A reading list for future-ready executives
In a typical year, strategy planning takes into account a company’s goals, its competitive set, and its customers’ needs, as well as megatrends related to the economy, emerging technologies, and evolving behaviors. Of course, 2020 isn’t a typical year, and 2021 planning hinges on additional factors, including individual, national, and international responses to a global pandemic.
No one knows the future, but business planners take cues from what is known and read the tea leaves. For example, today we know that missteps by economic superpowers have had ripple effects across the globe; federal, state, and local decisions immediately impact businesses. In the U.S., in particular, we also know that our future will be informed by the outcome of the national election, government stimulus decisions, and public health management, as well as the speed at which therapies and vaccines become widely available. While a single organization can’t control what governments do, executives will need to understand the forces at play and be prepared for multiple scenarios.
As your organization weighs economic, demographic, or technological factors and their impacts on 2021 strategies, it’s important to plan for responsiveness and agility. Here’s what to watch.
The pandemic and the economy
- Managing the coronavirus pandemic. Containing the coronavirus means doing many things at once — including testing, tracing, isolating and quarantining, wearing masks, maintaining physical distance, and limiting gatherings. Countries that have effectively communicated and enforced multiple measures have been able to resume some “normal” economic activity. For the rest of the world, including the U.S., the struggle will likely continue through the fall and winter. While experts are hopeful that new treatments, antibody prophylactics, and vaccines will be available soon, these advancements aren’t sure bets. Mid-2021 may look much different than mid-2020 — but organizations will need to plan for multiple outcomes. (STAT, The Daily, The Atlantic)
- Gross domestic product. China is the only G20 country that’s not experiencing a recession this year. But Deutsche Bank expects global GDP to return to pre-pandemic levels by mid-2021; similarly, the International Monetary Fund projects global growth of 5.4% next year. But uncertainty over stimulus bills prompted J.P. Morgan to revise its U.S. GDP forecast; the investment bank lowered growth estimates for the fourth quarter of 2020 and the first quarter of 2021. (OECD, Markets Insider, IMF, Business Insider)
- Currencies and inflation. The relative value of the U.S. dollar has dropped 3% this year, despite stronger performance last month, and experts expect to see more volatility in the months ahead. The Federal Reserve has adopted an approach to monetary policy that would “keep interest rates near zero until its 2% inflation target and full employment are reached.” (CNN Business, Reuters, MarketWatch, Reuters)
- Employment trends. While the U.S. economy has regained some of the jobs lost in the early months of the pandemic, some temporary furloughs are now turning into permanent layoffs. Unemployment has hit women particularly hard, and economists fear this recession could be a long-term setback for women. Instead of a chart that looks like a V, U, or W, the letter-shaped recovery may be more like a K, with increasing disparity between the most secure and the most vulnerable employees. (New York Times, Wall Street Journal, Marketplace)
- Income, spending, and saving. The disparity in employment is having an impact. Since government support ended in July, personal income and savings have fallen. But prices are higher, and spending is up after a brief plunge during spring lockdowns. (Seeking Alpha, Barron’s)
- Industries to watch. Many industries — from energy to hospitality — are struggling during the pandemic. And the fall of one industry can affect others. For example, the airline industry supports 10 million jobs; its collapse would impact everything from events and hotels to manufacturers and suppliers that are part of the larger ecosystem. In another example, overall energy consumption is down, and the U.S. oil and gas industry has lost more than 100,000 jobs this year. But the trend toward electrification and renewable energy could become a job-creation engine. Some industries will need subsidies, bailouts, or political will to survive; keep an eye on which sectors receive support, which activities don’t resume at all, and which industries are forever transformed. (Washington Post, Marketplace, Enverus, U.S. Energy Information Administration, Natural Gas Intelligence)
Bright spots and opportunities
- Investing in recovery. Targeted support can help national economies bounce back from the pandemic. The Organisation for Economic Co-operation and Development recommends governments invest in education, training, health systems, and a “green recovery” — including sustainable energy, infrastructure, housing, and transportation. (OECD)
- Main street. With many people traveling less and spending more time at home, smaller neighborhood corridors are seeing more business activity than tourist areas and central business districts. (Wall Street Journal)
- Mobility. Companies that sell bicycles and scooters — especially e-bikes and electric scooters — are having a big year as people look for safe, easy ways to make local trips. Meanwhile, young adults are buying “COVID cars” for road trips and commuting. New car sales have recovered, with auto dealerships now reporting low inventory, and a shortage of used cars is pushing prices up. (MarketWatch, Smart Cities Dive, The Atlantic, Detroit News, USA Today)
- Seeking comfort. More time indoors has prompted many to take on decorating and repair projects, boosting sales at home improvement stores. New stores that have opened in New York during the pandemic sell donuts, cannabis, cheese, and skin care products — small comforts that help customers escape, even if just for a moment. (The Atlantic, New York Times)
Migration and demographics
- Pandemic moves. Fewer people moved at the height of the pandemic, and data doesn’t support claims of a mass exodus from urban areas — but COVID-19 seems to have accelerated moves from the most expensive coastal cities to cheaper suburbs. Homebuyers from New York and San Francisco are driving up real estate prices in smaller cities. These big-city expats may spur economic growth in smaller metro areas, but the shift may be temporary: Some of the people leaving large cities say they plan to return. (Bloomberg, Redfin, Forbes, San Francisco Chronicle)
- Rent and housing prices. Rent prices have fallen in 41 of the 100 largest U.S. cities, with the biggest drops in expensive places such as New York, San Francisco, Boston, and Washington, D.C. Low inventory and high demand have pushed housing prices up, but the labor market’s slow recovery makes the long-term real estate outlook uncertain. Even before the pandemic, the high cost of housing was prompting moves from ”blue” cities to less populated “red states” and swing states. This migration pattern, accelerated by the pandemic, could have long-term impacts on the U.S. electoral map. (ApartmentList, Zumper, Zillow, National Association of Realtors)
- Free rent and free to roam. Some are giving up on a place of their own entirely. For the first time since the Great Depression, a majority of U.S. adults under 30 are now living with their parents. Young remote workers are also taking advantage of the opportunity to road trip — despite the complexities of COVID-era travel. Sales of recreational vehicles are up, thanks to surging interest in camping and long-distance road trips. (Buzzfeed, Pew Research Center, Barron’s, Bloomberg)
- Climate migration. Higher global temperatures will create hot zones, severe storms, flooding, drought, and other natural disasters. Millions of displaced people will be looking for new homes in less vulnerable areas. This year’s fires have prompted people in California and other Western states to consider relocating. (New York Times, First Street Foundation, New Yorker)
- Expatriation and immigration. Political uncertainty, racial discrimination, and the U.S. approach to the pandemic are leading some to consider leaving the country and vying for second citizenship. Meanwhile, the same circumstances — combined with currency fluctuations and hostile policies — could prompt foreign students and immigrants to go elsewhere. If workers, researchers, and entrepreneurs take their expertise and spending to other countries, America could face long-term economic consequences. (USA Today, MarketWatch, Forbes, Entrepreneur, New York Times, Crain’s Chicago Business, Federal Reserve Bank of Dallas)
- Births and deaths. Encouraging immigration isn’t just about filling job openings and boosting the economy. Incoming residents help offset America’s declining population and aging society. The pandemic is accelerating those shifts: Experts predict a “baby bust” this year, and researchers say that the complete number of deaths due to the pandemic is severely undercounted. (NPR, Brookings, World Economic Forum, Nature, JAMA, CDC)
Business models, media, and technology
- Social media, news, and entertainment. Screen time is up: More work and school activities are happening online, social media use is at an all-time high, and people are consuming more online content than ever. With movie theaters closed, the film industry is delaying releases of new movies and the shift toward streaming services is accelerating. (Forbes, Axios, MarketWatch, Vulture)
- Mobile and wearables. Global smartphone sales dropped 20% during second-quarter lockdowns. iPhone sales were relatively flat, though supply chain issues have delayed its annual release schedule. Experts estimate global smartphone shipments will decline nearly 10% in 2020, but the push toward 5G may drive more growth in 2021. At the beginning of 2020, one in five Americans were using a smartwatch or fitness tracker, and smartwatch shipments grew 20% in the first quarter. (CNBC, Bloomberg, International Data Corporation, Pew Research, Techcrunch)
- Collaboration and communication tools. Schools have handed out millions of digital devices to students since learning went virtual, despite shortages and difficulties with tracking loaned equipment. The next generation of digital collaborators is now fluent in platforms like Google Classroom and Zoom, and adults working remotely are having a similar experience. Companies have swiftly adopted video conferencing, chat, and project management software. Microsoft is focusing on its Teams application, Asana is heading for an IPO, Slack is expanding its reach, and Zoom plans to add Slack-like chat capabilities. (Education Week, CBS News, Techcrunch, Investopedia, The Verge, The Information)
- Touchless transactions. Prior to the pandemic, many people hadn’t tried using QR codes or mobile payments. But now, “contactless” information, ordering, deliveries, and transactions have new, germ-free appeal, and they’re used everywhere from retail stores and restaurants to doctor’s offices and apartment buildings. (PYMNTS, National Retail Federation)
- Emerging technologies. Voice technology is touchless, and the use of voice assistants increased in the early months of the pandemic — but the steady uptick in adoption is far from explosive growth. However, as workers return to offices, touchless interfaces such as voice may finally find their use case in the COVID-era workplace. Augmented and virtual reality still hold promise, but beyond selfie video filters, aren’t quite ready for prime time. Artificial intelligence is finding its place in healthcare, research, manufacturing, finance, and supply chain — and its use in clinical care and clinical trials has prompted new calls for guidelines and standards. 5G networks are here, technically, though not yet living up to promises for faster connection speeds. (National Public Media, Computerworld, VentureBeat, Forbes, Technology Review, Nautilus, Data & Society, Washington Post)
- Big tech drama. Lawmakers are building an antitrust case against Amazon, Apple, Facebook, and Google; a recent congressional report recommends new laws to break up big tech companies and make acquisitions more difficult. If passed, new antitrust legislation could have long-term ramifications. Meanwhile, TikTok’s popularity among teens has surpassed Instagram and is second only to Snapchat. The U.S. ban on TikTok is on hold — for now — with court rulings unlikely before the end of November. Walmart and Oracle are awaiting China’s approval to purchase stakes in the company. (Recode, CNBC, Reuters, Wall Street Journal)
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