The kaleidoscope has been shaken

6 April 2020

Duncan Fulton, Partner

“The kaleidoscope has been shaken, the pieces are in flux, soon they will settle again. Before they do let us reorder this world around us”. 

So said Prime Minister Tony Blair in October 2001, in that fervid, fearful period after the 9/11 attacks during which, for many, it felt like the world could never be the same again. Blair’s hope was that tragedy would beget a new global consensus and a shared commitment to each others’ security. And, fleetingly, it did.

COVID-19 today presents a different sort of challenge of a different order of magnitude. Unlike our foe then, this pandemic poses a genuine challenge to our way of life. Not in the sense of loss of life – terrifying and tragic though that number will be – but in how our society and our institutions function when we are the other side of this medical emergency. Some of our industries, institutions and businesses may not survive the crisis – many will be profoundly reshaped.

The challenge of definition

A crisis manual will tell you that a critical first step is to ‘define the crisis’. But in these times that is far easier said than done. What makes this situation unique outside of wartime is the sheer scope. It is not just a public health crisis, but an economic and geopolitical crisis. It impacts on how we work, where we work, how our children are educated, and how the law is administered. It poses fundamental questions about the balance between public and private sectors and the respective roles of the state, business and communities. So, the challenge of definition is to try and understand what will be the ‘new normal’, and what are the challenges and opportunities that will emerge from this uniquely disruptive moment in our history.

In the UK, economic and social enforcement measures that a month ago would have been unthinkable are passed into law. The impossible is now policy. The CBI estimates that nearly half of all businesses will furlough staff, while UC applications have risen tenfold to nearly 1,000,000 over the past fortnight alone. Such is the extent of these and other measures that the government cannot realistically return to the status quo ante. On the other side we’ll inevitably have a far bigger government and a more supportive state.

Accelerated reform

Much as the role of the state will change, so too will the role of business. The importance of business demonstrating social value has become prominent as never before. This crisis may well greatly accelerate the redefinition of corporate and fiduciary purpose to rebalance responsibilities towards shareholders and society. The cancellation of many dividend payments may well be a temporary measure (in part) to protect jobs, but will it also herald a more permanent shift in priorities in favour of employees and communities? Significant corporate governance reforms seem inevitable.

The pieces have been shaken, the challenge for governments, for businesses, for all of us – is to ensure that when they settle (for settle they will), we are prepared for a very different picture to the one that went before.

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