For consumers, the new normal looks like masks, social distancing, and working from home. For brands, the new normal looks like a string of high-profile bankruptcies, empty storefronts, and an increased reliance on e-commerce. And for researchers, the new normal is even more grim — more and worse pandemics, increasingly tough business conditions due to global warming, and disruptions from political instability. All of a sudden, the world looks like a much scarier place than it did a year ago.
It’s no surprise, then, that consumers are weary and wary of the new normal. Brands are too. Unfortunately, brands can’t just load up their Netflix queue, order a bunch of books from Amazon, stock up on snacks and crafting supplies, and pretend the world doesn’t exist for a bit. While consumers are turning to escapism to deal with our world being turned upside down, brands need to face the crisis head on if they want to survive the next decade. As Charles Darwin once famously put it, “it is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” Companies need to adapt, and they need to build constant adaptation into their very DNA.
What Is the New Normal for Our Economy?
There’s a big difference between the new normal of wearing face coverings and social distancing and the new normal that brands need to prepare for. The former is a reaction to the COVID-19 pandemic. While it’s likely to bring some real changes to the way consumers interact with brands, many of the most high-profile changes are likely to be relatively temporary.
The latter, the new normal, is a response to a several decades-long shift in everything from geopolitics to the economy to climate and epidemiology. It’s a radical shift in the way future planning needs to be done, and a break-down of much of what is classically understood as “the way we do business.”
The new normal is about rapid, unforeseen disruption: what author Nassim Nicholas Taleb called “black swan” events. What’s changed since that book was published is the pace at which these black swan events happen, and the impact that they have on society. It took almost 200 years to get from the start of the industrial revolution in the 1760’s to the era of modern consumerism in the 1910s and 1920s. It took less than 25 to get from ARPANET to Amazon. There were just eight major pandemics in the 20th century. The 21st has seen one almost every year. Recessions in the 19th century tended to be brief affairs, quick to spark and quick to return to normal. Recessions in the 21st have stretched for years, and created instability and social changes that persist long after the economy rebounds. In short, change is the new normal.
Of course, change doesn’t just mean macro. The events we’re seeing now, and the events we can expect in the future, will bring about untold changes in the ways people live, work, and shop. We’ve seen it with COVID, as people stay home and rely more on e-commerce than they have before. We saw it in the great recession of 2008, which led to a huge shift in consumer behaviors — especially for millennials just entering the workforce, leading to a generation of consumers averse to credit and materialism. And we saw it very clearly during the Great Depression, with members of the Greatest Generation leading every following cohort in savings, thrift, and mistrust of banks.
How Brands Should Cope in an Unstable World
If rapid, unpredictable change is the new constant, how can brands move forward? Traditional models of business planning operate on the basic assumption that tomorrow is going to look very similar to today, at least for the big things. Even the best modern AI-powered models are only as good as the assumptions they’re built on. Intuition and business instincts are even worse, tending to underperform structured plans and models by a huge margin.
That leaves brands with three tools to prepare for a new world (dis)order: risk management, organizational agility, and company culture.
De-risking the unknowable
Risk management is one of the few holdouts from the old way of doing things. It uses analysis, modeling, and structured planning to assess how much exposure companies have to certain events and plan how best to balance that exposure against potential upside. Unlike more traditional business planning approaches, a risk management approach doesn’t necessarily concern itself with specific crises. Instead, it looks for weak points in all of the systems that make up a modern company and addresses potential failures in them.
There’s enough material on risk management that we don’t need to go in-depth here. The biggest takeaway for brands is that every system, decision, asset, and liability needs to be looked at through a lens of “how do we risk-proof this component?” And this risk-proofing needs to be much more thorough than many executives are used to. When COVID first hit, one of the biggest impacts on many brands was a realization that they were overly-reliant on supply chains based in China. When China slowed down as a result of the virus, many brands found themselves scrambling to catch up. A shocking number of retailers were still 100% offline only, or close enough, and had to rush an e-commerce solution to stay open. A thorough derisking approach may have caught some or all of these in time, and will become even more critical as the world becomes less predictable.
For more information on moving your business from offline to online:
Organizational agility and the art of the pivot
Of course, the best planning in the world won’t save a company when something unprecedented happens. Just look at AIG in the wake of the great recession. Instead, the brands that win over the next five to ten years will be the ones that have cultivated organizational agility as a core value.
Organizational agility is the ability of a brand to react and change rapidly in response to market conditions: how quickly and effectively can you pivot? The COVID pandemic has done a great job of demonstrating why organizational agility is critical for brands. Companies that are able to restructure the way they do things, even change their focus entirely, are better positioned to survive through a crisis and emerge stronger than before. Companies that are exceptionally good at the pivot can even take advantage of disruption to leapfrog competitors.
Brands that pivot well (like some of the ones we’ve highlighted) have agility baked into their DNA. They start with supportive management that places value on change, continue through in hiring adaptable and malleable executives and managers, and reward employees for being able to change direction. Being agile is a process, and a commitment, and it’s not one that pays off immediately. But brands that want to be the next Nike need to start acting like Nike.
For more information on staying competitive with big retailers this holiday season:
Getting it together with culture
The last piece of the puzzle for brands that want to weather the challenges of the next decade is culture. This may seem like an odd fit in this discussion, but it’s really the most important component. Culture is what determines how quickly and effectively a brand can pivot. It helps identify weaknesses and risks to be mitigated. And it allows companies to keep their fingers on the pulse of the market. Culture is what gives companies the resiliency to survive the next crisis.
A unified, strong culture that connects employees top to bottom makes it easier to assess risk, as employees from across the company are more likely to become active participants in identifying potential problems and suggesting effective solutions. It’s also more likely to pivot successfully, by maintaining a strong focus on desired outcomes instead of just chasing trends. And in a world where most employees work from home, it can be the only thing keeping companies together. Culture is the foundation of an innovative company, and every company will have to become an innovative one if it hopes to become a leader in the 2020’s and beyond.
For more information on maintaining the company culture while WFH:
The Time to Adapt Is Now
The last eight months have shown us that the world can change dramatically in a short period of time — and with no warning. Even into January, no one was predicting that 2020 would look like this: a pandemic closing retail around the globe, consumers abandoning physical shopping for the web as they isolate themselves, and surgical masks becoming the hottest (and most divisive) product on store shelves.
But it happened. It changed the world. And this won’t be the last time. Brands need to adjust themselves now, to become more adaptable in the future. Companies need to invest resources into identifying and mitigating risks, becoming more flexible, and unifying their culture. Brands that learn to change with the changes rolling the world. Those that learn to adapt will rise to the top, and those that don’t will go the way of Sears.
Angie is the Content Marketing Manager at AdRoll. Prior to AdRoll, she was a Content Writer at various digital marketing agencies. A writer by day and a reader by night, Angie’s other hobbies include cooking and learning useless movie trivia.