Why the Covid-19 epidemic could benefit businesses

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Why the Covid-19 epidemic could benefit businesses





© DENIS BALIBOUSE
World Health Organization

Very penalizing in the short term, the coronavirus epidemic could, in the long term, benefit businesses. As long as they know how to make it an opportunity.

Sometimes good can come from good … As the epidemic threatens global growth, the Covid-19 forces businesses to make changes that could benefit them. As the London underground strike of February 2014 shows, it is all about adaptation and resilience. Faced with the closure of several metro lines, frustrated Londoners had been forced to rethink their commute. But researchers at the universities of Oxford and Cambridge found that 5% of passengers kept their new routes even after resuming normal service. This has generated long-term economic gains that outweigh the short-term costs of the disruption.

Certainly, the coronavirus pandemic poses a far greater challenge to the business community than a transportation strike. Of course, like most London underground passengers at the time of the 2014 strike, many businesses will revert to the way they used to operate. But, for others, the Coronavirus will have a lasting effect, accelerating the positive trends already underway in terms of business organization reform. Whether it is the spread of remote working or the reconfiguration of supply chains, already weakened by the trade war.

Read also Coronavirus: Telework or sick leave? What solutions for parents of young children at work?

Travel, an exuberant budget

As for their employees, companies are wondering whether they should let them travel, attend conferences or come to the office, at the risk of contracting the virus. In all three cases, the answer is more and more often “no”. Many multinationals have banned all unnecessary travel. While Google and Facebook, are working to put online, partially or totally, some of their great celebrations, thus giving a new meaning to the term “teleconference”! At the same time, JPMorgan Chase asked thousands of American bankers to stay at home to test his emergency measures. Business travel, which costs companies more than $ 1 trillion a year in business, may decrease by more than a third as the epidemic rages, according to a study by the Global Business Travel Association.

In addition to highlighting the exuberant inflation of the travel budget, emergency plans against the Covid-19 also highlight the sometimes exorbitant cost of using offices. Large British and American companies pay an average of $ 5,000 per employee in annual rental fees. Only 40-50% of the desks are actually used during working hours – often not very well. According to a survey of 600,000 employees by Leesman, a data provider, two in five said that coming to the office made it difficult for them to work effectively. In other words, if their managers find, in the midst of the coronavirus crisis, that productivity actually increases – or at least does not decrease – while the staff isolates themselves at home, the arguments in favor of teleworking may become … irresistible.

Stocks, a vital necessity

But that’s not all. Since the 1980s, supply chains have become more complex and global, making companies dependent on thousands of suppliers. The just-in-time adoption launched by Toyota in the 1970s made production more efficient but more vulnerable to disruption, as companies stockpiled less and less. According to Bloomberg data, Apple has only nine days of inventory. When natural disasters strike, large companies cope by temporarily shifting production from disaster areas to those that are not. But Covid-19 simultaneously affects all of a company’s current and potential subcontractors. In such a scenario, having larger stocks and suppliers in the immediate vicinity is a vital necessity for companies.

The coronavirus will not do away with global business travel or supply chains. But the current epidemic offers an opportunity to experiment with new ways of doing things. Business leaders should not be immune to such an opportunity.

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