First published on LinkedIn on 13 March 2020
Among the more fanciful disaster scenarios dreamed up in recent years was one where Chinese intelligence releases a deadly computer virus which brings the Western world to its knees. It turns out that the real threat has come from a natural virus originating in China which, like a computer virus, has spread inexorably across the world, crossing borders and firewalls at lightning speed.
The virus has not just infected over 125,000 people (and counting); it has infected every aspect of daily life. Nothing is immune to infection – every piece of media coverage, every conversation is honed on this single issue. And it’s not just the vulnerable among our population who are at risk; business are also being laid low.
Flybe, which went into administration last week, is unlikely to be the only company with ‘underlying health conditions’ to succumb to the virus. How many more sickly companies on borrowed time could be pushed over the edge by the epidemic’s impact? Browse through the news of the past six months and you will find a host of companies that were already struggling to manage their losses and restructure their debts before the virus appeared.
But of all the impacts the virus is having, the most immediate and profound is the enforced shift to remote working. In a sense, the coronavirus is forcing the gig economy on the world. With increasing numbers of workers – indeed entire countries – ordered to ‘work from home’, everyone is being thrown into the gig economy whether they like it or not. And this jolting change is exposing the digital divide not only within the gig economy itself but also between the digitally connected and the digitally excluded.
The virus is exposing the divide in the gig economy
For workers in the gig economy there is a sharp division in the virus’s impact. For most professionals – such as bankers, lawyers and consultants – there will be little disruption to ordinary business. Most of their work is transacted digitally and they are used to sending emails, holding conference calls and exchanging digital documentation from hotel lobbies and airport lounges. It is not essential to physically meet clients every day, and although restrictions on travel and meetings will curb business development and weaken client relationships over time, for now BAU can continue.
But it is a different picture for the workers in the gig economy’s value chain: the Uber drivers, food delivers and caterers. For them being barred from leaving their home or being in contact with other people is a ban on earning a living. Governments in developed nations have promised support for these workers, as have their employers, although it’s unclear how to protect them from a precipitous drop in trade if people simply stop going out.
The digitally excluded will feel the full impact of the virus
But when it comes to those outside the gig economy, the digitally excluded, the divide is even greater. Today nearly everyone has a mobile, even in developing markets. But access to affordable Internet – whether through 3G or Wifi – is varied. Even in developed countries like Italy one quarter of the population does not have access to the Internet, and in rural areas mobile and Internet coverage is patchy to non-existent. The imposition of quarantine on these digitally-excluded communities will be onerous, cutting them off from access to key goods and services available only via the web.
In developing markets, notably those in Africa, the impact could be even more severe. Governments’ lack of funds to test for and police the virus could force them to impose draconian restrictions on the movement of people and contact between them. Such a lockdown would strike at the very heart of the economy which is made up of millions of informal traders. Retail is one of the key employers in African towns and cities: from the one-woman street kitchens to the vendors who ply their goods between the cars in traffic jams. There are also millions of taxi and moto drivers, cleaning ladies and handymen. All of these one-person businesses could see their livelihoods extinguished. There is no ‘working at home’ option for them, and little prospect of financial support from their strained governments.
Cool heads are needed
So what can be done by entrepreneurs and businesses as the epidemic constrains their ability to do business? The key thing is not to throw out the baby with the bathwater. Many businesses have seen their basic assumptions evaporate before their eyes and they have reacted in panic, postponing or cancelling all their plans. ‘Self-isolation’ may work for humans, but for businesses its means snuffing out revenues and killing off new business.
What is needed is a cool assessment of how the next three to six months will pan out and a reassessment of the assumptions on which each business plan is based. I am currently working with a client in Nigeria to help them understand and manage the impact the pandemic will have on the ability of their subsidiaries to operate in the country and the broader region. Short-term measures will be needed to mitigate the impact, but businesses should not give up their most prized goals for this year, especially those aimed at growth and development. Because at the end of the day everyone needs to grow their business in order to survive. And a defeatist strategy usually ends up being self-fulfilling.