Time to ADAPT: the world’s biggest challenges are accelerated by COVID-19

ADAPT is even more relevant in the COVID-19 world

In 2017 our team identified a set of urgent challenges the world was confronting and captured our findings in the framework called ADAPT (Asymmetry, Disruption, Age, Polarization, and Trust). Since then we have seen the framework evolve and be applied at many different levels of analysis: for nations, industries, organizations and individuals.

Now, when the world is focused on coping with the COVID-19 pandemic and adjusting to the new ways of living and working it requires, we asked ourselves how this experience will influence the deeper systemic issues raised in ADAPT.

In our initial review, it is clear that COVID-19 accelerates the urgency of the issues:

Asymmetry. Wealth disparity in the world will increase at an accelerated pace. We will see more disparity between nations as the choices their leaders make in navigating the crisis will amplify the differentiation between countries as they come out of the pandemic, for example, whether — and how effectively — countries provide financial support to people and organizations most harmed by their policy decisions. How long the policies last will have an impact on sovereign debt and thus other elements of the recovery at a national level. Disparity within nations also will increase due to the employment issues, small business failures and economic downturn disproportionately affecting those at the bottom of the wealth pyramid. The large-scale destruction of small- to medium-sized businesses is likely to be profound as spending decreases as people worry their own income is at risk and focus only on purchasing essentials.

Disruption. Clearly COVID-19 is an abrupt and major disruption, and it is unlikely to be the last of its type. The heightened sensitivity to the possibility of these types of events will impact our risk appetite and force us to consider how we live and work in an attempt to be better prepared when the next one comes. For example, how an organization thinks about its supply chain. Moreover, there are other disruptive elements that are still advancing while we deal with the fallout from this one. While the pressure on our climate will reduce for a period while travel and other pollutants are slowed, what happens next is unclear. On one hand, the economic crisis that follows will distract people’s attention and planned investments to fight global warming may be diverted to other more “immediate” needs. Demand for alternative energy sources is expected to decrease as government and business leaders will be more focused on short-term issues. On the other hand, there is hope that one positive outcome of the pandemic will be enhanced social consciousness, which could actually increase the pressure to reach net zero emissions. What is clear is that the very urgent issues arising from climate change will not go away even if our attention to them lessens.

It is likely that technology will become even more ubiquitous with all the benefits and harms that creates for individuals and businesses that do not adapt. The power of the Big Tech platforms and other organizations with platform business-models will grow. With quarantine and self-isolation we are being forced to live our lives almost solely via technology, including mitigating the downsides of isolation by staying connected to friends and family. While some of these activities are facilitated by the smaller, challenger companies, the real power is in the hands of the major tech platforms. It is unlikely that after the crisis we will revert to life as it existed before. For example, as employees demonstrate the ability to work from places outside the office with as much efficiency and commitment as in the office, there is no reason for companies to require a full-time return to a physical work environment. Although technology offers us some big advantages in combating the virus, social media is fragmenting and multiplying messages, creating confusion and sometimes panic.

Age. The pandemic will have a differential effect on distinct age groups in a way that will change the context and outlook for many people’s lives. For example, the significant workforce challenges everywhere in the world will be amplified in countries with a young population as a depressed economy will have fewer jobs and lower wages to offer the growing pool of young people looking for work. Small business failures will drastically reduce the number of options those just starting out in their working life have to choose from, so they will be disproportionately impacted. At the opposite end of the demographic spectrum, pension pots will be diminished and thus some people may not be able to retire, or will require more support in retirement than government economic models currently presume. The challenges which aging populations pose to sectors such as inadequate healthcare systems have been fast-forwarded and are now at the heart of the crisis.

Polarization. The world started fracturing many years before the pandemic struck, but this dischord is now even more obvious as, for example, the WHO struggles to be heard. There is a possibility that, as we emerge from this crisis, humanity will grow together as we have all suffered a shared experience but we think this is a medium to long-term outcome. In the short term, people’s local concerns become more acute and crowd out other issues. The psychological side is hard to predict, but the economics are clear. Multinational organizations will need to learn how to navigate an increasingly localized world and multilateralism will have an even greater need to be reinvented. The limitations of just-in-time models dependent upon a global supply chain have become clear, which is likely to accelerate efforts at localization that were already starting before the crisis. Given the real economic and social harms to people, businesses and communities arising from the crisis, countries are likely to be internally focused in the coming years, increasing the momentum toward deep global fracturing. The crisis does highlight the need for greater global cooperation, but it is likely to be focused primarily on obvious shared issues such as disease tracking and management.

Trust: The WHO example is also indicative of how declining trust in institutions is causing harm in the crisis. People are distrusting and, in some cases, ignoring the recommendations of their government. Though, interestingly, the voice of experts has been more welcome, though it is sometimes in juxtaposition to government advice, which is creating its own challenges. And, as citizens have watched this pandemic unfold, the way that leaders across all segments of society have responded has been an opportunity to build trust or destroy it further. Leaders managing this crisis well are aware of the trust deficit and are tackling it with direct and transparent communication to their constituencies. The need for this transparency is likely to continue after the crisis ends, as people will demand it. This crisis has made it clear that the world needs to rethink our approach to leadership and how we develop our leaders.

The world is changing, even faster than we predicted

It was clear before COVID-19 that the pressures arising from ADAPT would cause us to find ourselves in a completely different world in 2025. Now, accelerated by the pandemic, these changes may actually come sooner than we originally thought. Our team predicted in our forthcoming book that humanity has ten years “to midnight”, now it seems there is even less time.

Manage today’s crisis but keep ADAPT in mind

Moreover, COVID-19 will not be the last such shock to the system and, unless we address the very deep trends quickly, and in a way that manages the crisis of today but with the ADAPT issues in mind to set us up for the future, the next shock could be much greater.

For more on #PwCADAPT please visit: www.pwc.com/adapt

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