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The future is not what it used to be: Thoughts on the shape of the next normal

McKinsey 14 Apr 2020 12:00

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Dealing with the coronavirus crisis and its aftermath could be the imperative of our times. Indeed, we have argued that it augurs the “imminent restructuring of the global economic order.” As Ian Davis, one of our previous managing partners, wrote in 2009 in the midst of the global financial crisis:

“For some organizations, near-term survival is the only agenda item. Others are peering through the fog of uncertainty, thinking about how to position themselves once the crisis has passed and things return to normal. The question is, ‘What will normal look like?’ While no one can say how long the crisis will last, what we find on the other side will not look like the normal of recent years.”

It is impossible to know what will happen. But it is possible to consider the lessons of the past, both distant and recent, and on that basis, to think constructively about the future. We believe the following elements will be important in the shaping of the next normal—and that business leaders will need to come to terms with them.

Again, the past can be a prelude. McKinsey research on the 2008 financial crisis found that a small group of companies in each sector outperformed their peers. They did get hurt, with revenues falling about the industry average, but they recovered much faster. By 2009, the earnings of the resilient companies had risen 10 percent, while that of the nonresilients had gone down almost 15 percent. What characterized the resilient companies was preparation before the crisis—they typically had stronger balance sheets—and effective action during it—specifically, their ability to cut operating costs.

These silver linings are thin compared with the scale of the coronavirus catastrophe. Nurturing a next normal that will be better than what it replaced will be a long-term test of all our institutions, global and local, public and private. It will be critical to reconstruct for the future and not solve for the problems of the past.

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Ian DavisMcKinsey researchUS Department of Health and Human Services
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