With countless loss of lives and livelihoods, rapidly surging unemployment rates, and the worst recession witnessed in recent history, the shock caused by the COVID-19 crisis is in no small measure unprecedented. The prevailing extremely pessimistic mood is understandable, but there are reasons to be optimistic.
Some emerging promising trends, which have the potential to transform human productivity and expand the development frontier include rapid increase in digital proficiency, business innovation and greater predisposition for change.
First, with rapid expansion of the existing and development of new and innovative IT infrastructure and a rapid increase in digital proficiency across the board, there is an emerging new lifestyle encompassing the entire society – the so-called “New Normal”. Virtual social get-togethers are becoming common, e-commerce is booming, and IT- based entertainment and gaming is expanding more rapidly.
There is an unprecedented growth of a work culture involving work from home and virtual meetings. It was hard to imagine even at the beginning of this year that several organizations and firms could run 100% virtually with employees physically distant across various time zones working and interacting simultaneously together. Equally odd was the idea of virtual political rallies. All of these are part of the New Normal being defined by the disruptive changes caused by COVID-19.
Like the IT revolution associated with Y2K that led to huge increase in human productivity, the growth of the new lifestyle and new work culture is likely to raise the productivity drastically. Benefits are clearly being realized in terms of time savings from absence of the daily commute to the work place, as well as reduction in transport costs, environmental pollution, and congestion. People are able to do more with less time and resources. These will be lasting gains. But this should also remind governments and businesses on the need to respond to the challenges of connectivity, particularly for the poor and those in remote places.
Second, faced with the worst loss ever experienced earlier, businesses are innovating and improving supply chains and production processes. Except for some lucky ones, most private businesses from factories to hotels to cinema theaters are experiencing the highest levels of losses ever seen and are left with no option but to try ingenious ways to minimize their losses or diversify sources of revenue.
This is catalyzing innovations and out-of-the-box adjustments, which would otherwise be unimaginable under a business-as-usual scenario. For example, a food product company in India is reported to have managed to reduce its distance to market, as a cost efficiency measure, at about 10 times faster rate during three months of COVID-19 crisis than what they could achieve in previous 7-8 years. New or better ways of doing things such as this will be entrenched in these firms, and will get further sharpened with experience.
Third, there is a sharp and across the board decline in resistance to change, which is catalyzing some long pending reforms and transformative changes in both public and private sectors as well as in the society at large. Often societies and organizations face resistance to change due to set expectations, entrenched interest groups, and general inertia of the system. It is not always easy to undertake transformative changes. COVID- 19 has sharply reduced this inertia.
Amidst unprecedented loss of income and livelihood, there is greater willingness among stakeholders to accept changes that help their countries, organizations, or businesses. Employees seem more trusting and accommodating with respect to the tough decisions that employers have to take during these difficult times.
Some governments are also seeing an opportunity amid the reduced resistance to change and pushing long pending reforms. For example, some long pending agriculture sector and labor market reforms have been undertaken in India. History is a witness to the fact that some of the greatest reforms and pathbreaking changes have taken place during a crisis. The COVID-19 crisis period is certainly no exception.
After the COVID-19 crisis is over, possibly, after the eventual discovery of a vaccine and building of more robust public health systems, the world may witness a more efficient and resilient economic system as a result of these transformative trends, generating dividends that far exceed the losses incurred. The New Normal may turn out to be the harbinger of a better future for all.