The COVID-19 pandemic maintains a grip on the world with severe human and economic consequences; and as variants bring new uncertainties, society’s efforts to save lives and safeguard livelihoods should continue unabated. But innate to any crisis is the potential to fundamentally reshape a person, an economy, and possibly an entire society.
In the case of the pandemic, businesses have tried to cushion their employees, customers, and operations from the worst blows of the economic shocks and responded to COVID-19’s massive productivity accelerants and the disruptions under way.
The resulting innovation and behavioral changes have initiated a three-phase ripple effect in the economy, each with the potential to deliver a jolt of growth and prosperity—if business leaders respond strategically.
As society stands at the dawn of 2022, business leaders may want to consider a stance of clear-eyed optimism about growth—and reflect it in their business agendas. Despite the vicissitudes of the past two years, could there be a postpandemic boom on the horizon?
This will likely depend on business leaders’ ability to respond to the productivity and growth “jolts” born from the pandemic.
The onset of COVID-19 brought a set of discontinuities that drove the first jolt to growth and productivity. Now, near-term uncertainties pose risks to growth; however, responding effectively could translate to a second jolt. The potential third and final jolt may be the largest as companies reshape their long-term strategies to reflect—and define—the next normal.
While uncertainties prevail, a growth mindset could be a force for good. Growth sets the trajectory for a future in which millions more people could prosper and attain greater economic security, material comfort, and well-being than ever before. Growth is the foundational enabler of progress toward inclusion and sustainability, helping to create well-paid jobs for more people and generate sufficient funding for the climate transition.
The upheaval driven by the pandemic, along with enabling government policies, prompted significant productivity accelerants that impacted many aspects of modern life. The collective impact could increase annual productivity growth by about one percentage point in the period to 2024.
E-commerce expanded, compressing ten years of growth into mere months. As a matter of necessity, digitization and automation grew across arenas from employee collaboration to customer channels to supply chains. The rapid shift to remote and hybrid work for some occupations opened the door to long-term workforce optimization, with more than half of executives reporting higher individual and team productivity through remote and hybrid models.
Wide-ranging government interventions spurred new business models, such as virtual healthcare.
Higher savings, home values, and equity prices drove the net worth of US households up more than 25 percent. And, in aggregate, corporate balance sheets grew stronger as assets and equity growth outstripped the rise in debt (Exhibit 1).
That strength is not universal: the gap in economic profit between the highest performers and the rest of the playing field widened during the pandemic.
Increased innovation also made 2021 the year of entrepreneurship, seeing 400 new unicorns and record-high fundraising levels among venture capitalists.
The coming months will likely present risks ranging from the economic to the geopolitical, and these should not be underestimated. However, those who successfully navigate the headwinds could unlock potential for a second boost to growth. (Exhibit 2).
These interconnected disruptions are substantial, but disruption creates the potential for change. While navigating them will not be easy, we see leading companies that have already begun to execute savvy strategies in response.
Even amid some of the biggest disruptions of our lifetime, this could be a moment of immense potential to chart the course for the next decade and beyond. From the advancement of medicines, to the reskilling revolution, to the spread and intensification of digital and analytics—if business leaders respond skillfully, the world could be on the cusp of a new age of prosperity marked by sustainable and inclusive growth.
For CEOs, now may be the time to examine your strategy and consider seven tests that can help gauge whether you are ready for the next growth jolt. (Exhibit 3).
Over the past two years the world has been through a crucible of change because of the pandemic; but there is reason for optimism. If leaders can drive growth, we may see benefits to society on a broad scale.
There has already been a period of immense profit growth driven by the first economic jolt. Business leaders have the chance to enter the new year with eyes wide open to the risks ahead and manage them closely, while utilizing the bold experimentation undertaken so far and forging it into potentially long-term sustainable and inclusive growth.
The authors wish to thank Rebecca J. Anderson, Ezra Greenberg, Kevin Russell, and Ben D. Thomas for their contributions to this article.
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