So What Does Superman Have to Do With Covid?
I would expect most good decisions to be based on hard facts and numbers, however, in this article about market trends I will go a little ‘off the beaten path’ for my readers and delve into the realm of psychology and qualitative (as opposed to quantitative) reasoning. Yes, even Superman will play a part so bear with me on this one!
What an Archetype Is and How Hollywood Uses Them
First proposed by psychologist Carl Jung, an archetype is a pattern/image/icon that is universally recognized by people of different eras as a consequence of the collective unconscious. Examples of archetypes can be found around the world in religions, myths and fables. A classic example being that of an archetypal medieval knight who endures a number of trials to, for example, slay an archetypal dragon.
In the West, Hollywood has borrowed heavily from this framework in recent times with characters often taken directly from (or based upon) ancient myths or legends. This has, in my view, had an enormous impact on the collective psychology of UK society.
In my view, what this means is that Western society has been exposed to a recurring plot with an archetypal monster (Covid) ultimately defeated by an archetypal hero (a vaccine, leader or ‘sage’) often after an arduous journey or ordeal. The defeat is usually permanent in a Hollywood film where the final credits usually roll following a happy ending after (e.g. Superman) saves the world.
The Strategic Mistake in Business of Believing in Hope, a Saviour or a Sage
In my analysis, too many business decision-makers have recently relied on this overly simplistic logic, namely, that the fight against Covid would be permanently won following a vaccination program. Too few anticipated the possibility of future disruptions via mutations.
Here are some key points that I would propose for readers who are decision-makers to help them navigate these turbulent times:
1. Risk assessments should be based on data and probabilities and not hope.
2. The reality of a ‘permanent pandemic’ (or at least a ‘long-term pandemic’) should be embedded into organizational strategy at least as a possibility if not that of a probability.
3. Complacent thinking should be eliminated. What if things do not ‘go back to how they were’ before Covid? In my view, to openly discuss and adapt to change is vitally important if an organization is to survive and thrive in what is now a new environment. How many employers were recently encouraging people to go back to work on the assumption that ‘things were back to normal?’ Perhaps we now have a ‘new normal?’
4. We have to accept the probability that certain industries will be permanently impacted (positively or negatively) rather than assuming that they will return to previous levels of turnover or profitability.
The Business Opportunity – Covid Risk, Flexibility & Hybrid Work
The last point is particularly key in my opinion. The VC world often uses the word ‘disruption’ as a factor in deciding which industries to invest in and here is a quote below:
COVID-19 is unlike any other challenge the world has faced, affecting people from every socio-economic background and causing a disruption in operations and processes across industries.Ritesh Agarwal
Arguably, the Covid pandemic has been one of the largest disruptive forces in recent times.
1. It has accelerated flexible and remote working
2. It has fundamentally changed the housing market
3. It has fundamentally changed many employer/ employee relationships in the workplace
4. It has fundamentally changed certain industries (airlines, tourism, hospitality etc.)
Extreme Government Measures – the Coming Economic Crunch
In my view, the biggest ‘crunch’ will happen when the ‘Superman Hypothesis’ turns out the be incompatible with the current and ongoing data, namely, that there is a high probability of future mutations for years to come.
The ‘Superman Hypothesis’: In this scenario, the government ‘throws the kitchen sink’ at the economy applying extreme measures such as QE, low interest rates, the furlough scheme etc. This hypothesis assumes that industries will ‘roar back to life’ once ‘Superman saves the world.’ The consequences of these measures will include an unprecedented increase in government debt and ‘sticky’ inflation (however, this may well have been felt to be ‘a fair price to pay’ for defeating an archetypal foe.)
The ‘Superman Does Not Save Us Hypothesis’: This hypothesis assumes regular Covid mutations and disruption for years to come. In this economic scenario, some industries are finally accepted as being permanently disrupted. Additionally, the government will be forced to increase interest rates in a turbulent economic environment (impacting significantly on the financial sector and property markets). The ‘crunching sound’ would be akin to changing down gears, hitting the brakes and changing direction very quickly after a driver realises that he has been speeding in the wrong direction.
A Simple Illustration
To illustrate, vast sectors of the economy such as hospitality, tourism, airlines and the theatre district of London have received billions in furlough money and government-backed loans. They received this assistance on the assumption that the vaccine will be a permanent solution in 2021. They did not restructure permanently as a result. What happens if they no longer receive bailouts? Alternatively, worse still, what happens to the nation’s finances if they continue to be bailed out every time a new mutation comes along? A similar assessment could be made to a long list within the economy e.g. what happens to the demand for commercial office space if the pandemic is assumed to be long-term and hybrid working is here to stay (particularly if interest rates rise)?
Summary – Becoming Superheroes
In my view, the current turbulent times can present a huge business opportunity to many readers. Some industries will be permanently disrupted (both positively and negatively) and I encourage readers to position themselves to benefit.
Readers should also look out for the impact that central banks raising interest rates will have on vast sectors of the U.K. economy and plan ahead accordingly. Ultimately, however, I firmly believe that Superman will not save the world (at least not quickly), rather that we must all learn to become our own Superheroes in other to survive and thrive in these turbulent times as this pandemic continues to disrupt our lives.