{"id":87421,"date":"2021-04-13T04:53:22","date_gmt":"2021-04-13T04:53:22","guid":{"rendered":"https:\/\/www.alj.com\/?post_type=perspective&p=87421"},"modified":"2022-07-04T11:06:43","modified_gmt":"2022-07-04T11:06:43","slug":"building-back-better-rethinking-business-for-the-post-pandemic-recovery","status":"publish","type":"perspective","link":"https:\/\/alj.com\/en\/perspective\/building-back-better-rethinking-business-for-the-post-pandemic-recovery\/","title":{"rendered":"Building back better: rethinking business for the post-pandemic recovery"},"content":{"rendered":"

In the last year, global business has been turned on its head in a way that previously seemed unimaginable.\u00a0 But 12 months on from the official declaration of the pandemic, there are positives to be drawn as businesses and their employees adapt and innovate moving forward.<\/h4>\n

\"COVID-19 It almost seems surreal.\u00a0 On December 31, 2019, Wuhan Municipal Health Commission in China released a media statement from its website about cases of \u2018viral pneumonia\u2019[1]<\/a>.\u00a0 By January 9, 2020, it had been identified as a novel coronavirus \u2013 Coronaviridae<\/em> being a family of viruses that cause respiratory and intestinal illnesses.\u00a0 These include SARS and MERS.\u00a0 It was named SARS-CoV-2 (Severe Acute Respiratory Corona Virus 2) and led to the disease we now know only too well as COVID-19[2]<\/a> (COrona VIrus Disease-2019).\u00a0<\/p>\n

On January 11, 2021, China reported its first death from the disease and just a few days later on January 30, with the virus now spreading internationally, the World Health Organization (WHO) declared an international public health emergency.\u00a0 By March 11, the disease had been officially classified as a global pandemic.\u00a0 Within a little over two months, our world – as we\u2019d previously knew it – had been transformed.<\/p>\n

Phrases such as \u2018furlough\u2019 and \u2018social distancing\u2019 that were barely in our vocabulary have become commonplace.\u00a0 Industries based around socialization such as hospitality, travel, leisure and, to a lesser extent, retail, have largely been out of operation for the best part of a year.\u00a0 Sports fixtures, if they\u2019ve gone ahead at all, have played out in empty or socially distanced stadiums.\u00a0<\/p>\n

The corresponding human tragedy of COVID-19 is simply unfathomable.\u00a0 In the US alone, it has killed tens of thousands more people than in the country\u2019s World War II military service[3]<\/a>.\u00a0 Globally, the figures change daily but are devasting \u2013 around 2.5m deaths by the end of February 2021.\u00a0 For some of the world\u2019s leading economies, unemployment levels from 2019 to 2020 have seen an unprecedented rise \u2013 particularly in the US which saw its economy shrink by 3.5% in 2020, the worst contraction since 1946[4]<\/a>.\u00a0 The International Labor Organization (ILO) reports Q4 2020 working hour losses at 4.6% relative to pre-crisis \u2013 equivalent to 130 million full-time jobs.\u00a0 Employees currently on furlough schemes worldwide are not technically classed as being unemployed, so it is likely these figures will climb even higher once furlough schemes are wound down.<\/p>\n

\"World<\/p>\n

For some industries, their operating models became virtually obsolete overnight, such as the international travel and hospitality sectors.\u00a0 In the early stages of the pandemic, for example, air travel was down by 96%[5]<\/sup><\/a>. According to the UNWTO World Tourism Barometer, international tourist arrivals (overnight visitors) fell by 74% in 2020 compared to the previous year, curbed by slow virus containment, low traveler confidence and important restrictions on travel still in place[6]<\/sup><\/a>. The collapse in international travel represents an estimated loss of US$ 1.3 trillion in export revenues – more than 11 times the loss recorded during the 2009 global economic crisis.<\/p>\n

\"Travel<\/p>\n

COVID-19 has major implications for the commercial property sector, too.\u00a0 Remote working (discussed later in more detail) may fundamentally change the way businesses operate moving forward and a reduced need for physical space.\u00a0 In the US, office vacancy rates are already expected to rise to 20.2% by end-2022 compared to 16.8% at end-2019[7]<\/a>.\u00a0<\/p>\n

Assessing the full extent of the damage in the real estate sector is difficult because the market itself is opaque.\u00a0 Real estate investment trusts, or REITs, however, provide a useful guide.\u00a0 The Bank for International Settlements calculates that in the US, UK, continental Europe and Japan, the pandemic wiped out REITs\u2019 cumulative valuation gains of the past five years. \u00a0In comparison, stock market indices at the depth of the crisis in early March lost only the gains they had made in 2019. \u00a0REITs have also lagged behind the subsequent stock market recovery[8]<\/sup><\/a>.<\/p>\n

Digitize or bust?<\/h2>\n

As the world starts to plan for recovery, however, it is increasingly clear that, rather than introducing a raft of new changes for businesses to deal with, in many ways the pandemic has merely accelerated existing trends that were already changing the face of business; trends that have not only been essential survival strategies over the past 12 months, but which can also provide a foundation for longer term business performance.<\/p>\n

Chief among these is the move towards digitization as a crucial factor in strategic viability.\u00a0 With people stuck at home, high streets deserted, leisure and hospitality venues closed, huge swathes of our lives have moved over to the digital arena.\u00a0 An example is the entertainment industry.\u00a0 Museums, theaters and cinemas were largely closed to the public for almost a year, destroying livelihoods for a whole industry of performers, creatives, technicians, promoters and managers[9]<\/a>.\u00a0 At the same time, online streaming platforms have thrived, as people have been locked down at home \u2013 in the first three months of the crisis, for example, Netflix received 16 million new sign-ups[10]<\/a>.\u00a0<\/p>\n

According to a McKinsey Global Survey of executives[11]<\/a>, companies have accelerated the digitization of their customer and supply-chain interactions and of their internal operations by three to four years. \u00a0And the share of digital or digitally enabled products in their portfolios has accelerated by seven years. \u00a0Nearly all respondents said their companies have adopted digital technologies to meet many of the new demands on them, and much more quickly than they had thought possible before the crisis.<\/p>\n

What\u2019s more, most of these changes are expected to be long lasting.\u00a0 Organizations are already making the kinds of investments that all but ensure they will stick. \u00a0In fact, the McKinsey survey found that when asked about the impact of the crisis on a range of measures, an increase in funding for digital initiatives was deemed to be the number one impact – more than increases in costs, the number of people in technology roles, and the number of customers.<\/p>\n

The detail of retail<\/h2>\n

\"Retail\"The power of digital is perhaps most painfully visible on the high street.\u00a0 Stores without a strong online sales platform to run alongside their physical presence had been under growing pressure for a decade or more. \u00a0\u00a0For some, COVID-19 \u2013 which gave rise to the expression \u2018non-essential retail\u2019 \u2013 was the last straw.\u00a0 Take the flagship UK fashion retail chain, Arcadia Group.\u00a0 With a largely traditional high street model, shutdowns pushed Arcadia over the edge.\u00a0 In early 2021 it went into administration.\u00a0 Around the same time, Debenhams, a much-loved UK department store giant operating since 1778 with over 12,000 employees, also went out of business[12]<\/a>, while in the US, high street stalwarts like Brooks Brothers and Neiman Marcus fell into bankruptcy.\u00a0<\/p>\n

Conversely, the pandemic has seen a boom in global e-commerce sales which grew 27.6% over 2020, valued at US$ 4.28 trillion[13]<\/a>.\u00a0 Again, this was already a developing trend, only exacerbated by lockdown.\u00a0 Online UK fashion retailer, Boohoo, has since bought Debenhams and some of Arcadia\u2019s premium brands[14]<\/a>.\u00a0 In both cases, the deal extends to their online brand potential only.\u00a0 Their huge network of physical stores is not part of the deal \u2013 another nail in the coffin of the traditional high street.\u00a0<\/p>\n

Technology in good health<\/h2>\n

The healthcare sector was on the cusp of a technology-driven revolution of its own prior to the pandemic. With COVID-19 putting a huge strain on healthcare systems, these changes have been supercharged, especially as the pandemic and ensuing lockdowns have driven many people to pay closer attention to their physical and mental health.<\/p>\n

As explored in the Abdul Latif Jameel Perspectives<\/a> article on healthcare technology<\/a>, healthcare innovations leveraging AI and machine learning can turn vast amounts of patient health data into refined insights for treating, preventing and even predicting diseases, and all at a speed that was previously impossible. \u00a0Through the results that emerge, clinicians can come to understand recurring patterns and develop treatment models based on specific patient attributes.\u00a0<\/p>\n

Virtual medical appointments for minor illnesses and ailments \u2013 or \u2018telemedicine\u2019 – a niche offering 12 months ago, are now many people\u2019s first consultation with a medical professional. In the US, nearly half of all patients now use telemedicine in some form, versus only about 10% pre-pandemic. \u00a0Moreover, 83% of patients say they expect to continue using telemedicine post-pandemic, resulting in the potential for US$ 250 billion of US healthcare spending to shift to virtual care[15]<\/a>. \u00a0Another area of growth is expected be self-diagnostics.\u00a0 Using wearable devices to measure our temperature, blood pressure, heart rhythms and respiratory rate, then send the data to our doctor ahead of a virtual consultation, are increasingly common.<\/p>\n

Healthcare technology extends to clinical trials with participants never needing to leave their home. \u00a0\u00a0Examples include the Apple Heart and Stanford University study of 400,000 people on using wearables to detect atrial fibrillation[16]<\/a>, and the Apple and Johnson & Johnson partnership Heartline study for stroke prevention which involved 150,000 participants[17]<\/a>.\u00a0 Scientists widely concede that COVID-19 will become a carefully managed aspect of life for the foreseeable future \u2013 much like influenza.\u00a0 This being the case, the concept of remote healthcare will only develop and grow.<\/p>\n

For over 25 years, Abdul Latif Jameel has been proud to make its own contribution to improving access to healthcare.<\/p>\n

As far back as 1995, it established the Abdul Latif Jameel Hospital<\/a>, the first non-profit rehabilitation hospital in Saudi Arabia. More recently, it has established partnerships with medical device innovators and innovation facilitators such as Cyberdyne<\/a>, Cellspect<\/a> and JOMMD<\/a>.<\/p>\n

The latest step in its commitment to encouraging and supporting innovation in healthcare is Abdul Latif Jameel Health<\/a>, established in 2020, which aims to ensure the benefits of advances in healthcare are made available to \u00a0communities across the emerging nations of the developing world.\u00a0 Abdul Latif Jameel Health is working with the global investment arm of the Jameel family, JIMCO<\/a> (the Abdul Latif Jameel Investment Management Company) and their dedicated JIMCO Life Sciences Fund<\/a> to further accelerate access to modern medical care with a series of targeted investments including in companies such as Evelo Biosciences<\/a>, Cellarity<\/a>, AVNeo<\/a>, and more.<\/p>\n