Director’s View

Updated: Apr 8


For the purpose of this edition, we thought it would be interesting to look at the trends that will define 2021 and possibly beyond.


Worldwide, vaccines are being rolled out and it would be prudent for business leaders to determine which factors should be kept in mind for the “new normal” as it emerges during the course of this year. McKinsey recently released some predictions for the post Covid world to bear in mind when planning ahead.


Innovation and Entrepreneurship will explode post-Covid.


Disruption has always created a space for entrepreneurs to flourish. In the third quarter of 2020 more than 1.5 million new business applications were filed, more than double the figure for the same period in 2019. Plato famously once quoted that necessity is the mother of invention.


Covid has directly led to an explosion in digitization, from artificial intelligence to supply chain re-invention. BioPharma and telehealth have permanently changed the landscape for health care, not to mention the changes in online customer service and remote working.

Interestingly enough, the EU has not seen the same response. This could be owing to the fact that their recovery strategy was to protect jobs, and not incomes, as in the USA. Businesses are adjusting to the changes prompted by the COVID-19 crisis.


Consumer shopping permanently shifts towards online procurement.


In a recent survey by McKinsey, 65% of all consumer respondents admitted that they tried online shopping in the last year of the pandemic. More telling is that 65% of this number have indicated that they will continue to do so. Big brands worldwide will have to urgently figure out marketing strategies how to reach consumers in new ways, once brick and mortar retails stores do not attract the same kind of foot traffic.


On a side note, the first 6 months of 2020’s increase in e-commerce was the same as the preceding ten years! A cautionary note on the survey was that online buyers have a conspicuous lack of brand loyalty. A huge wake up call to the big retail brands out there.


A rebalance and shift in supply chains.


Risk management will have to become more sophisticated for global supply chains. What this means is that during the pandemic, when a single country or even factory went dark, the entire supply chain up stream and down stream got disrupted owing to the lack of critical components.


The new thinking will be “Just In Time Plus”. The “plus” stands for “just in case”, meaning that stock holding would have to be increased to prevent a single point of failure in the supply chain. Three things became evident during Covid:


a) Disruptions aren’t that unusual. Think Black Swan strategy. These supply chain shocks are predictable and the risk needs to be managed.


b) Manufacturing cost differences between developed and emerging countries are narrowing, owing to the adoption of IR 4 principles. (Robotics, 3D Printing, Data analytics)


c) Most companies have no idea about the business-continuity arrangements at their non-tier-one suppliers. This is where most disruptions originate and with the development of AI and Data Analytics, companies can negate this risk going forward.


The revolution of biopharma heats up.


Businesses globally have sped up their operations as a response to the pandemic and this is even more evident with the pace of medical innovation, with technology and biology meeting up in new innovative ways.



The new vaccines from BioNTech/Pfizer and Moderna uses new mRNA technology to fight the C19 virus. This is the first time that regulatory approval has been granted using this kind of technology to develop a vaccine.


The Covid-19 genome was sequenced in a couple of weeks and the new vaccine took less than 9 months to develop. Normal vaccine development used to take up to a decade, but due to the increase in bioengineering, machine learning, data analytics and genetic sequencing this is now down to a fraction of the time it previously took.

This rapid increase in gene editing technologies could eliminate malaria which kills more than 250 000 people per year and lead to new kinds of cellular therapies to repair or replace damaged cells and tissues.


Even genetic modification to enable heat and drought resistant crops for agriculture, or engineered microbes to create biofuels are on the horizon. The economic impact of this technology can create trillions of dollars of value globally post the pandemic.


Consumer confidence will rebound.


Expect a massive pent-up demand to be unleased, especially in the hospitality, restaurant and entertainment businesses. Some publications refer to this as “revenge shopping” to make up for all the controlled lockdowns that people had to endure. China’s household spending is already at pre-Covid levels and growing at 3.3% with spending on goods and services at 7.7%. The rest of the world will follow.


Leisure travel will explode, but business travel will continue to lag.


By definition, leisure travel is discretionary. Business travel is less so. After the 2008 financial crisis, international leisure travel took only two years to recover. Business travel took more than five years to get to pre-financial crisis levels.


The question in all executives’ minds is simple “When exactly is business travel essential? “

The answer of course is that it certainly will be less than before. Video conferencing and collaboration tools for remote working have replaced the majority of conferences and on-site meetings. We do not foresee that trend to change in a post-Covid world.


Global prosperity will continue to rise and with this, the human desire to explore and travel. Domestic and regional travel will therefore recover first. As mentioned before, the effective use of technology may lead to a long-term structural change in the nature of business travel going forward.


Green energy takes off globally.


The government stimulus after the 2008 financial crisis were substantial, but few incorporated environmental or climate action. This time is different.


The benefits of environment sustainability and the cost of pollution is globally being recognized. The USA is slowly moving away from coal towards innovate green technologies such as electric vehicles, carbon capture methods and large-scale battery development.



US president Joe Biden has pledged to invest USD 2 trillion in clean energy related to building, power, and transportation infrastructure. The EU has committed 30 percent of its USD 880 Billion plan for Covid issues to climate change related measures.

China has pledged to be carbon emission neutral by 2060, whilst Japan and South Korea have committed to a 2050 date.


Stock market returns in the past have been powered by digital economy companies. The future for investment companies will be green-technology companies.


It is possible to be cautiously optimistic about the next new normal that will start emerging this year as global vaccinations take hold, and a sense of normality starts returning. But there is no doubt that the economic and social order as we know it have undergone a dramatic change during the pandemic.


Resiliency and good leadership are now, more than ever an enduring foundation for long term growth.


Thank you as always for your support of First Technology Western Cape.


Stay safe!

Warm Regards


Johan de Villiers

CEO

First Technology Western Cape

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