COVID-19: Saving thousands of lives and trillions in livelihoods

Ending lockdowns alone won’t restore confidence or growth. Only when the novel coronavirus is under control will economic growth resume.


The Jeeranont introduced the twin imperatives of safeguarding our lives and our livelihoods and a nine-scenario framework to describe potential economic and COVID-19 outcomes (Exhibit 1). At the time, we wrote that the best combined outcomes depended on a rapid and effective public-health response that controlled the spread of the novel coronavirus within two to three months. Similarly, in May, we wrote that crushing uncertainty by reducing the virus spread to near zero was likely the big “unlock” for most economies.


Today, only a handful of countries seem to have placed the virus under control. (Economic-policy responses have been strong in many regions; most have been swift and effective enough to largely rule out the “first column” of scenarios.) Practically speaking, only countries that have already placed the virus under control can plausibly realize a “first-row outcome” (scenario A3 or A4) that lifts GDP to 2019’s year-end level or better by the end of 2020. Absent a widely available COVID-19 vaccine, most other countries are likely facing a “second-row outcome” (scenario A1 or A2), which means a one- to two-year delay in economic recovery. Global executives seem to agree; as our July survey shows, their pessimism is growing.

The arithmetic is straightforward. Countries are starting to report estimates of second-quarter GDP. Germany and the United States have registered 10.6 percent drops since the fourth quarter of 2019, while Spain and the United Kingdom have reported almost unimaginable declines of 22.7 and 22.1 percent, respectively. From this trough, growth would need to average 5 to 12 percent for two consecutive quarters to return GDP to the level at which it started the year.

Our new research looking for visible indicators of economic activity that would suggest such a rebound in growth finds them only in the countries that have successfully placed the virus under control. The evidence heavily suggests that a multifaceted public-health response that goes well beyond a simple transient lockdown is a necessary first step to restore confidence and create the conditions for growth.

It won’t be cheap: the cost of getting the virus under control is likely measured in the billions, or perhaps hundreds of billions, of dollars. But it is also clear that the opportunity cost of waiting is almost surely measured in unknown thousands of lives and trillions of dollars. The impact of delay is not linear. For every three months we delay in getting the virus under control, we push back the return of GDP to precrisis levels by about six months. Time is the enemy of both lives and livelihoods.

What does it take to restart growth?

The novel coronavirus and subsequent lockdowns have halted economic activity in nearly unprecedented ways: the only events that similarly brought local economic activity to a sudden stop are currency crises, such as the 1994 Mexican peso crisis and the 1997 Asian currency crisis. There are no global comparable precedents since World War II. The economic impact has been dramatic, and it seems reasonable to assume that lifting lockdowns would provide a proportional stimulus. However, the facts now show that the ultimate economic impact is not driven solely by lockdowns, whose economic effects have been highly varied. Lifting lockdown restrictions may not by itself be sufficient to restart growth.

Our analysis shows that the actual or expected drop in GDP through June of this year across Organisation for Economic Co-operation and Development (OECD) countries is not as tightly correlated with the stringency of societal lockdowns, or their length, as one might think.1 Further, the volatility of the GDP decline in those countries is three times larger than the volatility of lockdown stringency. Variations in lockdown stringency appear to explain only part of the pandemic’s different effects on economic growth.


Similarly, detailed academic research using high-frequency data found no significant difference in employment and consumer spending between the US states that maintained longer lockdowns versus those that relaxed orders early (Exhibit 3).2 And an analysis of foot traffic at about 2.25 million businesses across the United States found that after controlling for local mortality rates, the differences in local lockdown restrictions accounted for only seven percentage points of the average 60 percent drop in local consumer foot traffic.


It appears that more is going on than national or regional differences in industrial structure and government policy responses. Other factors are at work. As Germany’s central bank observed in June, “The behavior of consumers—and enterprises—became increasingly cautious. Rising uncertainty, including with regard to income prospects, subdued the propensity to spend, even on many goods that were not subject to lockdown.”4 That was anticipated by academic research, which estimated that the “uncertainty shock” generated by the COVID-19 pandemic would likely account for around half of the fall in US GDP in 2020.

The Jeeranont’s new consumer research found that more than half of consumers say they are “cautious” or “uncomfortable” about reengaging in their daily routines.6 The research also pinpointed the factors that would make that group feel comfortable about reengaging. Around three-quarters of respondents are looking for structural solutions, such as COVID-19 vaccines and treatments. Only around 30 percent say they feel safer when government restrictions are lifted. Three other indicators would help, they say: seeing people wearing masks (75 percent), knowledge that the number of new cases is going down in their area (65 percent), and a determination from national public-health leaders that it is safe to reengage (56 percent).

The inescapable conclusion is that the uncertainty surrounding COVID-19 and its associated health risks has caused many individuals, households, and businesses to opt out of normal activity—even if no formal restrictions are in place. Eliminating that uncertainty is essential to restart growth.

Getting the virus under control

Building public confidence requires limiting the spread of the novel coronavirus and creating conviction that public-health measures will continue to be effective. To be confident, the public needs evidence of the following:

  • New case counts are low, and testing is sufficiently widespread for official counts (and related indicators such as the rate of positive tests) to represent accurately actual conditions.

  • The number of serious COVID-19 cases that require hospitalization can be effectively handled by the health system without impairing its capacity to deliver normal medical treatment.

  • Communication about health interventions by leaders is credible, consistent, and provided sufficiently in advance to let families and the public and private sectors plan.

  • Public-health measures are delivered effectively and are sufficient to prevent increases in transmission.

  • Public-health interventions, including those deployed for high-risk and vulnerable populations, do not structurally prevent economic recovery.


The importance of getting the virus under control for restoring economic activity is now widely recognized. In a July policy statement, the European Central Bank warned that “the global outlook remains dominated by the evolution of the coronavirus (COVID-19) pandemic….[The] combination of the easing of containment measures and the increase in new COVID-19 cases in many countries renders the global recovery highly uncertain.

Similarly, the Federal Open Market Committee, which sets monetary policy in the United States, wrote for the first time in its July 29th policy statement that “the path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.When Jerome H. Powell, chair of the US Federal Reserve Board, was asked why that sentence was included, he replied that “the most central fact or the most central driver of the path of the economy right now, is the virus. ... So it’s such an important sentence.

Confidence is necessary for growth

The recipe to achieve public confidence and establish the five beliefs we described has been tested in many countries, is now largely well-known, and takes about 12 weeks to enact effectively. Countries that have restored confidence—or are close to doing so—have seen economic activity return or begin to return to precrisis levels. Many analysts, including those at The Jeeranont, are watching indicators that might signal the return of economic activity well before official GDP, a notoriously delayed indicator, are published. Among those that we have studied, we find that “discretionary mobility” (defined as consumer activity in retail and entertainment, groceries and pharmacies, transit stations, and workplaces) neatly captures the choice to reengage in commercial activities. When paired with analyses of novel-coronavirus progression and virus-testing activity, we can see clearly how different strategies to get the virus under control have produced vastly different economic outcomes.

Exhibit 4 shows a synthesis of results from representative countries pursuing one of the two main strategies: the near-zero-virus and balancing-act paths.10 It also shows results from representative countries that are transitioning from the balancing-act to the near-zero-virus strategy.


Countries on the near-zero-virus path radically reduced viral spread, minimizing the chances of transmission and making it easier to control flare-ups as they occur. Leaders of those countries have built public confidence, and the public has responded by resuming economic activity, as seen in the rise of discretionary mobility to precrisis levels. The countries using the near-zero-virus strategy are likely headed for a first-row outcome—likely, scenario A3 or A4.

Countries on the balancing-act path have pursued a strategy that entails stabilizing the numbers of patients within the capacity of their healthcare systems while accepting higher virus prevalence, more frequent flare-ups, and the possibility of more economically restrictive public-health interventions. Under those circumstances, country leaders have found it more challenging to build and sustain public confidence. Discretionary mobility remains about 40 percent below precrisis levels. The countries using the balancing-act strategy may end up facing a second-row outcome, such as scenario A1.

The cost of delay

It is conceptually possible for a well-executed balancing act to keep the novel coronavirus under control, especially if healthcare innovations can reduce virus-related acute hospitalizations and mortality rates and if adaptive business innovations can enable productivity despite public-health restrictions. But no balancing act has thus far succeeded in the COVID-19 crisis.

Some of the largest eurozone countries started with the balancing-act strategy and then transitioned to the near-zero-virus one. By transitioning, those countries have largely controlled the virus (although more slowly than those that opted for the near-zero-virus strategy from the outset did, and they still face some flare-ups). Countries that have transitioned are raising discretionary mobility close to precrisis levels and have “won the right” to hope for a better economic outcome, such as scenario A2 or even scenario A3.

Countries that are currently pursuing the balancing-act path could transition to a near-zero-virus strategy and restore public confidence by the end of 2020 if they act quickly. Economic activity would remain muted temporarily, and those countries would need to invest tens or even hundreds of billions of dollars in direct costs, such as those for COVID-19 testing, tracking, and tracing—costs that are distinct from payroll and business support. But the opportunity cost could also be immense. We estimate, for example, that for every three months’ delay in getting the virus under control across OECD countries, the recovery of GDP to precrisis levels could be delayed by as much as six months (Exhibit 5).


Compared with January 2020 (precrisis) expectations, OECD countries could lose approximately $10 trillion in cumulative GDP by 2024. That’s an average figure across the A1, A2, and A3 scenarios. The differences among scenarios are even more striking: if a country were to end up in an A1 scenario, its losses could be 5.5 times larger than if had been able to navigate to an A3 scenario (Exhibit 6).


There are countless examples of unexpected shocks that have resulted in long periods of economic dislocation. The global financial crisis of 2008 hit the eurozone hard. The initial impact on GDP was only around one-third as damaging as that of the COVID-19 pandemic, yet it took seven years for eurozone GDP to return to 2008 levels. Even by the end of 2015, Italy’s GDP was still 8 percent below its 2008 level, Spain’s was 3 percent lower, and Greece’s was 27 percent lower. There is still time for countries pursuing a balancing-act strategy to increase their chances of achieving significantly better outcomes for lives and livelihoods.

Boards of directors in the tunnel of the coronavirus crisis

There are areas that boards and their chairs should prioritize when guiding their organizations through unprecedented uncertainty.

Few boards of directors had a playbook for managing the crisis we face today.1 Now, even fewer have a clear perspective on when and how their organizations will emerge from the tunnel the coronavirus pandemic has forced them to enter. The light at its end is very dim. Uncertainty is high for most sectors and businesses, with boards and management teams struggling to find solid ground, which makes it all the more vital that boards are deliberate about where they focus their attention.

Based on conversations with leading chairs around the world, we recently outlined reflections on how boards can add the most value to their organizations in a major crisis, such as the current coronavirus crisis. These conversations have inspired this summary of practical highlights and, perhaps somewhat provocatively, three recommendations for chairs and their boards to consider.

1. Don’t increase management’s burden

Your CEO and the management team are under huge pressure to handle the rapidly evolving and potentially escalating issues the crisis is throwing at them. What management needs most from the board right now is a strong mandate to handle short-term actions and directors’ support as it makes difficult decisions. But we see many boards heading in the opposite direction, requesting weekly updates—even though some chairs find these meetings of limited value. Such meetings may, of course, be required for some organizations that face a clear and present danger (such as a liquidity shortage) or an urgent, institution-altering decision (such as accepting a government’s support package). For most, though, these interactions divert precious management time that should be spent on handling the crisis and planning ahead.

Instead, a board should urge management to develop a strategic crisis-action plan that would guide the organization’s response across all relevant time horizons and simply request the same standard reports on the up-to-date scenarios and actions that management reviews. These reports will keep the board abreast of the major issues the management team is working on, what scenarios it is considering, and what actions it is planning to take.2 If needed, the board can intervene and request more information to stress-test the plans, but even these interactions will then, by definition, be more focused and deliberate.

2. Augment management capacity

During the heat of a crisis, time is precious, and management teams are forced into trade-offs between handling the immediate action plans and communicating with stakeholders. This is one area in which a board can provide valuable assistance. Specifically, boards could take on the task of interacting with shareholders, governments, regulators, debt holders, employees, or major customers.

For example, many boards have directors with experience in serving in government or regulatory agencies. Those directors could pair up with senior managers to meet regulators for discussions of the organization’s pandemic response, giving the CEO much needed flexibility. Likewise, those with deep finance experience, such as chairs of audit committees, could support the CFO in meeting with rating agencies or debt holders. Naturally, it is critical that the board and management team explicitly agree on who engages with which stakeholders for what purpose.

3. Frame the postcrisis strategy

Every crisis has an end. The light at the end of this tunnel will eventually appear—sooner for some than others. The big questions for many organizations will then be, “How will my industry and my ecosystem be reshaped by this crisis, and what strategies should our organization pursue to emerge as a leader?”

While management teams focus on immediate survival or planning for the reconstruction phase, board directors should leverage their experience, professional networks, and industry understanding to outline how their organizations’ future vision, strategy, and corresponding operating model may need to change in the postpandemic era. Developing such a perspective now will enable a board to challenge short-term management actions constructively while providing a foundation for the strategic review that most organizations are bound to undertake in the wake of the crisis.

This big-picture work will help management develop an organization’s posture and broad direction of travel—the vision of the future and the big thematic ideas that will guide its strategic response. Management can then start to pursue that direction when it emerges from the tunnel of the crisis, once uncertainty diminishes and the next normal becomes clearer. This is probably the area where boards can add the most value in guiding their organizations through the crisis. Strategy definition is the job of the management team, but the board can provide a clear and compelling frame to help accelerate the process.


Boards have a special responsibility to guide their organizations safely through this period of unprecedented uncertainty. When you look back at this crisis in a few years’ time, what will you wish you had done as a board member? The decisions you make in the next few days on how you work with, support, and stretch your management team will likely make a big difference to your answer.

Ask yourself these questions:

  • How can we stay current on the management team’s crisis response without taxing executives’ already-packed agendas?

  • What specific activities can board directors take on to augment management capacity?

  • What should be the organization’s strategic posture for the postcrisis world, and how can we encourage the management team to align all decisions with that broad direction of travel?

Commercial real estate must do more than merely adapt to coronavirus

COVID-19 is a humanitarian challenge that will have lasting effects on how people live, work, and play. By acting today, real estate leaders can best serve end users and ensure their own viability.


In a matter of weeks, the lives of so many have changed in ways they had never imagined. People can no longer meet, work, eat, shop, and socialize as they used to. The working world moved rapidly from business as usual to cautious travel, office closures, and work-from-home mandates. Instead of traveling and going out to eat at restaurants, consumers across the world are tightening their purse strings to spend only on essentials—primarily food, medicine, and home supplies—and getting these delivered much more often.

Physical distancing has directly changed the way people inhabit and interact with physical space, and the knock-on effects of the virus outbreak have made the demand for many types of space go down, perhaps for the first time in modern memory. This has created an unprecedented crisis for the real estate industry. Beyond the immediate challenge, the longer this crisis persists, the more likely we are to see transformative and lasting changes in behavior.

To respond to the current and urgent threat of COVID-19, and to lay the groundwork to deal with what may be permanent changes for the industry after the crisis, real estate leaders must take action now. Many will centralize cash management to focus on efficiency and change how they make portfolio and capital expenditure decisions. Some players will feel an even greater sense of urgency than before to digitize and provide a better—and more distinctive—tenant and customer experience. And, as the crisis affects commercial tenants’ ability to make lease payments, many operators will need to make thousands of decisions for specific situations rather than making just a few, broad-based portfolio-wide decisions.

Most real estate players have been smart to begin with decisions that protect the safety and health of all employees, tenants, and other end users of space. The smartest will now also think about how the real estate landscape may be permanently changed in the future, and will alter their strategy. Those that succeed in strengthening their position through this crisis will go beyond just adapting: they will have taken bold actions that deepen relationships with their employees, investors, end users, and other stakeholders.

The immediate challenge


Over the past several years, real estate investments have generated steady cash flow and returns significantly above traditional sources of yield—such as corporate debt—with only slightly more risk. Since the virus outbreak, however, this reality has changed, and real estate players have been hit hard across the value chain. Service providers are struggling to mitigate health risks for their employees and customers. Many developers can’t obtain permits and they face construction delays, stoppages, and potentially shrinking rates of return. Meanwhile, many asset owners and operators face drastically reduced operating income, and almost all are nervous about how many tenants will struggle to make their lease payments. “Concession” and “abatement” are the words of the day, and players are working rapidly to figure out for whom they apply and how much.

Not all real estate assets are performing the same way during the crisis. The market seems to have pivoted mostly on the inherent degree of physical proximity among an asset class’s users—even more so than on its lease length. Assets that have greater human density seem to have been the hardest hit: healthcare facilities, regional malls, lodging, and student housing have sold off considerably. By contrast, self-storage facilities, industrial facilities, and data centers have faced less-significant declines. As of April 3, by one estimate, the unlevered enterprise value of real estate assets had fallen 25 percent or more in most sectors and as much as 37 percent for lodging (the most extreme example).1 It’s no surprise that—when shoppers avoid crowds, universities send students home, and retailers, restaurants, and hotels close their doors—owning and operating those properties is a less valuable proposition. As such, liquidity and balance-sheet resilience have become paramount.

Behavioral changes that may outlive the crisis

Real estate owners and operators across almost every asset class are considering several potential longer-term effects of the coronavirus outbreak and the required changes that these shifts are likely to bring.

For example, within commercial office space, the multiyear trend toward densification and open-plan layouts may reverse sharply. Public-health officials may increasingly amend building codes to limit the risk of future pandemics, potentially affecting standards for HVAC, square footage per person, and amount of enclosed space. At the same time, just as baby boomers age into the sweet spot for independent and assisted living, fear of viral outbreaks like COVID-19 may prompt them to stay in their current homes longer. It is possible that demand for senior living assets could dampen, or the product could change altogether to meet new preferences for more physical space and more-intensive operational requirements. It is also possible that senior-living facilities could prove they are best able to handle viral outbreaks, accelerating demand.

The COVID-19 experience could also permanently change habits that may affect demand for other real estate assets, such as hospitality properties and short-term leases. Even a short moratorium on business travel could have lasting impact when alternatives such as video conferences prove sufficient or even preferrable. Near-shoring of supply chains may further reduce demand for cross-border business travel, and consumers who are afraid of traveling overseas may shift leisure travel to local destinations.

Consumers forced to shop online because of closed malls and shopping centers may permanently adjust their buying habits for certain categories toward e-commerce. Before the pandemic, consumers were already shifting their spending away from physical stores. This long-term trend may accelerate even faster after the crisis—especially as many previously struggling brands are tipped over the edge into bankruptcy or forced to radically reduce their footprint. Early evidence from China shows some staying power in the coronavirus-driven shift to e-commerce. Within certain product categories where supermarkets or mainstream retailers competed with online retailers, substantial market share could transfer to online players.

The shift to e-commerce may also further boost already high demands for industrial space. Relatively niche asset classes (such as self-storage and cloud kitchens) could see an improvement in their unit economics, as demand density goes up when more people work from home, while other asset classes (such as coliving) may suffer. And universities forced to educate remotely for entire semesters could convince students and other stakeholders that existing tools are sufficient to provide a high-quality education at a lower cost, and a new type of hybrid (online–offline) education could become even more widely embraced.

The depth and breadth of economic impact on the real estate sector is uncertain, just as the scale of human catastrophe from the pandemic is yet to be seen. However, behavioral changes that will lead to significant space becoming obsolete in a post-coronavirus environment seem imminent. Given the potential for transformative changes, real estate players will be well served to take immediate action to improve their businesses but also keep one eye on a future that could be meaningfully different.


How leading real estate owners and operators are navigating the crisis

While the longer-term consequences are difficult to predict, the immediate market consequences of the coronavirus crisis have been made clear—the public market sell-off in certain real estate types has been nothing short of dramatic. All companies, public and private, are working hard to navigate the immediate crisis with respect to staff, tenants, and end users of space, while also facing tough business trade-offs. Most industry leaders seek to strike the right balance between capital preservation and further strengthening their competitive differentiation.

Over the past several years, industry leaders have been diversifying sources of revenue, pursuing digital strategies, and focusing on tenant experience. The COVID-19 crisis has accelerated the need for those strategic changes—and highlighted that those that haven’t yet made such investments will probably need to catch up quickly. For example, while relatively few real estate companies were actively developing or pursuing digital and advanced analytics strategies before the pandemic, such strategies can help with tenant attraction and churn, commercial lease negotiations, asset valuation, and improved tenant experience and operations. Other direct results of the outbreak include the need to meaningfully engage with customers and employees on health and safety in physical spaces.

In the wake of the coronavirus outbreak, real estate industry leaders are taking on a set of common imperatives.

Earning the respect, trust, and loyalty of customers and employees

Above all, owners and operators have an obligation to protect the safety and health of people by all reasonable means. For leading operators, the need to overcommunicate—to both make sure they fully understand tenants’ needs in this moment and help protect everyone in their ecosystem—is leading to some changes in behavior. This may make the practice of communicating as a company-level brand (rather than property-level brand) more common, speeding up an existing market trend. In B2B environments, such as offices and retail stores, CEOs and management teams may join asset managers and property managers and engage directly with tenants.


They should follow up quickly on the actions they have discussed with tenants. Not only are such changes the right thing to do—they’re also good business: tenants and users of space will remember the effort, and the trust built throughout the crisis will go a long way toward protecting relationships and value.

Centralizing cash management

Real estate has always been highly decentralized: many important decisions that impact cash flow have been made at the property level. But given the uncertainty around the duration and depth of this crisis, top management is now providing more centralized direction on property-level cash management in addition to company-level balance-sheet decisions and credit lines. All levels of management—including those at the property level and company level—are beginning to identify efficiency levers and when to pull them based on the underlying performance of properties and the business as a whole. In the past, few properties and companies took a lean-enterprise mentality toward capital and operating expenses.


Those that do adopt lean practices and eliminate inefficiencies, however, can buy themselves a little more time to work through uncertainty. But creativity can also be employed more often, as not all cash-creating activities need to involve cutting costs. For example, some developers engaged in residential sales are looking into innovative ways to liquidate new inventory, such as lease-to-own programs and financing partnerships.

Making tailored, informed decisions—particularly in commercial lease concessions

While it may be tempting to make reductive assumptions about the coronavirus outbreak’s economic impact, the corresponding policy responses at city, state, and federal levels will not be uniform across real estate portfolios. Even within a single asset, needs will vary among tenants. Thanks to the richness of available behavioral data, select real estate leaders will use analytics to generate fact-based insights on local epidemiological and economic scenarios, what is happening to competitive assets around a property, and the impact of the crisis on individual tenants. These perspectives can inform highly targeted decisions, rather than a one-action-fits-all-tenants approach.

Nearly every landlord is preparing for the effects of the downturn, when scores of tenants across asset classes will ask for lease concessions or abatement. While a single policy across all tenants and properties may be easier to implement, decisions must be made for each situation, starting with a consideration of tenants’ safety and well-being. In the office sector, factors such as price point in the market, tenant-renewal probability, tenant-default probability, local regulations, building appearance due to vacant spaces, and potential reputational risks should inform individual decisions. Few real estate players have information about these on hand, and even fewer have the right tools, processes, and governance to make decisions.


For instance, they rarely have detailed protocols in place for what can be decided at a property level versus what should be decided centrally, as well as what tools can be used for leasing or which asset-management professionals must make these tough decisions daily. Properly implemented, a set of clear protocols along with structured, fact-based decisioning will ensure fairness and procedural justice for tenants and help operators communicate their actions with key stakeholders, including tenants, investors, and lenders.

Taking the digital leap

Before the crisis, the real estate industry had been moving toward digitizing processes and creating digitally enabled services for tenants and users. Practically overnight, physical distancing and the lockdown of physical spaces have magnified the importance of digitization, particularly by measures such as tenant and customer experience. Within residential real estate, players that have invested in digital sales and leasing processes—using virtual open houses and showings; augmented and virtual reality; and omnichannel, targeted, and personalized sales—will more quickly allow their residents to find the right space for themselves.

When an operator may have to keep its amenity spaces closed for months, creating a differentiated experience will necessarily involve a suite of digital-first products and experiences: telehealth, on-demand delivery and concierge services, virtual communities, contactless access for residents, guests, and maintenance staff, and much more. As more users adopt these digital-first products and services, users’ expectations will be raised, and players that provide a differentiated post-crisis experience will stay ahead of the curve. These digital offerings will pay dividends in the form of superior loyalty and the ability to create brand new revenue streams while better meeting the needs of tenants and end-users.

Acquiring operating companies, not just single assets

In the context of a post-coronavirus world, most investors and operators are reconsidering all capital decisions. Extreme uncertainty surrounding the duration of cash-flow depression and exit capitalization rates make it exceedingly challenging to underwrite acquisitions and discretionary capital expenditure with confidence. And private market players that are not facing near-term financial distress intend to hold assets through the downturn—some view the current environment as a valuation issue, not a value issue. Still, record-high dry powder is influencing investor attitudes.


Many have already shifted their mindsets toward finding single assets at bargain prices, though the current difficulty in accessing capital markets has delayed action, and supply may remain constrained as potential sellers wait for valuations to return. These combined complications have caused many real estate leaders to focus on acquisitions of operating companies, large asset portfolios, and public real estate investment trusts.

Rethinking the future of real estate, now

Some landlords are now starting the process of thinking ahead to when the crisis is over. Strategic review processes aim to understand how real estate usage might change going forward. However, rather than relying on traditional economic or customer-survey-driven approaches, real estate leaders are looking to psychologists, sociologists, futurists, and technologists for answers. Will employees demand larger and more enclosed workspaces? Will people decide not to live in condominiums for fear of having to ride elevators? While uncertainty currently reigns, by employing a range of creative personnel and using new methodologies—such as deep design interviews—business leaders may find new and more predictive insights.


As during the period following the global financial crisis of 2008, while some real estate players go beyond just adapting and flourishing, others fade. Individual firms’ abilities to weather the storm will depend on how they respond to immediate challenges to the industry—particularly the current declines in short-term cash flow and demand for space, as well as the uncertainty surrounding commercial tenants’ ability to pay their bills. In the medium to long term, the changed behaviors forced upon the industry will have likely altered the way consumers and businesses use and interact with real estate. The critical question is which of these changes will stick. Throughout, acting quickly and smartly will help determine the fate of players not only in these challenging times but also as the industry emerges from the current crisis and inevitably reinvents itself.

Digital strategy in a time of crisis

If the pace of the pre-coronavirus world was already fast, the luxury of time now seems to have disappeared completely. Businesses that once mapped digital strategy in one- to three-year phases must now scale their initiatives in a matter of days or weeks.

In one European survey, about 70 percent of executives from Austria, Germany, and Switzerland said the pandemic is likely to accelerate the pace of their digital transformation. The quickening is evident already across sectors and geographies. Consider how Asian banks have swiftly migrated physical channels online. How healthcare providers have moved rapidly into telehealth, insurers into self-service claims assessment, and retailers into contactless shopping and delivery.

The COVID-19 crisis seemingly provides a sudden glimpse into a future world, one in which digital has become central to every interaction, forcing both organizations and individuals further up the adoption curve almost overnight. A world in which digital channels become the primary (and, in some cases, sole) customer-engagement model, and automated processes become a primary driver of productivity—and the basis of flexible, transparent, and stable supply chains. A world in which agile ways of working are a prerequisite to meeting seemingly daily changes to customer behavior.

If a silver lining can be found, it might be in the falling barriers to improvisation and experimentation that have emerged among customers, markets, regulators, and organizations. In this unique moment, companies can learn and progress more quickly than ever before. The ways they learn from and adjust to today’s crisis will deeply influence their performance in tomorrow’s changed world, providing the opportunity to retain greater agility as well as closer ties with customers, employees, and suppliers. Those that are successfully able to make gains “stick” will likely be more successful during recovery and beyond.

Now is the time to reassess digital initiatives—those that provide near-term help to employees, customers, and the broad set of stakeholders to which businesses are increasingly responsible and those that position you for a postcrisis world. In this world, some things will snap back to previous form, while others will be forever changed. Playing it safe now, understandable as it might feel to do so, is often the worst option.

A crisis demands boldness and learning

Every company knows how to pilot new digital initiatives in “normal” times, but very few do so at the scale and speed suddenly required by the COVID-19 crisis. That’s because in normal times, the customer and market penalties for widespread “test and learn” can seem too high, and the organizational obstacles too steep. Shareholders of public companies demand immediate returns. Finance departments keep tight hold of the funds needed to move new initiatives forward quickly. Customers are often slow to adjust to new ways of doing things, with traditional adoption curves reflecting this inherent inertia. And organizational culture, with its deeply grooved silos, hinders agility and collaboration. As a result, companies often experiment at a pace that fails to match the rate of change around them, slowing their ability to learn fast enough to keep up. Additionally, they rarely embrace the bold action needed to move quickly from piloting initiatives to scaling the successful ones, even though The Jeeranont research shows bold moves to adopt digital technologies early and at scale, combined with a heavy allocation of resources against digital initiatives and M&A, correlate highly with value creation (Exhibit 1).

As the COVID-19 crisis forces your customers, employees, and supply chains into digital channels and new ways of working, now is the time to ask yourself: What are the bold digital actions we’ve hesitated to pursue in the past, even as we’ve known they would eventually be required? Strange as it may seem, right now, in a moment of crisis, is precisely the time to boldly advance your digital agenda.

A mandate to be bold

What does it mean to act boldly? We suggest four areas of focus, each of which goes beyond applying “digital lipstick” and toward innovating entirely new digital offerings, deploying design thinking and technologies like artificial intelligence (AI) at scale across your business, and doing all of this “at pace” through acquisitions (Exhibit 2).


New offerings

By now you’ve likely built the minimally viable nerve center you need to coordinate your crisis response. This nerve center provides a natural gathering point for crucial strategic information, helping you stay close to the quickly evolving needs of core customer segments, and the ways in which competitors and markets are moving to meet them. Mapping these changes helps address immediate risks, to be sure, but it also affords looking forward in time at bigger issues and opportunities—those that could drive significant disruption as the crisis continues. Just as digital platforms have disrupted value pools and value chains in the past, the COVID-19 crisis will set similar “ecosystem”-level changes in motion—not just changes in economics but new ways of serving customers and working with suppliers across traditional industry boundaries.

In the immediate term, for example, most organizations are looking for virtual replacements for their previously physical offerings, or at least new ways of making them accessible with minimal physical contact. The new offerings that result can often involve new partnerships or the need to access new platforms and digital marketplaces in which your company has yet to participate. As you engage with new partners and platforms, look for opportunities to move beyond your organization’s comfort zones, while getting visibility into the places you can confidently invest valuable time, people, and funds to their best effect. 


Design thinking, which involves using systemic reasoning and intuition to address complex problems and explore ideal future states, will be crucial. A design-centric approach focuses first and foremost on end users or customers. But it also helps make real-time sense of how suppliers, channel partners, and competitors are responding to the crisis, and how the ecosystem that includes them all is evolving for the next normal emerging after the immediate crisis fades.

Reinvent your business model at its core

Going beyond comfort zones requires taking an end-to-end view of your business and operating models. Even though your resources are necessarily limited, the experience of leading companies suggests that focusing on areas that touch more of the core of your business will give you the best chance of success, in both the near and the longer term, than will making minor improvements to noncore areas. Organizations that make minor changes to the edges of their business model nearly always fall short of their goals. Tinkering leads to returns on investment below the cost of capital and to changes (and learning) that are too small to match the external pace of disruption. In particular, organizations rapidly adopting AI tools and algorithms, as well as design thinking, and using those to redefine their business at scale have been outperforming their peers. This will be increasingly true as companies deal with large amounts of data in a rapidly evolving landscape and look to make rapid, accurate course corrections compared with their peers.

While the outcomes will vary significantly by industry, a few common themes are emerging across sectors that suggest “next normal” changes to cost structures and operating models going forward.

  • Supply-chain transparency and flexibility. Near-daily news stories relate how retailers around the globe are experiencing stock-outs during the crisis, such as toilet-paper shortages in the United States. It’s also clear that retailers with full supply-chain transparency prior to the crisis—as well as algorithms to detect purchase-pattern changes—have done a better job navigating during the crisis. Other sectors, many of which are experiencing their own supply-chain difficulties during the crisis, can learn from their retail counterparts to build the transparency and flexibility needed to avoid (or at least mitigate ) supply-chain disruption in the future.

  • Data security. Security has also been in the news, whether it’s the security of people themselves or that of goods and data. Zoom managed to successfully navigate the rapid scaling of its usage volume, but it also ran into security gaps that needed immediate address. Many organizations are experiencing similar, painful lessons during this time of crisis.

  • Remote workforces and automation. Another common theme emerging is the widely held desire to build on the flexibility and diversity brought through remote working. Learning how to maintain productivity—even as we return to office buildings after the lockdown ends, and even as companies continue to automate activities—will be critical to capturing the most value from this real-world experiment that is occurring. In retail, for example, there has been widespread use of in-store robots to take over more transactional tasks like checking inventory in store aisles and remote order fulfillment. These investments won’t be undone postcrisis, and those that have done so will find themselves in advantaged cost structure during the recovery.


Boldly evolve your business portfolio

No company can accelerate the delivery of all its strategic imperatives without looking to mergers and acquisitions (M&A) to speed them along. This is particularly true with digital strategy, where M&A can help companies gain talent and build capabilities, even as it offers access to new products, services, and solutions, and to new market and customer segments.

More broadly, we know from research into economic downturns that companies that invest when valuations are low outperform those that do not. These companies divested underperforming businesses 10 percent faster than their peers early on in a crisis (or sometimes in anticipation of a crisis) and then shifted gears into M&A at the first sign of recovery.

In more normal times, one of the main challenges companies face in their digital transformations is the need to acquire digital talent and capabilities through acquisitions of tech companies that are typically valued at multiples that capital markets might view as dilutive to the acquirer. The current downturn could remove this critical roadblock, especially with companies temporarily free from the tyranny of quarterly earnings expectations. Because valuations are down, the crisis and its immediate aftermath may prove an opportune time to pick up assets that were previously out of reach. We are already seeing many private-equity firms actively looking to deploy large swaths of capital.

Learning at the pace of crisis

Moving boldly doesn’t mean moving thoughtlessly, however. Bold action and the ability to learn are highly interrelated. The real-time ability to learn during a crisis is in fact the one ingredient that can turbocharge your ability to scale quickly.


Find a new cadence

In situations of extreme uncertainty, leadership teams need to learn quickly what is and is not working and why. This requires identifying and learning about unknown elements as quickly as they appear. Prior to the crisis, leading companies had already been increasing the cadence of their learning as part of a quickened organizational metabolism (Exhibit 3). Companies can look to their example as they work to adapt to change more rapidly during crisis times—and beyond.

Four areas of intervention can help companies learn more quickly during the crisis and the next normal that follows.

Quicken your data reviews

Start by evaluating the frequency with which you review the available data. You should be reviewing multiple sources of data on a weekly (or more frequent) basis to evaluate the shifting needs of your customers and business partners—as well as your own performance. Look to your crisis nerve center as a single source of truth for newly emerging data about your employees, your customers, your channel partners, your supply chains, and the ecosystems in which your company participates. Then turn to secure file-sharing technologies like Box and Zoom to remotely share and discuss insights from this faster pace of data review.

Focus on technology

The abrupt shift to virtual operations and interactions, both inside and outside your organization, also provides an opportunity to accelerate your pace of learning about, and adoption of, technologies with which your organization might have only begun to experiment. As experimentation scales, so does learning. The rapid shift to digital can also reveal potential trouble spots with your organization’s current technology stack, giving you a sneak preview of how well your technology “endowment” is likely to perform going forward. Here are some factors to keep an eye on as you more quickly learn about and adopt new technologies:

  • Data security. Are you experiencing breaches as you move to remote working and data sharing?

  • Scalability. Where are the breaks and crashes happening as 100 percent of your interactions with customers, employees, and business partners go virtual?

  • Usability. Right now customers and business partners often have little choice but to access your products or services through your new digital offerings. Their options will expand as we move beyond the crisis. How well will your new offerings stand up? If your current usability is low, experiment to improve it now, while you still have a captive audience to partner with and learn from.


Test and learn

In normal times, experimentation might sometimes seem a risky game. Changing the working models to which employees, customers, or business partners are accustomed can seem to risk pushing them away, even when those experiments take aim at longer-term gains for all concerned. The COVID-19 crisis, however, has made experimentation both a necessity and an expectation.

Start with the customer-facing initiatives that, while more complex, offer a larger upside. Use automation and predictive analytics to quickly and effectively isolate difficulties. Look for opportunities to standardize what you’re learning to support scaling digital solutions across core business processes. Standardization can help accelerate projects by reducing confusion and creating common tools that broad groups of people can use.

Learning while scaling

As companies increase their rate of metabolic learning, they need to quickly translate what they’re learning into at-scale responses. Scaling what you learn is always an obstacle in a digital transformation. We’ve had plenty to say regarding scaling up analytics, scaling up quality, or innovating at speed and scale. Here we’ll simply highlight the role learning plays in your ability to scale your digital initiatives.

While companies frequently pilot new digital initiatives with the intention of learning from them before they roll out broadly, these experiments and pilots, in normal times, only test one dimension at a time, like the conversion/engagement/satisfaction rates of individual customers, the unit economics of a single transaction, or the user experience of a given digital solution. Whether they want to or not, companies in crisis mode find themselves in a different type of pilot: one of digital programs at massive scale. The rapid transition to full scale in many types of digital operations and interfaces has brought with it many challenges (for example, building and delivering laptops in under two weeks to all employees to enable 100 percent of them for remote working versus the 10 percent that were previously remote). But it also brings opportunities. At the broadest level, these include the prospect for real-time learning about where value is going in your markets and industry, the chance to learn and feed back quickly what’s working in your operations and your agile organizational approach, and the opportunity to learn where it is you’re more or less able to move quickly—which can help inform where you might need to buy a business rather than build one.

Observing interaction effects

Since scaling quickly requires changing multiple parts of a business model or customer journey simultaneously, now is a valuable time to observe the interaction effects among multiple variables.1 For example, healthcare providers are facing an increased demand for services (including mental health and other non-COVID-19 presentations) at the same time that their traditional channels are restricted, all in the context of strict privacy laws. This has caused many providers to rapidly test and adopt telehealth protocols that were often nonexistent in many medical offices before, and to navigate privacy compliance as well as patient receptivity to engaging in these new channels. Providers are learning which types of conditions and patient segments they can treat remotely, at the same time that they’re widely deploying new apps (such as Yale Medicine’s MyChart) to accelerate the digital medical treatment of their patients.

Similarly, when a retailer rolls out, within a week, a new app for country-wide, same-day delivery, it’s testing far more than one variability at a time, such as the customer take-up of that new channel. Because of the scale, it can learn about differences in adoption and profitability by region and store format. It can test whether its technology partners can scale across 1,000 stores. It can test whether its supplier base can adapt distribution to handle the new model. Shifting multiple variables simultaneously, however, also increases the degree of difficulty when it comes to interpreting the results—because you’re no longer isolating one variable at a time. Companies that have already invested in AI capabilities will find themselves significantly advantaged. Making further investments now—even if you’ve yet to get going—will continue to pay out postcrisis as well.

Simplify and focus

Given the degree of complexity created by scaled experimentation, organizations need to find ways to simplify and focus to avoid being overwhelmed. Some of that is done for them as the crisis closes many physical channels of distribution and makes others impossible to access. But further streamlining is required along the lines of what is working, what isn’t, and why. This is perhaps the first global crisis in which companies are in the position to collect and evaluate real-time data about their customers and what they are doing (or trying to do) during this time of forced virtualization. Pruning activities and offerings that are no longer viable while aggressively fixing issues that arise with your offerings will help increase the chance of keeping a higher share of customers in your lower-cost, digital channels once the crisis passes.

Don’t go it alone

Research indicates that people and organizations learn more quickly as a result of network effects. The more people or organizations that you add to a common solution space, in other words, the more quickly learning occurs—and the faster performance improves. Some argue that these network effects occur in a so-called collaboration curve.

At a time of crisis, changing needs drive rapid shifts in employee mindsets and behaviors that play out as a greater willingness to try new things. Consider how you can best support the ways your talented employees learn. One option is to build or tap into platform-based talent markets that help organizations reallocate their labor resources quickly when priorities and directions shift—and help talented employees increase their rate of learning. Be sure to look not just within the boundaries of your own company but across enterprises to include your channel partners, your vendors, and your suppliers. Chances are they will be more willing than ever to collaborate and share data and learnings to better ensure everyone’s collective survival.


It’s often the case in human affairs that the greatest lessons emerge from the most devastating times of crises. We believe that companies that can simultaneously attend to and rise above the critical and day-to-day demands of their crisis response can gain unique insights to both inform their response and help ensure that their digital future is more robust coming out of COVID-19 than it was coming in.

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