In our “Welcome to the Low Touch Economy” Master Class, Board of Innovation CEO Philippe de Ridder forecasts behavioral shifts caused by COVID-19 and how teams can prepare for change. De Ridder also discusses base case economic scenarios and strategies for your team to adopt.
Board of Innovation is a business design and innovation strategy firm. Their team works with clients to develop growth strategies, innovation capabilities, and new businesses using teams’ core strengths. Download Board of Innovation’s full report on the Low Touch Economy and slides from de Ridder’s presentation.
What is the Low Touch Economy?
According to de Ridder, the “low touch economy” refers to economic and behavioral shifts caused by COVID-19. “It obviously all starts from the health measures which are currently in place in almost all countries around the world to fight the current pandemic. Low touch measures to flatten the curve — that is the starting point of the feedback loop,” he says. “People change what products they buy, what needs they have, how they behave in general.”
De Ridder points to robots that monitor social distancing in Singapore, precautions taken by actors when recording shows during this period, and expanded bike lanes in Milan as examples of the low touch economy.
De Ridder speculates that the longer health measures are in place, the more likely people are to develop new habits that disrupt the economy. He points to a survey conducted by Harvard and Imperial College in London, in which 60 percent of Fortune 500 CEOs said they were relying on a scenario where pre-pandemic economic activity resumes by 2022. In the meantime, de Ridder says companies must ask, “Which of the shifts that we’re currently seeing are just temporary…and which of the shifts, new services, and products are here to stay?”
The Winners of the Low Touch Economies
In a survey of 750 global companies conducted by Board of Innovation, “15 percent of them indicate that they are actually winning in the current economy, meaning that they see a revenue increase for the whole of 2020,” de Ridder says. These companies often involve less physical contact between clients and employees, do not include a physical location where people meet, and may not require travel.
For example, Peloton has seen increased demand for its at-home exercise equipment and remote spin classes. De Ridder also pointed to Beyond Meat, a company that makes plant-based, meat-alternatives, as a winner in the current economy. As meat packing plants face challenges continuing safe operations, leading to supply shortages, this vegan option is finding new customers.
“In order to build your portfolio of innovation initiatives, you obviously need to start from which strategy you are following…[which] starts from the scenario that you’re banking on,” de Ridder says. When moving forward, he recommends companies balance the length and severity of economic challenges created by COVID.
Companies that are negatively impacted, de Ridder says, should pivot their current business. He points to companies that have re-purposed technology to map crowded areas and sanitize public spaces. For companies facing dramatic decreases in revenue, de Ridder suggests three routes: Innovating the core, exploring adjacent opportunities, or jumping into a white space created by the low touch economy.
Some companies, deRidder says, have moved “really fast to adapt from a losing category to a winning category. And obviously, because of those types of moves, you can join the winners in the low touch economy.”