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Episode Info: A lot of entrepreneurs are pondering what the “new normal” will look like when we emerge from the health crisis. They’re wondering where the opportunities may be. Just as important, they should think about the risks ahead. To gain a clearer picture of where we might be headed, I follow trends like these into the future and imagine how they might intersect: Demographic shifts: Baby Boomers are downsizing and no longer saving;  Globalization: Open borders and efficiency have meant low prices;  Consumer trends: The world’s shifted to e-commerce, leaving our stores empty; and Fiscal policy: Three decades of cheap borrowing.   These trends have a natural breaking point—but it takes a long time for them to be realized. By definition, trends last a long time. And then, at some point, they break or bend.   When you look at these global trends through the lens of a Covid-19 era, what types of shifts might we see happen?   Lower consumer confidence Our economy depends on confidence. If you’re not confident that tomorrow will be better than today, you’re going to act differently. You’re going to forego all kinds of things, and you won’t even feel like you’re sacrificing to do it. When people go through something this traumatic, they don’t think, “You know, I really need a new iPhone this year.” And yet, our economy depends on 35 million people a year buying an iPhone when they don’t need one. Even if there’s a Covid-19 cure tomorrow, are you going to book that trip to Jamaica or that cruise? Are you even going to want to travel far from home? These types of events affect people’s psyche and change their consumption patterns for a long time.   Supply shock We’re experiencing the pains of the demand shock now. The supply shock will follow. The crisis is exposing just how fragile our global supply chain is. It’s a highly efficient system that allows companies to produce goods cheaply. But it’s also extremely complex, which makes it vulnerable to breaking down. You can already see examples of where it’s happening (for example: they’re running out of storage space at ports of entry for container ships), and we’ll see much greater impacts over time. The supply shock will mean some businesses—like “fulfilled by Amazon” companies—simply don’t make sense to do anymore. It also means smaller companies throughout the chain will confront new challenges.   Globalization to localization Globalization is one of the biggest areas that will see long-term impacts from this crisis. Globalization has been extended as far as it can be—like a rubber band getting stretched—and Covid-19 is a catalyst causing it to snap back. We’ll see a shift to localization. Businesses will decide it’s not worth the risk to make the same choices they made in the past. They’ll adjust, and consumers will, too. Companies will do away with complex supply chains that have little redundancy and are susceptible to failure and build o...
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