- The pandemic has acted as an accelerant for existing underlying trends
- Opportunities for disruption are rife, especially in education
Time has moved both slowly and quickly since the start of the pandemic, depending on who you ask. Long weeks and empty social calendars can seem to drag on perpetually. But as Professor Scott Galloway reminds us in his new book ‘Post Corona: From Crisis to Opportunity’, we perceive time through marked changes. And with many of us stuck in the same positions as we were last March, the first rounds of clapping for the NHS might seem like a few weeks ago, rather than almost a year.
This makes the sunny uplands of a “post-corona” world seem all the more distant. But Galloway, who teaches marketing at the New York University school of business, is well-known for his forward thinking, making outlandish predictions in the private sector. Most notable was his guess in 2017 that Amazon (US:AMZN) would buy WholeFoods, which came to fruition only a month later. A book dedicated to his most recent round of predictions is therefore not surprising – but it is packed with interesting speculations about the direction of companies, economies and people in the coming years.
“Nothing can happen for decades, then decades can happen within weeks,” he writes, quoting another Mr Galloway (George), the former Scottish MP. The Covid-19 outbreak shut down cities, turned homes into offices and obliterated retail businesses, but throughout the book, Professor Galloway reiterates his key argument: that the pandemic has mostly acted as an accelerant, rather than a stimulator of change.
He points to ecommerce penetration as the prime example. Since it started to take root in the US market in 2000, its share of retail has grown by around 1 per cent every year. At the start of the millennium, around 16 per cent of retail was transacted through digital channels. Two months after the pandemic reached the states, that number leapt up to 27 per cent: the market gained a decade’s worth of growth in just eight weeks.
Galloway insists on an old truism: that in any crisis there is also opportunity and the greater and more disruptive the crisis, the greater the opportunities that arise from it. Unsurprisingly, new room for innovation is already being hoovered up by big tech. In a chapter dedicated to the big four – Amazon, Apple (US:AAPL), Google parent Alphabet (US:GOOGL) and Facebook (US:FB), Galloway outlines the ways in which these giants are targeting growth for the next decade.
Take Apple for example, which owns what he describes as the most profitable product ever made – the iPhone. Yet even a few years ago, the pandemic would have seriously threatened its status as a member of the big tech group. Its reliance on physical objects and manufacturing would have left it extremely vulnerable to hiccups in global supply chains that have persisted since last March. But heavy investment in its services in TV, music and gaming meant that not all of its revenues were disrupted. Galloway coins this as the ‘rundle’ approach: creating recurring revenue bundles that are hard and enduring. Other companies are following this lead: Peloton (US:PTON) charges a subscription fee to its customers even after they dish out more than £1,000 for one of its exercise bikes. Given the trajectory of its share price, it looks like a winning strategy.
These companies clearly know how to survive – and Galloway believes that the strong will only get stronger. Meanwhile other traditionally ‘safe’ areas of the market have started to look shaky. Education – once a sector that proudly considered itself beyond the reach of economic pressures – appears like it could be turned on its head. “For decades, higher education has been sticking its chin farther and farther out. Covid-19 will be the fist that meets it.”
In the past four decades, he writes that college tuition fees in the US have increased by 1,400 per cent. In fact, Galloway argues that compared with this, even American healthcare looks cheap, where spending has ‘only’ increased 600 per cent in the same time – even though here at least patients can see that technology, procedures and medications have developed significantly since the 1980s. Universities have not changed much: a lecture hall, one teacher and a swarm of students could be a picture from any decade in the past century.
Massive open online courses (MOOCs) kicked off in the 2000s, although did not gain much traction. But the huge shift to remote learning this year has proved to millions of students worldwide that the astronomical fees they are pushed to cough up are often not proportional to the value of the service they are receiving. The early phases of digital learning have not been pretty – riddled with glitchy Zoom meetings and clumsy dumps of entire courses online. But Galloway predicts that will change, as schools retrain their staff, buy new tools and restructure their classes. There is, after all, a key incentive: scale. Brand growth and new reach will not only fatten up institutions’ pockets, but could also correct what the Professor believes is one of the great inequities of our time: the artificial scarcity of elite education.
Written with equal measures of scepticism and hope for a future beyond the pandemic, Post-Corona makes for an uplifting yet grounded read. A taste of Galloway’s forward thinking helps to build a picture of what the market will look like in the next decade –- and while it doubtless will be littered with the economic casualties of Covid-19, it should also be a hotbed for newer, smarter, innovative thinking.