Brand Z - A new normal full of contradictions

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It feels like the effects of the digital transformation that were already slowly happening have now accelerated with rocket speed toward becoming part of our “new normal.”

There is something about Christmastime that always causes to me reminisce and look forward. Especially last year, with December 2019 marking the end of the 2010s. In a written piece, I tried to wrap my mind about what was in the rear-view mirror, and what was to come. I wrote: “New decade, new beginning…” Little did I know how that conclusion would unfold in the months to follow.

The piece in question contained a statement: “We will have to get used to change as the new standard. We need to identify developments that are soon to scale up, and we need to be able to quickly adapt businesses and services to these emerging developments.” (With a side-note that this should not to be mistaken for the assumption that those who are “first” and “fastest” will win in the long-term). I accompanied these musings with all sorts of predictions and ideas about what would lead to growth in the 2020s.

Then the rules of the game changed. COVID-19 paralyzed the world. If there’s one thing that the following months showed, it’s that the macro-economy is a fragile thing. We have not yet seen the end of this crisis, and uncertainty of what is yet to come predominates. That being said, I am not uncertain about one thing: Things will not, in the slightest, be the same after this crisis.

What’s more, our current situation has created a maelstrom of contradictory forces and emotions: chief among them, a feeling of unstoppable change that has clashed with a competing urge for stability.

Some lasting post-pandemic changes already seem clear. Starting with everything ‘E’: e-meetings, e-learning, and scaled up e-shopping will likely stay a part of our widely accepted new ways. Finally! It feels like the effects of the digital transformation that were already slowly happening have now accelerated with rocket speed toward becoming part of our “new normal.”

Less obvious might be the more macro impacts of this crisis. For starters, expect an acceleration of the shift that was already underway toward elevating China above the USA as the chief driver of globalization. America’s unemployment challenges are so massive, and its citizens seem to have lost faith in international trade. And this is where yet another contradiction starts to emerge.

Going forward, it will to be interesting to follow the effects that “uncertain times” have on businesses that typically claim stability as one of their chief assets. Stability, after all, often goes hand-in-hand with lower abilities to change or disrupt. And in the past decade, “disruption” was often seen as more desirable than “stability.” Will that continue to be the case? Already, we are seeing some cases in which businesses are knowingly pursuing greater stability while accepting lower profits as the cost of this pursuit. For instance, consider the ways that many global manufacturing companies are looking to spend more to bring their supply chains closer to home.

Again, there are contradictions at play here: In many ways, globalization should drive a shift towards China, an economy that has been built on low-cost production. But those non-Chinese companies who have the scale (and financial strength) to entertain a wider range of sourcing options are increasingly opting for lower-risk (rather than lower-cost) alternatives. Cost savings will not be the only big determinant of a company’s global footprint. The flexibility of non-core services will become increasingly valued – in other words, the ways that these services can be easily plugged in and out of a company’s operations while causing minimal levels of disruption.

On an individual level, economic fragility should drive a search for lowered vulnerability. Large, stable entities of the kind mentioned above may become more attractive for their perceived safety and dependability – even if they’re not seen “sexy” or cutting-edge. This may, in turn, slow the growth of start-ups – that is, those companies trying to disrupt existing businesses.

This is a contradiction embedded within today’s “Digital Disruption” wave – which in theory should provide plenty of opportunities for startups offering the “newest,” most disruptive thing, but may be left behind by a shift toward the stable. Perhaps these startups can bridge this contradiction positioning themselves as the “easily plugged in and out” service providers of non-core activities, for use by those with scale and stability.

In conclusion, if you were to force me to do the “Christmas reminisce and look forward” exercise today, it would go down something like this: We are heading to a more closed system that is built on ensuing a reliable supply, as businesses seek to reduce vulnerabilities moving forward. The question of who will win in such an environment is still evolving, and not all of the pre-2020 wisdom about the gains of “disruptive upstarts” is wrong. But this conventional wisdom needs one big amendment: established businesses may prove to be more important stewards of the future than previously thought.

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