Post-Covid 19 Business Models
There is no doubt for many people the world has changed and we have become even more polarised in all views.
We are no longer divided by politics we are separated by something more fundamental.
Political division is now arguably irrelevant when faced with more serious problems and social unrest we have seen during the pandemic.
Leadership and existing systems have been found sadly lacking.
Some have reacted fast and decisively and put lockdown measures in place quickly, others have not.
Those who did have reaped the benefits and have come out with better results.
The mercenary ideas of trying to preserve the economic status quo when faced with a killer virus have been starkly profiled.
The very reason to keep the economy open to maintain GDP has had the opposite effect with numbers of infected spiralling out of control and paralysing what some sought to protect second waves of Covid 19 force more stringent measures.
It also seems that the more disciplined and unselfish societies have benefited from those who believed in their leaders.
Of course, some believed in their leaders and were mislead too!
Whatever happens, the world is not the same.
It only confirms to many of us that we are looking for a new way of life and business and economic models.
What we are now divided by is ‘how we want to live’.
Business and New Models
Our economic and business concepts are built on growth. But this model is old and historically even talked about free goods like water. Well, water is no longer free but becoming a traded commodity and many predict one of the scariest and most sought after in the next hundreds of years.
Businesses and countries can no longer chase growth and as consumers, we cannot either.
On a personal level, we need to make more considered choices about what we buy, how we buy it and what we throw away.
We all need to find alternatives to being measured by growth.
Bhutan’s economic goal is its peoples’ happiness and why not?
So for businesses, there is a new now.
People are becoming suspicious of the motives of big business but companies that pursue more honest and socially acceptable ethics and goals are rewarded.
CSR or Corporate Social Responsibility is no longer enough. ‘Greenwashing’ is rife. That means pretending to support sustainable policies on the one hand whilst doing something completely different on the other.
BSG or Boston Consulting Group recently published a paper on TSI (Total Societal Impact).
Total Societal Impact says many interesting things.
‘For decades, most companies have oriented their strategies toward maximising total shareholder return (TSR). This focus, the thinking has been, creates high-performing companies that produce the goods and services society needs and that power economic growth around the world.’
They go on to say as people become more concerned about the impacts of the action on the environment that businesses need to consider TSI as well as TSR. (Total Shareholder Value).
They go on to say that their key findings were that ‘Non-financial performance (as captured by the ESG metrics) was statistically significant in predicting the valuation multiples of companies in all the industries we analysed.’
And that ‘investors rewarded the top performers with valuation multiples that were 3% to 19% higher.’
More importantly that all else being equal than those of the median performers in those topics,‘Top performers in certain, ESG topics had margins that were up to 12.4 percentage points higher, all else being equal than those of the median performers in those topics.’
The conclusion is that by taking TSI seriously and applying it as an additional measure performance is increased in several ways tangible ways.
It seems then we can have business models that provide organic growth and which benefit society.
As the millennial and post-millennial generations take over the business and, as consumers, this trend will only increase, I think?
What will the future look like?
It will look like this….:
- There will be accurate measurements of intangible assets and behaviours like human capital, brand value and organisational culture
- External data about the way a business engages with its supply chain and customers will also be measured
- Organisations will be scored on their performance by many criteria but also against UN SDGS
- Investors will look at this and decide how to invest, knowing that those who have good TSI ratings will also perform well financially
- Customers will express their opinions with apps at the point of sale and, this information will be publicly shared
- Companies who behave better will do better
- Consumers and investors will drive companies results
- These things will have a radical effect in public opinion and behaviour mores
- Society will start to move away from selfish greed towards a more holistic view of good
- Governments will be forced to align with the new way and, policies will change accordingly.
The world will start to correct itself and, things will get better!