2020 was a year like no other and threw unforeseen challenges at all levels of society from governments to individuals and businesses to regions. What is clear is that once the world can pick its way through the post-pandemic debris, more challenges – both known and unknown – lie ahead.
Members of the Criticaleye Community give their assessments of what the next 12 months might hold in store.
Hopes for global economy
With a vaccine for COVID-19 there are opportunities ahead, says Janet Mui, Investment Director at Brewin Dolphin
After a difficult year, there are some causes for optimism in 2021. With the vaccine we have an opportunity to get COVID-19 under control, a new US president brings hope for change while lowering geopolitical tensions, and confidence is returning to the markets for a sustainable economic recovery.
Equity markets are certainly more optimistic, and the growth of the global economy is expected to be more synchronised between developed and developing economies.
Risks remain though. We don’t yet know how effective the vaccine will be nor do we know the true depth of the economic scarring from the pandemic. There is also the potential for austerity to return. This is certainly the case in the UK where GDP this year is expected to rise 4.2 percent, after slumping by 11 percent in 2020. As much depends on the vaccine as on how businesses adapt to the new normal post-Brexit for the country’s revival in 2021.
China will maintain its dominant position and could provide one third of global growth. Chinese and Asian equities will offer attractive investment opportunities, particularly with a less confrontational US administration.
Momentum lies with climate
Environmental issues will take centre stage for government and business, says Ashley Phillips, Managing Director, UK Markets and Bioenergy at Ørsted
Looking back to Q4 2019 and the start of 2020 there was such a focus on climate change. Then COVID-19 hit and we all went into crisis management. We’re coming out of that now and with the Government’s Ten Point Plan for a Green Industrial Revolution and accompanying social movements, I feel the forces are there to impact organisations going forward. I just don’t see environmental strategies as an option for businesses anymore, they have to be integral to an overall strategy.
COVID gave leaders the opportunity to take stock and examine how organisations have been tested. Now it’s time to take those learnings and apply them to the opportunities and risks like climate change that will face us in the longer term.
The momentum is also with investors. Just in December, 33 institutional investors with $9 trillion in assets launched the Net Zero Asset Managers initiative. They’re committed to supporting the goal of net-zero greenhouse gas emissions by 2050. I think more and more businesses will take notice of that and see its potential – create the right sustainability strategy and you will be in a better position to raise the right sort of capital going forward.
Business reset
Structural and operational changes in organisations will continue, says Mui Hoon Poh, Board Member at organisations including Singapore Pools and a Board Mentor at Criticaleye
It’s hugely encouraging to have a vaccine for COVID-19, but I have two concerns for business. Firstly, how effective will the vaccine be and how quickly will it be rolled out? Secondly, there is so much uncertainty ahead – I don’t think we will go back to the previous normal because much has changed, especially consumer behaviour.
The move to ecommerce has been rapid and for many successful, but there will be backpedalling among those organisations who may have rushed things and not put in proper controls and checks. There has already been a rise in cybersecurity incidents and that will increase further.
The drop in demand for office space and even buildings is not going to be reversed and so, with people staying at home, more will be expected in terms of digital tools. For businesses, a larger pool of talent will open up – remote working means that employees can be anywhere in the world and, as companies get more comfortable with that, I see more moving to leverage talent in lower-cost countries. This can have implications for people’s jobs in more developed countries as organisations move towards hiring the best talent at the best value no matter where they are based.
Globally, I expect to see a more positive approach from the new Biden administration in terms of alliances and working with partners – and that includes China. The Chinese economy is like a growing youth right now – there’s no stopping it. The US needs to find that balance in partnering China and so does the rest of the world.
Changing leadership
Leaders need to find the right balance in the difficult year that lies ahead, says Matthew Blagg, CEO of Criticaleye
We’ve got a very fragile global economy, so we’re at an interesting tipping point. There are real opportunities with the vaccine, even among the sectors that have been hardest hit, but we’re still in for a difficult 12 to 18 months, particularly around leadership and what the new leadership model will be. We’ll only really know that in another 12 months’ time.
There are plenty of things that organisations need to work through, especially the leadership and people agenda, that are both personal and professional. Nearly everybody is experiencing a reassessment of who they are and what their values are. That’s going on at corporate and individual level and will take some time to filter through.
2020 was the year when individuals were always available. That can be brutal, and we shouldn’t underestimate the pressures that leaders have been exposed to and the need for balance. If you’re out of kilter it can spell trouble for the organisation, so it’s vital that executives ensure they are in the right place in what will be another challenging year.
Little retail therapy in sight
Ian Wright, CEO of the Food and Drink Federation sees a troubled year ahead for hospitality
For our manufacturing members, survival and cash are the key priorities. We went into the crisis with 70 percent of food manufacturing going through retail production and 30 percent through home or hospitality. We’ve come out of it with 85 percent in retail and that has important implications for how we manage our margins, production and our customer relationships in 2021.
Online, click and collect and more local shopping will play a big role among consumers. There are a lot of people who have not strayed far from their homes during the lockdowns and that may well continue. Companies will need to look at how to provide products through those mechanisms that can address such demands.
With Brexit, the biggest risks for our industry are disruption, delay and increased costs. Retailers may absorb those costs but if they’re passed on to the customer, they may have to offer lower-price options as well. Those will more than likely come from the UK – and that’s where an opportunity does lie post-Brexit. The question is though, if somebody could do that and do it well, wouldn’t they already have done it?
Thanks to the Members of the Criticaleye Community who shared their views in this article shortly before it was announced that the UK was entering another period of lockdown in January 2021.
David Hobbs, Senior Editor, Criticaleye
The next Community Update will focus on the results of the CEO Research 2021.
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