Is your glass half full or half empty? Careful before you answer that question. Because you are about to be dubbed by an old school as either a pessimist or optimist. I see the world very black and white. When the post pandemic arrives no one is really sure. Right now everything is based on hope that the business and job market opens up again to where it was. It’s all being fueled by a great deal of rhetoric on how and who is going to relight the global economy back to normal.
The Story Line
The rhetoric of the day is penned by financial types who also need consumers to jump off their sofas and spend the trillions or billions of dollars in savings. Will they? Most likely, but will it last? The problem is inflation and in any shape it arrives in. On one hand higher prices can depress consumer spending, to just essentials again. Higher interest rates to curb inflation is just as bad, especially when it comes to servicing debt. When you’re coming out of a Pandemic there is no real guide to a recovery. We only know of a pandemic 100 years ago they didn't have any of the amenities e-commerce and technology have afforded us. The only real hope for a recovery is that consumers will behave rationally. They most likely will. At least for a while.
My outlook isn’t gloomy. It’s filled with opportunities however I see them differently. I expect three scenarios to happen simultaneously. The most dominant is one of Innovation, the second continued Disruptive Innovation and the third Creative Destruction. Neither of these are dystopian or utopian, they are reality for a world that’s been that’s been anxiously waiting to reopen. And a world that has invested in the future.
But let’s unlock these three for the sake of those who need to hear and see hope. My view is that we have entered a consumer world demanding greater convenience> Looking to protect their personal time a behaviour born of the pandemic. As is will be greater attention to personal health. And by health I don’t mean fitness alone. It will be mental and physiological health. If the pandemic has taught us anything, life is too short to think ourselves immortal. Therefore, those who are very conscientious will spend billions to assure themselves of normal longevity. Or perhaps an extended life span.
Peter Diamandis wrote of gene therapy and gene sequencing all with the potential to live longer, in an article “100 is the new 60. “
Three Forces of 2020's
Innovation will come in all forms, many will fail with short bursts of life. Others will push competitors to change their direction quickly. Many will not be eureka moments, but they will be, why didn’t I think of that moments. Those with deepest pockets, and scale will runaway with the lions share. Even though in most cases it might not have been their idea. There is no first mover advantage in this game. You innovate or get left behind. It's like a restaurant. Update, invest and create new menus or you are old news.
Then there is the world of disruptive innovators. Who are they what will they go after next? Some might think that there isn’t much left to disrupt in retail for example. But there is! Any concept that has consumers dealing with inconvenience is vulnerable to changes. We need to wrap our business minds around being more convenient. Look, the smartphone unleashed consumers from the confines of their homes and desks, the pandemic proved we can work from home and just as productive. This threatens many business models that were dependent on commuters going back and forth to work. Just as a start. And you can mandate people back into the workplace, but you can’t mandate them how to behave, that is to return to their old routines, that’s just going to take time. Unfortunately time is our enemy as other work fast to disrupt and take advantage of opportunities while consumers are still sensitive.
That’s where disruptive innovation is going burrow itself into and exploit. And for those that need to know retailing as an industry will resurface a different version of itself. Everyone of them testing the waters. Those that fail will be the ones that presume that nothing has changed. The same applies to workers.
Last it’s one of Creative Destruction. The auto sector will be the most visible over the next 10-15 years. With General Motors planning for 2035 to be the year of the last gas combustion engine vehicles to roll off their assembly lines. But don’t confuse electric vehicles as creative destruction, they are an evolution. The creative destruction is what happens to an old industry and the businesses related to them. As new ones surface to replace them. Think about the impact of not having to fill up a gas tank. Where does that take us? How does that change some business models and end others? If you don’t need an oil change who needs an oil change shop, muffler shops, oil and gas additives or radiator repairs, all will begin to diminish . Of course there will be new needs for service. However if Tesla has shown us anything we don’t need to shop for vehicles at dealers or to visit a service shop for minor work. Tesla will visit your home. And let's not forget the impact on the oil industry.
The driver? Consumers. They can't wait to buy an electric car. Most hold on to a car 8-10 years. Some speculate that by 2035 we won't be able to give away a gas burning vehicle. Its happened before with horse and buggies and buggy whips if you need an elementary reminder of strategy.
My glass is not half empty or full. I am very much reside in a camp that changes are coming and we are not ready for them. We need substantial efforts to train and educate future generations. Our lack of technological fortitude in Canada, Europe and to some degree in the U.S. is giving way to Asia. We run a geopolitical risk of entering the realm of developing country status. Something that many of my peers understand is an issue for us. But that is being driven by our stand to protect old industries. That's happened in the past as well.
Yes there is a great deal to be optimistic about. But I’ve been successful not by following the herd but by paying attention to potential changes and being mindful of history.
Winston Churchill Wrote: “Those that fail to learn from history are doomed to repeat it.” Every market crash, black swan moment and corresponding bailout reminds me of how vulnerable economies and the public really are. But somehow we recover with more debt and keep on spending. However if we don't move faster into a technology status we will risk our place in history. There is no reinvention in this. You either Innovate, Disrupt or lead Creative Destruction. Business failures will continue as long as the thinking remains with past models.
My name is George Minakakis, I am the CEO of Inception Retail Group. Most of my work is with Private Equity, I help identify and build business opportunities with growth and resilience. Look for my new book this summer “The New Bricks & Mortar - Future Proofing Retail”