As coronavirus infection and hospitalization curves flatten, pandemic-stricken economies are reopening and—unevenly and haltingly—coming back to life. But post-pandemic, what will “normal” actually look like? Once the global crisis recedes, can societies and markets simply return to their pre–COVID-19 ways of operating? Should they? Or will a new, more balanced model emerge, one that elevates sustainable consumption and business practices?
Health-care systems in China, Italy, Iran, Spain, and the United States were unprepared for the novel coronavirus. Taiwan and Singapore fared better because they had invested in resources to manage the avian flu epidemic of the 1990s and kept that capacity in place as larger economies divested from their infectious-disease systems.
Meanwhile, supply chains for many products were disrupted when Chinese suppliers shut down operations. Despite the emergence of sophisticated, technically adept manufacturing in low-wage countries like Vietnam, technology industries had become dependent on a virtual monoculture of Chinese sourcing, sacrificing the resilience that supply-chain diversification might have provided.
These object lessons underscore the inherent risk in the Western habit of “running lean” in the pursuit of efficiency and profits. Capital markets have pressured companies to prioritize short-term returns to investors over maintaining a redundant capacity to make enterprises more sustainable for “black swan” events like this year’s pandemic.
The Question of Growth
Corporate directors and institutional investors, chastened by the pandemic-driven recession, will likely support future resiliency measures. There are reasons to hope businesses and individuals will not simply revert to old habits of consumption when social distancing is relaxed and stores reopen.
When the pandemic hit, growth already was straining Earth’s finite resources. The world needed a new operating model that could do more while addressing inequality, disruption to businesses, and harm to the environment—thereby reducing waste, improving outcomes, and generating better opportunities for workers.
Recently, industry thought leaders have posited changes in consumer preference and corporate business models. These trends point to more modest and sustainable consumption, driven by macro trends such as wealth inequality and climate change. The 2020 pandemic could provide the global shock that pushes consumer cultures to adopt new business norms.
Thomas Roulet and Joel Bothello, writing in the Harvard Business Review in February, questioned whether growth itself is a necessary condition for general prosperity. They propose that firms should redirect their strategies to add value to existing products or nudge product designs toward using standardized components in order to thrive as competitors in finite markets. Response to these concepts has been mixed. Doctrinaire proponents of capitalism have dismissed the diminution of growth as unthinkable. Nobel laureate economist Joseph Stiglitz asserts that growth is indispensable but suggests that economies need to evolve a more climate-friendly form of growth.
Jeffrey Hollender, a social entrepreneur who founded Seventh Generation eco-friendly household cleaning products, agrees with Stiglitz. “All growth is not created equal, and what we need is called ‘net-positive’ or regenerative growth,” Hollender says. Businesses, he argues, should adapt to offer Earth and its inhabitants a future with the best chance for common well-being.
What might a regenerative-growth strategy look like? It almost certainly will take some inspiration from the circular economy. Sustainable clothing company Patagonia—a benefit corporation—has long advocated for reduced consumption. Companies like Patagonia offer a vision of a circular economy, in which manufactured goods are not simply recycled at the end of their useful lives but upcycled, with their component materials reworked into new products.
Workspace-design company Steelcase embraces the circular economy by creating new materials and products made of completely or partially recycled content. It also runs its Phase 2 Program, which advises companies on reusing or recycling unwanted office furniture with a “zero landfill” goal.
In the high-tech world, Fairphone has adopted the circularity concept as well. The Dutch firm makes sustainable smartphones built to be modular, user-repairable, recyclable, and longer-lasting.
Fairphone is focused on the European market; its Android phone has yet to reach the United States. “Fairphone’s first phone attracted ‘dark-green’ consumers, drawn to what they considered a change maker in the industry,” says Miquel Ballester Salvà, Fairphone’s circular innovation lead. “Now, we appeal to ‘light-green,’ or conscientious, consumers who don’t want to compromise on functionality.”
Ballester Salvà drives the company’s impact innovation agenda, which lets Fairphone increase the longevity of its devices—typically five years versus the usual two years for most mobile phones. “Our environmental assessments show that if you can increase the longevity of a smartphone by two years, it reduces the CO2 footprint of that product over its lifecycle by 30%,” Ballester Salvà says.
“We circumvent the industry norm by making a modular device, making repair quick and easy,” he continues. “If you break the screen, you can replace it yourself or use our repair service. You can replace the battery—all you need is a Phillips screwdriver, which comes with the phone.”
Meanwhile, Electrolux has turned to a subscription plan in Sweden for its Pure i9 robotic vacuum, which includes all service and maintenance, with an eye toward creating a sustainable model for hardware use.
Many Paths Forward
Author and consultant Bill Jensen, long an advocate for simplicity as a guiding principle for business transformation, says the supply-chain shock from the pandemic could prompt companies to adopt open-source design and development. Open-source manufacturing is currently allowing small shops to jump in and deal with the shortage of medical equipment. “If the financial incentives are there—recognizing how cheap and efficient it is to share designs and produce things online—we have a chance to change the way we deal with scarcity,” Jensen says.
Can organizations really adopt more resilient post-pandemic business models? Futurist Jerry Michalski says a predictor might be found in companies’ capacity to trust individuals as contributors. “This moment lets people explore alternative organizational designs because they have to,” Michalski says. “Some will discover more resilient models. We still operate in a very mechanistic fashion, and trust is something we’ve forgotten how to do.”
Some observers doubt the isolation and introspection from the pandemic will change consumption patterns. “The economy likely will bounce back strongly, and most consumers and workers will be okay pretty quickly,” says Larry Irving, a veteran governmental affairs and policy consultant who heads his own firm in Washington, DC. “I suspect cabin fever, austerity budgets, and inability to travel is going to create a significant bounce in travel, for example. Americans are nothing if not optimistic.”
Although many people will revert to old habits, a deeper shake-up of expectations is likely among the young. “It’s really Generation Z that’s likely to bring about broad changes at work and in the way we consume,” says Wendy Amstutz, director of thought leadership at educational publisher McGraw-Hill. “My 17-year-old is shaping his thinking about how society works during this pandemic, and so are his friends. This shift in thinking is likely to be profound.”
The present crop of economic thought leaders has spawned resiliency strategies such as circularity and degrowth, but the next generation will likely provide the customer demand that ultimately drives their adoption—re-creating what “business as usual” means.