Why no one should be saying ‘back’ or ‘to normal’

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During the first week of April in 2020, global Google search traffic for the phrase “back to normal” spiked at roughly four times its typical level. As pandemic awareness burst upon us, “When will we be done with this?” was the question on everyone’s minds – and today, it’s apparent that many believe we’re there. Airline passenger traffic, labor force participation, and many other measures of activity — the numbers of “normal” life? — are at or even above pre-pandemic levels.

For many reasons, though, any thought that “back to normal” has been achieved (or that is even desirable) is probably wrong and likely to be damaging. This is not bad news: it’s increasingly apparent that people, both as individuals and as leaders of enterprises, are ready to start talking about their readiness to participate in the next wave of good things and to de-emphasize their cautious defense against bad things. It’s important, though, to understand why the investments and the behavior changes of that next wave require staying in “Drive” rather than going into “Reverse”.

The two things wrong with “back to normal” are “back” and “to normal.” Let’s start with the “back.” Data suggest that during the pandemic, three-quarters of consumers experimented with alternative stores or brands, and that three-fifths of them expect to continue those new engagements even after they decide that “post-pandemic” has arrived. Wendy Redshaw, Chief Digital Information Officer for Personal Banking at Natwest Group, said, during a Financial Times webinar early in 2020, that customers between 50 and 70 years of age were her fastest-growing cohort of on-line users:

We’re hearing from so many people, ‘Why did it take a pandemic to get me to try this? It’s so much easier!’

 Generalize this to grocery shopping, or to use of government services, or to any number of other elements of daily life: customers have learned that digital transformations, both implemented and adopted on pandemic-necessity timelines, yield convenience that those customers are not inclined to give up.

Normal?

What about “to normal?” With the pandemic still looming large in our rear-view mirrors, it may take a real effort to look back as far as 2008 – but, remember The Great Recession (or The Global Financial Crisis, with your term of choice perhaps depending on whether you were a damaged borrower or a distressed lender)? We spent the decade prior to the pandemic dealing with a protracted period of GFC aftermath, in which costs of capital plummeted to near zero – catalyzing especially rapid substitution of technology for labor. Negligible yields on cash balances fertilized explosive growth of tiny little technology companies, who did not need to have revenue—let alone profitability—to attract investors who had few other candidate sources of attractive returns.

With costs of capital now returning to something like their pre-GFC norms, The Economist observed a few months ago that “After a decade-long bull run, the amount of money flowing into startups globally declined by a third in 2022… What passed for rationality in the boom times now looks somewhat insane.” This does not have to result in a lessening of innovative energy, but it probably does mean that enterprises will be looking for fewer clever point solutions; that they will be seeking, more often, transformational partners with breadth and depth of capability, who can help them unify and streamline their processes. There will be more “trusted advisor” opportunity for those who can help companies “simplicate and add lightness,” in the phrase sometimes called “Hooton’s Rule”.

What should utterly bury any remaining notions of “back to normal” are the advent of generative AI, and the growing acknowledgment of climate change as an immediate “now” rather than a “maybe someday” challenge.

As to the AI opportunity, three-fifths of sales and service professionals expect that they will become more effective in their roles with the aid of generative AI tools, according to research released this week by Salesforce. At the same time, though, about the same fraction of these workers want more help in using AI securely as well as productively. Employers who are visibly investing in their people’s skills, and deploying AI in ways that augment rather than seeking to replace human beings, will have an edge in attracting and retaining talent as well as a competitive advantage in their markets.

As to the climate challenge, companies around the world will be facing dozens of new requirements for data collection and disclosure, not to mention compliance with new rules of operation, to satisfy rapidly evolving laws and agreements. The good news is that there can be side effects of lower cost, creation of new revenue streams, and even profit-improving brand preferences that come from being seen to be a leader in this domain. As of now, though, “few companies adequately track the returns on their existing sustainability investments or carefully assess those on future ones”, reported Harvard Business Review in 2021 – so there is a pressing need for investments in these areas, and for behavior changes to achieve whole-company buy-in to these goals.

Not “back” to any recognizable normal, but forward into a better way, should therefore be the mandate for innovators, investors, and practitioners in what will likely prove a pivotal year.