the most part, organizations have already implemented the most critical response efforts, such as:
- Emergency response plans
- Remote working procedures
- On-site health and safety measures
- Measures that protect key business functions
Naturally, these types of activities should be maintained as long as necessary during the outbreak.
As of this writing, the outbreak is not yet over, though, and experts warn that future waves remain a threat.
Maintaining operations will require an agile mindset, as we discuss throughout this article.
- Developing plans to implement if secondary outbreaks or infection spikes occur
- Balancing the protection of the workforce against the future financial viability of the business
- Tracking changes to the marketplace or customer sentiment closely, then responding accordingly
Organizational agility has always been important, but in the current unstable business environment, it is even more critical, as we will see below.
When will the “next normal” begin?
The time frame of the outbreak will have a large financial impact on many organizations: the longer it lasts, the greater the financial difficulties will be.
Response and recovery planning will also be affected by that time frame, since that timeline will impact plan variables such as finances, the workforce, reopening schedules, and so on.
However, best guesses around when the pandemic will end are just that – guesses.
As of this writing, government institutions and experts point towards the development of a vaccine as the factor that will allow life to resume normally.
Naturally, it is impossible to pinpoint that date with any accuracy.
But business leaders should concern themselves less with the timeline than with their planning strategy.
- Since many details about the post-COVID era are unknown, businesses should not develop a static plan for a future that is still unclear
- Agility, adaptability, and responsive planning strategies should replace linear approaches
- Instead of creating a single plan of action for a single potential timeline, businesses should create multiple plans for multiple scenarios, then implement the ones that are called for in a given situation (see Deloitte’s model below for more on this)
In previous years, the economy and global events have been stable and moved forward rather predictably.
That has completely changed with the coronavirus pandemic, and that change requires a new mode of thinking and a planning approach that is far more innovative and agile.
Today, many organizations have implemented measures designed to protect their employees and their customers.
Telecommuting policies keep employees safe and productive, telecommunications technology allows businesses to confer virtually with their clients, and on-site safety measures keep staff and customers protected.
Preparing employees for the next normal, however, is a completely different matter.
- Ensure that the post-viral working environment is safe and secure
- Reskill, upskill, and train employees so that they are properly prepared for new business activities and directions
- Offer support to employees who need it, since the isolation of remote working can be emotionally taxing
- Cultivate a workplace culture that will help an organization stay agile and innovative during the next normal
In short, it is important to follow the same principles addressed in the previous question. It is important to protect workers and remain conscious of their health and safety, but protection alone will not push the organization forward.
In order to succeed, employees must have the right skills, tools, and mindset.
How Organizations Can Prepare Now for an Uncertain Future
Agility, as mentioned earlier, is a crucial trait to possess in the current climate, and it will be equally important in the coming months and years.
Many of the world’s most influential research firms and consultancies heavily emphasize that need.
Of course, agility is only one area to focus on when preparing for the next normal.
In the following sections, we will examine several other important strategic focal points by looking at the recommendations of some of the world’s leading research firms.
McKinsey’s Framework for Shifting to the Next Normal
McKinsey coined the term “the next normal,” so it’s only natural that they would have some insights and advice on how to prepare for its arrival.
McKinsey’s global managing partner Kevin Sneader and senior partner Shubham Singhal share how leaders can begin navigating to “the next normal.” Tell us how your organization is responding to the #coronavirus crisis along these dimensions. https://t.co/bm8nfm5esn pic.twitter.com/SgduUYmHfr— McKinsey & Company (@McKinsey) March 24, 2020
In order weather the coronavirus storm, then prepare for and emerge into the next normal, the research firm outlined five stages that organizations must pass through:
- Resolve. During this stage, institutions were concerned with the scale and speed of the actions they would implement. Governments and organizations went into crisis response mode, implementing public health interventions, lockdowns, remote working policies, and similar measures.
- Resilience. Shortly after response measures were initiated, it became apparent that the health crisis was also a financial crisis, perhaps the biggest one in a century. Central banks and governments struggled to bolster the financial system and keep it from sinking, and the majority of global institutions made resiliency their top priority.
- Return. Restoring normal operations poses several challenges. One is that entire supply chains must be reactivated simultaneously, which is exceedingly difficult during such a widespread disruption. Another dilemma is that governments must choose between the risk of a resurgence and the looming financial dangers that come from inaction.
- Reimagination. People will shift their expectations in a variety of roles that they play in society: as citizens, employees, and customers. Those changes will, in turn, influence our lives on multiple fronts and have a ripple effect on the way we live and work. Vulnerabilities in the current system will be revealed alongside opportunities, compelling business leaders to reimagine their businesses and what it takes to enable organizational resilience, performance, and value.
- Reform. Moving into the future, this black swan event may result in significant reforms in several areas, from public health to business to education. Changes will need to be made, for instance, in order to prevent events such as these from occurring again.
Ultimately, McKinsey states that this event will result in a major restructuring of the global economic order, as mentioned earlier.
By understanding their perspective and this framework, business leaders will be able to plan more effectively for the road ahead.
However, McKinsey’s model is not the only one that addresses the “next normal,” the “new normal,” and other terms used to describe the current paradigm shift.
Below, we’ll look at a few other models and perspectives that cover the same territory.
Deloitte’s Model for Building Resilience During the COVID-19 Outbreak
Deloitte has also addressed the coronavirus outbreak in detail, both generally as well as for specific industries.
How can your business plan for the next normal? We explore four principles needed to ensure that business and capital planning is focused on the strategies to recover in a future characterised by uncertainty. #COVID19 https://t.co/UntmTN5qaD— Deloitte Australia (@Green_Dot) May 21, 2020
Their general response framework consists of three stages, which were covered above:
- Respond to the immediate threat
- Recover business functions
- Thrive in the new environment
In one report, they recommend developing modified resilient operations in order to survive the next normal.
Since the COVID-19 pandemic will continue for an indeterminate amount of time, Deloitte explains, businesses must also remain flexible, responding as needed to both customer demand and changing circumstances.
Their scenario-based planning approach follows these steps:
- Identify scenarios that will impact customer and stakeholder demands and the operations to meet those demands. In the current pandemic, the biggest factors that influence both business operations and customer demand revolve around government-mandated public health measures. Planning should focus on those restriction “peaks,” and Deloitte suggests planning for three potential time periods, or scenarios: the tightening of restrictions, the relaxation of restrictions, and post-restriction, when most have been lifted.
- “Stress test” delivery capabilities against planning assumptions for each scenario. Evaluation should focus on what customers expect and need and which services are “required to minimize harm to customers.” An organization’s ability to deliver services will depend on resource availability, delivery methods, and whether these operations can be sustained during the given timeframe.
- Identify modifications needed to maintain safety, flexibility, and improve resilience. In this changed environment, new strategies and approaches will often be needed to successfully meet customer demand.
- Identify actions, resources, and timeframes needed to make modifications happen. The nature of the modification will vary greatly depending on the circumstances, and can include activities such as restarting a work location or altering a service delivery method, such as providing an offline service online.
Since the current environment will itself change over the course of the pandemic and into the next normal, businesses should be prepare to oscillate between scenarios.
By planning for multiple scenarios, however, organizations will be better prepared to make those rapid shifts.
With the proper execution, businesses will be able to stay flexible and resilient, while still delivering services during a prolonged crisis period.
Accenture’s Suggestions for Adapting to the “Never Normal”
Accenture, one of the world’s largest and most influential technology consulting firms, offers a number of insights on how organizations can survive the COVID-19 crisis, reopen their businesses successfully, and adapt to the next normal – or, as they have called it, “the Never Normal.”
Like McKinsey, Accenture agrees that the current crisis will result in significant, permanent changes to both the economy and to society. They also agree that businesses should accelerate their organizational change efforts if they are to succeed in the post-viral era.
One of the most important areas to focus on, the consultancy claims, is people, since “COVID-19 has forever changed the experience of being a customer, an employee, a citizen and a human.”
Accenture sees five major implications arising from the current crisis that will help to shape the post-viral era:
- The erosion of confidence. During the crisis, trust is more difficult to come by. The economy is unstable and the future is uncertain, customers are postponing purchase decisions, and countless organizations are eager to signal their virtues when it comes to health, safety, and social responsibility. Organizations should audit their existing customer experience, remodel it to meet changing customer mindsets, and pursue new opportunities after the outbreak has abated.
- The rise of the virtual world. After the outbreak has ended, we may be entering a “virtual century,” as Accenture puts it. Health concerns may fuel the widespread adoption of a wide range of virtual activities, including everything from gaming to education to shopping. This upcoming trend could represent a significant profit center for organizations that position themselves properly.
- An emerging health economy. Health is a top priority for all people now. In the coming years, we can expect health spending to increase, cleanliness to become a permanent preoccupation, and health-related industries will almost certainly experience growth. Above and beyond these trends, however, customers will likely begin evaluating businesses based on their health-related features.
- Coccooning. Home is a “safe space” and many people may spend far more time at home, since it is by definition safer from a public health standpoint. This trend will contribute to the growth of a number of industries that are directly related to the house and home. Also, if more people spend time at home, it may fuel the growth of other technology – Accenture mentions, for instance, that drones cleaned Shanghai streets during the outbreak.
- The reinvention of authority. During the crisis, central authority was involved in the development of health policies and enforcement. Governments that effectively handled the crisis would likely earn more trust and support, while ineffective handling of the crisis could have the opposite impact. Ultimately, the outbreak could have deep-reaching cultural effects, citizens’ attitudes towards their governments, and an increased need for corporate purpose.
We cannot know for sure exactly how these predictions will play out, since the future is not yet written.
Rather than planning for a “never normal” that is uncertain, Accenture recommends an agile planning approach:
- Listen to customers
- Pivot experiences to match
- Learn from customers and use them as a source of inspiration and innovation
- Reassess the brand and the business for the new normal
Now that we have actually experienced a black swan event, organizations should factor that into everything they do moving forward.
In April 2020, the research firm HFS surveyed 631 major enterprises in order to better understand the business impact of COVID-19.
The study discovered that many business leaders maintained a strong desire to protect their people during the crisis.
By protecting people and by embracing HFS’ Paradigm Shock model, the research firm claims that business leaders can build resiliency, fuel innovation, and create a “fluid environment where employees and customers are forever bonded through a shared, touchless, digital environment.”
Here are the four stages of this model, as applied to the COVID-19 outbreak:
- Crisis. During this phase of the pandemic, organizations around the world were required to make rapid, massive changes. Such responses included, among other things, a variety of measures aimed at protecting people and cutting costs. However, only a minority of organizations resorted to measures that would be overly detrimental to the workforce. For instance, 22% of enterprises required workers to take unpaid leave and under 8% laid off staff. According to HFS, by choosing to protect their people, businesses trust that their people will reciprocate.
- Stabilization. When the analysis was published in late May, 2020, organizations had already begun to stabilize. They were learning what was possible and what was not – what they could do and what they could not. During this stage, most of these organizations embraced not one but two “truths.” On the one hand, businesses were building contingency plans for a potentially unstable future, on the other they were investing in growth opportunities (31% and 28% respectively).
- Realization. During the third stage, the true impact of the paradigm shock will become apparent. Organizations will have a much better understanding of how the crisis will play out and they will be able to more accurately assess the financial impact on the organization, their supply chains, and their customers. When asked what other big concerns they had about COVID-19, the largest segment, 29%, cited “customer/client financial impact, uncertainty and demand” as their major worry.
- Unleashing people. In order to survive this Paradigm Shock, claims the research firm, employees must adopt a lean startup mindset and organizations must be flexible and adaptable in a wide range of business areas, from business models to technology architecture and execution. When people feel protected and connected, the organization will be more resilient, while also enabling the agility and innovation that will be required in the post-COVID era. However, the key is to avoid complexity and stay focused on the main purpose of the organization’s work: “connecting the business, through value, to its customer.”
In order to continue delivering value to customers during COVID-19 – and to succeed in the next normal – organizations must take on a people-first mindset, not only as a way to adapt to changing customer expectations and needs, but, just as importantly, to unleash the enterprise. Protecting an organization’s people is critical, but business leaders must also remember to pivot.
With the right capabilities, a strong vision, and an agile business model, HFS says that:
“We will emerge with a new wave of digitally-agile, data-savvy and super-energized businesses that are freed from the legacy infrastructures of old. Welcome to the new era of the hyperconnected, people-powered enterprise.”
Here, HFS agrees with most of the other major research firms, recognizing that an organization’s success is powered both by its people and by its technology.
Today’s crisis has accelerated much of the digital transformation work companies had underway, as many went from awareness to adoption in a matter of days. Catch my full convo w/ @WalkMeInc on this topic and more: https://t.co/sPQNh2JlWn pic.twitter.com/xEK3Zdsohg— Joe Atkinson (@j_c_atkinson) May 13, 2020
Conclusion: Key Takeaways, Recommendations, and Tips
In this article, we have explored the next normal from a number of angles, learning what some of the most influential industry leaders have to say on the topic.
McKinsey, the firm that coined the term, has made some very bold predictions around the current pandemic, suggesting that it will act as a “schism” or a boundary between different eras.
They predict, among other things, that the current crisis will result in the restructuring of the global economic order. But the short- and long-term effects will ripple out far beyond the financial realm, impacting mindsets, perspectives, behavior, and society.
Though not every research firm shares the same vision of a completely restructured society, they do agree that the current paradigm shift warrants a massive pivot in business strategy and execution.
Here are a few common themes that most research firms agree on:
- Agility, flexibility, and innovation will be required in order to adapt to changing customer demands, public health restrictions, and market conditions
- Protecting, training, and unleashing the workforce will enable those capabilities and maintain organizational performance during the transition
- Staying tightly focused on customer demand and the marketplace is a requirement, since they can and will change quickly
- Digital transformation and evolution have pushed ahead rapidly and will continue to reshape the digital economy, and organizations should accelerate their own digital transformation and adoption efforts in order to keep pace
With a strategic focus on these elements, as well as the steps covered in the planning frameworks covered above, organizations will have a much better chance of maintaining business continuity during the crisis and, just as importantly, preparing for and succeeding in the post-COVID paradigm, “the next normal.”