Did 2020 go like you thought it would?
All of our plans suffered from the impact of a global pandemic. For many of us, the past year has been one of the most challenging and stressful of our lives.
While the imminent health threat of COVID-19 should lessen as immunity and vaccination become widespread, underlying economic uncertainty makes planning for 2021 feel different than any other year. We know the magnitude of change that can happen overnight because we’ve lived through it this past year.
Simply put, our approach to strategy must change. Now more than ever strategy must be resilient to exogenous shocks and adaptable to changing circumstances.
While nothing is certain as we enter 2021, agile strategic planning is more important than ever. Even if you can’t predict where the global economy will be in 12 months, you can still define success for your team. While the path there will take twists and turns, finding success depends on understanding where you’re heading.
Let’s take a look at some of the trends shaping strategy for business leaders as we enter 2021 cautiously optimistic.
Renewed Corporate Responsibility
The transformation in our society this year led to renewed scrutiny on the values of our institutions. A company can set core values, but the way you treat your employees, customers, and community will define your brand.
“Social responsibility” has gone from a buzzword to a critical strategic priority as movements for social and climate justice gain prominence and urgency. New technologies, especially social media, will continue to be subject to increased pressure from lawmakers and citizens to prove that their business models are not creating more harm than good.
Diversity, equity, and inclusion must be a part of any strategy for retaining top talent and building an ethical brand. As public concern over rising inequality strengthens, investing in employees and their development is a critical need. Successful strategy in 2021 will have to take a stakeholder approach, accounting for the concerns of employees, communities, and partners.
With this renewed push for accountability, feedback and opinion metrics from customers and employees will be as important as financial data for driving success in 2021.
Zoom is Here to Stay
As we’ve written about on this blog, remote work offers many benefits to companies and employees when done properly. The cost savings and flexibility have already led many large companies to reduce or move office space and predict long-term remote work. Facebook’s Mark Zuckerberg suggests at least 50% of his company will remain remote for the next five to ten years.
Employers’ primary concern about remote work- that employee productivity would drop- has largely not occurred. Employee productivity increased by 47% year-over-year according to one study. Simultaneously, employees have experienced the flexibility of remote work and its advantages.
While safety precautions will likely continue well into 2021, a slow return to the office will continue. An increased push for the flexibility offered by remote work will likely lead to the emergence of a mixed model- some days in office and some days from home- for those capable. With the standard of 9-5 commuting dead, 2021 will be the year the long-term future of work becomes clearer.
(Finally?) Another Round of Stimulus
In our last quarterly trends round-up, we spoke promisingly of the potential of additional stimulus from US Congress. 3 months later and we still sit on the doorstep of a plan as house leadership and a lame-duck administration hash out details of a plan. With a new administration coming in, the odds of a stimulus- even before year’s end- sit even higher.
Small businesses will welcome payroll relief coming with renewed PPP funds, but B2C businesses will be disappointed that additional stimulus checks may have to wait. Americans are in desperate need of assistance as additional lockdowns threaten recovery progress. Securing additional assistance, hopefully with an influx of consumer relief, will help businesses build stronger in 2021.
How Low can Interest Rates Go
Even with another round of stimulus, inflation expectations remain low given slack in the labor market and dampened low-end consumer spending. With interest rates already historically low, the one-time impossibility of negative interest rates has crossed into reality. The Bank of England cites the success of negative interest rates in Europe as a sign that “We will be in the world of low-interest rates for a long time.”
In the United States, especially with a gridlocked congress, monetary policymakers like presumed Treasurer Janet Yelen will lean into low rates and quantitative easing programs. 2021 will still be a great time for borrowers to take advantage of the low-interest rate environment, and lenders should buckle up.
However, Goldman Sachs estimates a 6% decrease in the value of the dollar, helping earnings of international companies.
Making Up for Lost Time
The optimists among us say that 2021 will be the year we make up for everything we missed in 2020. While the challenge of an unprecedented vaccination effort stands ahead of us, there is good reason for optimism that 2021 will see the return of many of the celebrations and experiences we missed out on in 2020. Events from family events to the Olympics, while likely subject to some “bubble” treatment, will find ways to roll ahead.
Golman Sachs analysts predict 5.3% US GDP growth in 2021 compared to a decline of 3.9% this year. Opportunites are sure to emerge in this recovery for businesses with strategic planning designed to react to emerging trends.
No matter your results in 2020, the end of a challenging year is an opportunity to pause and appreciate making it this far. Planning for 2021 is a moment to recognize the achievements of the past year while sharing the exciting possibilities for the next one. Now is the time to motivate your team for success in 2021 and make this next year a true “comeback season”.