The dual whammy of the economic effect of the Covid19 Pandemic lockdown response and the combined US fiscal and monetary response, is creating a new economic reality which will be our new normal for many years or decades to come. As amply documented in the recent financial media, the economic consequences are swift, severe and transformative. I highlighted a recent Statistics Canada survey of 12,600 companies of the business impact of the pandemic lockdown in a recent post on LinkedIn, which showed the devastation of businesses in many sectors. You can read my post here on LinkedIn. Unemployment in the US is predicted to reach as high as 30% this quarter with the economic consequences to last for many years. Many business thought leaders, most notably Ray Dailo, are comparing this new economy to the Great Depression. While suppressed economic activity was the hallmark of that period, so was significant technological innovation. I believe we will experience a similar economic landscape going forward - a bifurcation between Back-To-The-Basics and Innovation. Back to the basics will be driven by consumers affected long-term by the Covid19 response economic impact, and innovation will be driven by well financed companies leveraging available capital and shifting demographic and consumption patterns into new products and services. All is not lost, quite the contrary. The new economy will create incredible opportunities for companies that strategically reposition into a provider of the basics (home improvement, food stuff, durable goods, DIY, etc) or a driver of innovation (technological platforms, innovative business models, novel materials and processes, etc). What should you do?
Take the time now to rethink and reexamine your strategy to have strong offers in one or both of those areas.
Work on your business as well as within it, so you design a business for the future.
Be willing to make the hard decisions now, before the market does for you.
Examine how you do business (business models for instance) as hard as you examine what you do or sell.
Strongly consider an M&A strategy to get there faster, particularly over the next 18 months.
There will be a shift and it will likely happen faster than you think. I have seen this many times before in my 30+ years in business, so plan accordingly and you will be richly rewarded.
By Eamonn Percy