The economy is evolving in interesting and unexpected ways post-COVID-19. Here’s how tech leaders should be thinking about how these changes may affect their strategy.
While the uncertainty wrought by a global pandemic is nothing new, the economic impacts have been interesting and often unexpected. Several obvious and expected outcomes have occurred: The US economy went from near zero unemployment to record unemployment almost overnight while governments rushed to mitigate the impacts through stimulus. Retailers were largely impacted in ways you’d expect, except where they weren’t.
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Notable examples like Home Depot and Lowe’s prepared for pandemic-related sales declines, but were flooded with customers who were launching all manner of home improvement projects during lockdown. This “home improvement boom” has rippled through an entire industry, with contractors of all types booked months or even a year in advance, the wood industry experiencing record demand, and even Google reporting that search terms like “sprinkler systems” and “swimming pools” have experienced a sustained rise. Similarly, anyone who has tried to purchase a bicycle or walked into their local Walmart or REI’s bicycle section will find bare shelves that look more like the aftermath of Black Friday than a depressed economy.
Is there a tiered economy?
Several economists and analysts have described this phenomenon as a “tiered” economy of sorts. Workers who are able to work remotely, who were generally already in higher-paying and more stable jobs, have done well during the pandemic and have redirected money they might have spent dining out, traveling, or attending concerts or sporting events on home improvements, fitness, technology, and other categories. Other industries have been decimated, with huge hotels sitting empty while staff are furloughed or dismissed, and entire economies that were supported by tourism shattered seemingly overnight.
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There’s a bit more nuance to the story, however, than the emerging narrative of “rich knowledge workers” playing the role of a modern-day Marie Antoinette eating their cake with colleagues over a Zoom videoconference and pedaling their Pelotons while the rest of the world struggles. The logistics industry has been on overdrive since the start of the pandemic, while the drivers who are at its core struggle to get a meal along their routes due to patchwork regulations related to COVID. There’s a renewed interest in local manufacturing, and ideas like “just in time” production that have been gospel for decades are being questioned after a dramatic lesson in the value of reserve inventories of goods ranging from PPE to toilet paper that are still subject to supply shortages. A renewed interest in the outdoors has powered a dramatic sales uptick in everything from fishing rods and licenses to recreational vehicles.
Investment dollars have continued to flow into stock markets, indicating that there’s still money in the economy hunting for outsize returns, and that capital may well end up at your doorstep as your organization determines how it will evolve in the coming months.
Adding the economy to your technology strategy
Attempting to predict the precise nuances of the global economy is certainly a fool’s errand; however, understanding broad shifts can drive important considerations for your technology strategy. Perhaps your company finds itself an unexpected winner in the evolving economy, and consistent and predictable production schedules have been replaced with record orders and seemingly unending demand. Flexible production systems, an ability to rapidly adjust pricing, and perhaps enhanced customer support technologies might suddenly be your highest priorities after years of being passed over as “nice to haves.”
At most companies, the focus at the executive level has dramatically shifted from mitigation, to short-term planning, to long-term planning. Technology is going to be a foundational element of many of these long-term plans, whether it’s tasked with “doing more with fewer employees” or supporting unforeseen rapid growth. If you’re showing up at your next executive meeting ready to talk about the latest collaboration tool or remote work technology, you may find a once-enraptured audience looking at their phones or rapidly losing interest.
Take the time to consider where your company and its products fit in the evolving economy. If nothing else, at this point in the game your data analysis infrastructure and reporting tools should have enough historical data to provide inputs to strategic decision-making, and ideally support doubling down on existing technology investments, or perhaps a significant and dramatic redirection of priorities.
In either case, a grasp of the evolving economy and its impacts on your business not only positions IT as a key player in these fast-moving times, but elevates your stature as a leader who will be key to helping your company adapt.