These days we hear very often phrases like “nothing will ever be the same again” or “liberal democracies have shown their ineffectiveness.” At my age, it is not the first time I hear them. So it was with the attacks of September 11, 2001 or with the fall of Lehman Brothers in autumn 2008. Perhaps the most disruptive thing I have known in the international arena was the fall of the Berlin Wall more than thirty years ago or the Constitution 1978 in the case of Spain. In the first case, the global geopolitical scenario started with the allied victory in World War II and the end of the bipolar world of the Cold War collapsed. In the second, we put an end to a particularly tragic period in our history with the Civil War and the Franco dictatorship. Real radical changes.
I do not deny that September 11 did not imply the questioning of a so-called new world order under the hegemony of a single superpower, in line with the famous “End of History.” Or that the recession that began in the fall of 2007 with subprime mortgages had no obvious consequences on the decline of the West and the identity crisis of the European project.
But I do not believe that, except for global lack of control, the COVID-19 pandemic will be as disruptive or have such profound effects as those we have mentioned. What is predictable is that it accelerates and intensifies the major macro-trends that had already been developing previously.
Humanity has suffered terrible pandemics throughout its history. The novelty is that, since the misnamed “Spanish flu”, none has significantly affected the developed world, with the partial and limited exception of AIDS. More than a hundred years have passed. But they have been suffered in Africa, or in other underdeveloped areas of our planet. They were far away… With far more lethal consequences in human terms but which did not affect the global economy.
The Western response, however, has not been different from the secular one: imposing severe quarantines. But the effect on an economic system based on global value chains and networks is very remarkable. And the combination of supply shocks (as a result of the confinement of the population) and demand (fall in income and expenses due to a decrease in economic activity) has led to massive interventions by central banks, with ultra-expansive monetary policies, and generating fiscal policies. of spending, deficit and public debt that seek to cushion the effects of the crisis. And that force enormous exercises of responsibility for the future.
However, no matter how serious the situation, everything indicates that its effects will not be long-term. Another thing is that the phenomena that were already there previously can be exacerbated.
Thus, the struggle for hegemony between a retreating United States and an expanding China, on all fronts and, above all, on the technological front, will continue to dominate the geopolitical scene in the first half of this century. The growing assertiveness of the “old empires”, such as Russia, Iran, Turkey or India, will be increasingly evident. We are seeing it in Southeast Asia, between the Pacific and the Indian Oceans, or in the Middle East and North Africa. Trends prior to the pandemic and that will continue in the post-pandemic.
It is also true that it can be a shock to Europe as a political project given the palpable evidence that it is not possible to face global challenges from strictly national positions. But it is also a pre-existing debate. Like the one that develops with respect to the future of Latin America or that of the African continent.
In short, the two great features of this century, globalization and digitization, have come to stay. Another thing is that the pandemic makes the globalization governance deficit that we have been suffering much more visible, or that digitization must be increasingly associated with the ethical debate about its consequences on individual freedom and, consequently, on nature and weaknesses of liberal democracies. Something that was already there and that the pandemic can accelerate.
Let us avoid what some want, under the pretext of the pandemic, to make irreversible: the disappearance of multilateralism and the rise of authoritarian regimes. The pandemic cannot be the excuse to erode our passion for peaceful coexistence and freedom.
According to the participants in the event, this double-scope gaze, with one eye on the urgencies of the present and the other on what is to come, is precisely one of the features that will define those in charge of leading organizations in the next months and years.
“This crisis is going to bring us better leaders, more resistant, more resilient and better prepared,” says Antonio Núñez, partner at Parangon Partners. Leaders, he adds, “endowed with great strategic capacity, but at the same time revisable in the short term.” The rigorous analysis of risks “with realistic scenarios and concrete contingency plans” will be, according to Núñez, another of the qualities of these post-pandemic leaders.
“We have realized that technology cannot do everything and that we are more vulnerable than we thought”, comments Jaime de Jaraiz, president & CEO of LG Electronics Iberia
For Jaime de Jaraiz, president & CEO of LG Electronics Iberia, this health crisis has a lot of humility. “We have realized that technology cannot do everything and that we are more vulnerable than we thought. Many things have changed, and this has made us more profound people, allowing true values to emerge in us.” And in this ‘awakening’, he adds, “companies with a purpose, that aspire to something more than just selling their products to their customers, will be more successful because they will connect much better with society.”
Experts see the current situation as a turning point in the relationship between people and brands
One of the visible consequences of the paralysis of the economy is the collapse of consumption. Although more than a temporary stop, experts see the current situation as a turning point in the relationship between people and brands. “We are going to come out a little poorer from this crisis and this is going to cause changes,” warns Tommaso Canonici. Among the trends that are venturing for that immediate future, this expert bets on ” a low cost with values “, in which the behavior of companies in the face of the current health crisis is not going unnoticed. Both those “that help, and those that stay behind.”
In these increasingly consumer-conscious choices, a lot of attention will be paid to what Canonici calls ‘programmed elongation’. In other words, “a preference for more usable products with a longer duration,” he explains. Michel Caputi, CEO of the Guatemalan bank BANTRAB, also believes that the time has come for companies to turn their gaze towards sustainable approaches and the circular economy. And he claims that “it is necessary to make sustainable investments over time, which do not seek mass consumption but rather add value to society.”
The confinement of the population will mark the sign of mass consumption in the coming months. Javier Solans, general director of Procter & Gamble (P&G) in Spain & Portugal, thinks that “it is not so much about an evolution of consumer tastes as a change of habits”. What specific elements does it translate into? ” Now we spend a lot of time at home, and this causes more personal or household hygiene products to be consumed. In a way, we are rediscovering home and placing more value on things like spending more time with our families. “
After the current shocks, it is also likely that security will become a must for the next consumer. A circumstance that, Solans points out, presents opportunities and challenges in equal parts for the big names. “Because a recognized and trusted brand is a safe value for the consumer, but it is also a huge responsibility for these companies, who know that they cannot fail their customers” For the health sector, one of the most active and with a leading role in this crisis, the approach also changes substantially.
Jesús Ponce, CEO of Novartis Pharmaceuticals in Spain and president of Novartis, believes that this industry is going to need “bold leaders with a medium-long-term vision.” And that in their management they will have to deal with “more questions than answers.” “Once we control the disease and have a vaccine, new challenges will arise, and addressing global diseases will be one of them. What is clear is that budgets will be managed in a different way, more oriented towards society and always with the patient in the center “, he predicts.