The current pandemic has disrupted almost all industries and sectors. Thus, the following three concerns would probably top everyone’s mind today:
1. When will the pandemic be over?
Pervasive lockdowns have slowed the virus, but a vaccine seems to be the only lasting solution. However, it may still be many more months until a vaccine is realistically available for everyone.
As per WHO April-end update, 8 candidates of the Corona vaccine are in the clinical trial stage, which is less than four months since the virus’s genetic sequence was first published on 10-Jan. This is the shortest time ever to reach the human trial stage for any vaccine developed. Besides the above, 94 other vaccine candidates were also in the various pre-clinical stages as of 30 April.
For the clinical stages, Ervebo from Merck – the only available vaccine for Ebola – took the historically shortest time of 12 months for completing all the human trials. Hopefully, the development of the Corona vaccine will break all the previous records with the massive global efforts underway currently. For example, the Oxford University-led team, whose vaccine is in phase 1/ 2 of the clinical-stage, anticipate starting production by Sep 2020 itself. Similarly, three Chinese companies are also in phase 1 and 2 stages of clinical trials. Several Indian companies too are in the fray. For example, the Serum Institute of India in Pune would be probably the first mass producer of the COVID-19 vaccine if the Oxford University trial succeeds.
While we hope for the best, clinical trials are known to be tricky and unpredictable. Thus, in all likelihood and even with the fastest development, the world is expected to face uncertain times for the next 12-18 months till a vaccine is available on a mass scale.
2. What does it mean to the economy and business?
The economic impact of the pandemic is expected to be severe in 2020 but recovery may also be swift depending on how fast the pandemic comes under control. However, it’s still an unfolding story.
In its April 2020 publication, IMF presented quite a grim scenario. In its base-case scenario where the pandemic is assumed to come under control in the second half of the current year, the global economy is predicted to contract by 3% in 2020 but recover with 5.8% growth next year. In the second scenario where the pandemic is expected to last longer through the current year, world GDP is predicted to contract massively by 6% in 2020 and grow less than 1% in 2021.
In the worst-case scenario when the pandemic lasts longer in 2020 and also resurges in 2021, the world GDP is predicted to decline by 6% in 2020 followed by another year of contraction at 2.2%. Thismay spur a period of continued global recession aswell.
Even in the base case, all major economies will have high negative GDP growth with India and China just scraping through to 1.2% and 1.9% growth respectively. WTO- World Trade Organization, also forecasted a 13% to 32% drop in global merchandise trade in 2020 with likely recovery of 21% to 24% growth in 2021, which broadly concurs with the IMF base case projections.
One can only hope optimistically that the pandemic comes under control this year itself, and the worst-case scenario does not pan-out. But, it’s also true that the world is grappling today with a nightmarish situation not seen in many generations.
3. How to cope-up with the disruption and prepare for the aftermath?
The current crisis is bringing new habits and hastening many trends that were underway earlier. WFH (working from home) doesn’t appear awkward anymore. Everyone is noticing productivity gains through video meetings, remote collaborative platforms, or other online tools. The environment is cleaner with much fewer vehicles on roads. For sure, some of these changes will stick longer, spawning new habits and practices. Many will reverse as businesses normalize. Yet, some will be worth persisting with due to better productivity and ease of working.
For most of the organizations, bringing the business-cycle back on track would be the prime concern and would rightly be taking all of the management’s attention. But the currently forced downtime also needs to be utilized in re-imagining the businesses for the future that will have many elements that were only peripheral in the past. A key question will be how to adjust and exploit these changes for long-term business advantages.
Without any doubt, technology and digitalization present huge opportunities to leap forward but they also present challenges in making the right choices. Besides, organizational value chains are stretched currently to the limits with many weak-links exposed. Instead of just repairing these broken links, it may be worthwhile to review the value chain afresh and recast the same with new capabilities more suited to exploit the new realities better. Thus, today is not only a crisis handling time but more importantly, a critical strategic time to prepare a leapfrog forward.
However, each of these actions – current crisis management and designing a leapfrog strategy – are resource-intensive. Many organizations may find it difficult to meaningfully allocate resources to both of these objectives or may not have the internal capabilities to do justice with both. But, it will be important for the business leaders to deliver on both. It may require reorganization of internal resources or bringing external collaborations onboard. In any case, a lost time now is a lost opportunity and must not be squandered.
Co-Founder & Managing Director, BizProWorld
(An eminent supply chain expert and strategic consultant – Alumni of IIT, Kharagpur (B.Tech.), NITIE, Mumbai (Post-Grad) and London Business School, London (MBA – Sloan)