In mid-March, a few days before the Danish government announced Denmark’s lockdown, I participated in a conference in Toronto, Canada. I was surrounded by hundreds of decision-makers, and only a small handful of participants avoided handshakes. I engaged in a casual conversation with another participant, a Canadian researcher, about the escalating pandemic.
The researcher made a point that has stayed with me. He said, “We have made no room for redundancy in our value-creating systems. Everything is optimized in the extreme. As a result, the system is extremely fragile”.
Over the past month, the researcher's insight has been made poignantly clear.
Many small businesses lack a buffer, and a few weeks without turnover means that they are facing bankruptcy. Large corporates are seeing collapsed value chains, leading to thousands of employees being laid off. In the healthcare sector, just a few hundred more intensive care patients have pushed hospitals to the limit and forced them into an emergency response.
For decades, we have fine-tuned extremely optimized production through management methods such as lean, TQM and just-in-time. In the private sector, optimization has mostly been driven by global competition. In the public sector by the new public management paradigm.
The crisis will likely contribute to the end of radical optimization and strengthen three movements that outline the framework for our next society: our concept of value, our production models, and the way we understand the concept of the future.
Towards a broader concept of value
We will move towards new value measuring concepts, which are not solely economical.
The thought is far from revolutionary. Former American attorney general, Robert Kennedy stated in 1968 that a nation’s GDP measures “everything except that which is worthwhile.”' Education, health, environment and human interaction is not yet reflected in our national accounts.
During this year's World Economic Forum in Davos, the same message came across. We must include a much wider circle of interests and stakeholders in the corporate value proposition. From an innovation perspective, people, nature, and the planet will be at the center in the design of new products and services.
Towards green, local production and community
Secondly, we will begin to question the wisdom in merely reestablishing global value chains. The climate agenda and circular business models, together with new digital production technologies such as 3D printing, fab labs and open source, will move investments towards greener, local production in our cities as well as local communities. This will likely lead to an increased focus on local relationships and community, also in relation to human networks.
Towards increased empathy in the future
The third and final initiative is perhaps the most important. To a large extent, we have assumed that the future will resemble the past. This is why we have constructed our societies in a way that even the smallest deviations in the context of our regular activities can completely destroy us. Optimization has made us extremely fragile. The third movement is towards a society with more room for change – and acceptance of a certain amount of redundancy. A society characterized by greater imagination that trains for the future by asking the "what if”– questions.
The OECD works with the concept of anticipatory governance - managing possible futures. Working dynamically with future scenarios will become a core competency for leaders. Co-designing scenarios and storytelling - methods we work with in my own organization - can be used to create the engagement and empathy with the future that is needed for us to have the courage to act now and make the necessary choices.
These three movements were already underway before the crisis occurred. But they are now being accelerated in a global redesign of the way our society creates value.
The world will not be the same. Maybe it will get better?