“This is the first time in history when the entire world essentially stopped at the same time,” said Rishad Tobaccowala during a powerful conversation in a CDX digital roundtable recently. “Unlike other crises such as The Great Depression or 9/11, this is a global, simultaneous political, financial, and humanitarian crisis…it’s the equivalent of an asteroid hitting the earth… this will move all of us to rethink everything, which is why I call it the Great Reinvention.” Tobaccowala is a long-time Publicis senior strategist, widely-followed futurist and author of Restoring The Soul of Business: Staying Human in the Age of Data.
Companies will fundamentally transform during the Great Reinvention, Rishad suggested: “The modern-day Corporation has many flavors and I anticipate it will continue to have many flavors, but I would expect that the new corporation will sculpt into it resilience.” He means both financial and operational resilience. Tobaccowala noted that Airbnb recently was reported to have borrowed $1B at the shocking rate of 9%, and that other downturn-shocked companies across many industries are quickly drawing down their entire credit lines. In the future, companies will need to have “rainy day funds,” and can anticipate higher tax burdens as well.
They will also need operational resilience. In regards to supply chains, Rishad noted that “for most companies, the just-in-time method and relying on China [will not] work moving forward. And [having] resilient supply chains – which are different than efficient supply chains – will cost money.” He noted that companies will look to cut costs wherever possible, focusing on flexible and contract workers. But he believes big technology companies remain well positioned, noting for example that Google has already given itself flexibility: “Of the 220,000 people working at Google, 133,000 are contract workers.”
Tobaccowala also had some harsh things to say about some top unicorns. He suggested that WeWork was built on “hallucinatory economics” and may not survive the crisis. As for its funder Softbank, he called its Vision Fund a “delusion fund”. Tobaccowala believes that post-Covid-19, many unicorns “have an economic model that’s destroyed, a target market model that’s destroyed and a business model that’s destroyed.” But he noted that for WeWork, this could have a huge negative follow-on impact for commercial real estate in large cities.
When he talks about the economy, Tobaccowala prefers to use the word “humans” rather than “consumers.” He thinks all of us will come out of this changed, calling what we’re living through a “mass near-death experience”: “You start thinking, ‘Okay, what’s important to me?’” He believes many people will analyze their past behavior and spending and ask “what can I cut? I’m living in a more fragile world.” Meanwhile, he said, “others will say, let me seize on the most amazing experiences that I possibly can.”
Virtually all industries, he expects, will “lose pricing power as consumers have reset their [expectations] because we have started doing stuff for free. I think the movie industry is going to be completely changed. I think the restaurant industry is going to be completely changed. Consumers are going to basically ask for deals everywhere.” The result, moving forward, will be the rise of what he calls a “discount economy.”
Leadership is always at a premium in a crisis. And in his book published in January, Tobaccowala laid out five key leadership ingredients– capability, integrity, empathy, vulnerability, and inspiration. “We are now in the foundry and the furnace of business,” he told us. “This is when real leaders stand up”.
As we entered this crisis, Toboaccowala “stress-tested” his leadership ingredients – and finds they are more relevant than ever. He also talked about understanding the importance of “integrating” these traits, for example integrating vulnerability and inspiration.
Tobaccowala shared additional memorable thoughts on the future of education, work, and the prospects for start-ups. That’s a good reason to view the full interview.
CDX drew on its live audience during the roundtable to conduct a few polls. Here are the results:
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