How to transform your business model for a post-COVID future

The COVID-19 crisis is recalibrating businesses across sectors.

The COVID-19 crisis is recalibrating businesses across sectors. Image:  Ra Dragon/Unsplash

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new business model after covid

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Stay up to date:, fourth industrial revolution.

  • Transforming business models is key to unlocking new value for business, customers and society in a post-COVID world.
  • Only a minority of companies today are undertaking business model transformation. Others are gaining marginal benefits through automation, process, or operating model shifts.
  • Transformation towards more inclusive business models are proving more resilient.

COVID-19 has caused the largest and fastest shift in human behaviour change at scale, ever. As digitalization is already underway in almost every organization, this shift has accelerated the adaptation of digital technologies.

Have you read?

Business models inspired by nature are the future, this is now new business models create an inclusive e-commerce market, these tech giants want to help prepare the world for the future of work.

In the second quarter of 2020, cloud IT infrastructure investments increased by 35% year on year. As a result of the pandemic, with its widespread demand for video communication and home office applications, the business case for IT infrastructure is clear and can convince even critical Chief Financial Officers.

But overhyping the technical digitalization of existing businesses, can make us complacent. Our future requires more dynamic changes than simply applying digital technologies to do what we have always done, faster and cheaper. If changes are too small, organizations run the risk of digitizing the past instead of innovating and transforming for the future.

Despite the reset on the horizon, many incumbent companies base their business models on yesterday’s logic; they risk relying on improvements that only scratch the surface. 80% of executives think that their business models are at risk ; while 60% of companies that have successfully undergone a digital transformation , say they transformed into new business models. To not let the crisis go waste, we need to challenge our basic assumptions about how to create, deliver and capture value.

Opportunity 1: Transform into new business models – beyond today’s efficiencies

Our analysis of 250 digital initiatives worldwide reveals that most companies still focus on process automation and efficiency gains. In other words, they make the existing processes more digital, such as document workflows replacing paper-based processes. Fortunately, an increasing number can be classified as process reimagination that challenge and put the existing processes to the test before re-implementing them. Predictive maintenance scenarios replacing traditional repair-replace processes would fall into this category.

Analysis of 250 digital initiatives worldwide

However, only a minority of organizations transform the operating model , which implies that digital technologies have become an integral part of the organization’s value-creation architecture. One example is Adidas group’s so-called “Speedfactory” approach, which integrates a number of trends transforming supply chains today, including 3D printing, customization at a mass scale, near-sourcing, and the digitalization of its operation. Similarly, a bank that establishes a hub to provide financial services at other banks, or embeds them into enterprise processes, could be classified as operating model transformation.

Lastly, only a minority of companies drive digital transformation in the form of a business model transformation . For example, Microsoft transformed from the Windows-grounded software product firm into a cloud platform company, which works across technologies and integrates with partners and ecosystems like LinkedIn and GitHub. From 2015-2020, their share price has nearly quadrupled, revenues have grown by 65% and shifted from upfront licenses to recurring subscription revenues.

As we can see, there is an important difference between the digitalization of the existing business model versus a digital transformation towards a new business model. While process automation, reimagination and operating model change, can often be done locally in an engineering department, a business model transformation cuts across divisions and business functions. It requires new leadership and backing from the Board(s) and then can be a highly effective lever for systematically driving digital transformation in a coherent way.

For companies seeking to implement that kind of transformation, the World Economic Forum has developed a tool to help executives adopt a fit-for-purpose digital business model .

Opportunity 2: Make business models resilient in times of crisis

A business model is the distinctive logic of how to create value in the back-end, deliver value in the front-end to customers and other stakeholders, and capture value via the monetization mechanics for the organization.

During the COVID-19 crisis, not all business models have been hit the same. The first factor influencing this is the company’s sector.

Winning sectors have been healthcare, with firms like Roche and Healthineers, major suppliers of testing kits and near-patient testing devices. We have seen a rise in e-commerce companies, such as Amazon, which triggered demand for logistics companies, such as UPS, FedEx, DHL. Cloud infrastructure companies, like Amazon Web Services, and streaming companies, like Netflix, profited as lockdowns gave them a boost.

In sharp contrast stand the losing sectors that have been hit hard, such as the travel industry, airlines, cruise ship operators and hotels. Even AirBnB, with their commission-based lodging business, needed to lay off 1,900 employees. Hertz car rental and Vapiano restaurants filed for Chapter 11. The economic slowdown and less travel dealt a severe blow to the oil and gas sector.

The second factor is the resilience of a business model. We can classify business models along two dimensions, which lead to four types: Product, Project, Platform and Solution. Within the same industry sector, the business model types with higher inclusiveness have been better off because, on average, they showed higher resilience in times of the pandemic.

Transforming business models to build resilience.

Increasing inclusiveness can be achieved when the comprehensiveness of the offering and/or the stickiness of the business transaction is enhanced, via a platform or solution business models. This implies moving from standalone, often physical offerings with vastly independent transactions, to comprehensive and integrated offerings with recurring transactions.

With higher inclusiveness levels, we have generally witnessed an increase of resilience. The higher the offering’s breadth and depth, the bigger the ecosystem around its customers, and the more premium services are integrated (e.g. free-of-charge shipping, unique content), the less reasons exist to change vendors. Furthermore, subscription-based monetization models increase the probability that the customer will continue the relationship with the same vendor and often leads to a chain of transactions.

Opportunity 3: Change the rules of the game in your sector

Certain sectors illustrate how leaders can foster inclusiveness of their business model to positively influence their firm’s resilience.

Retail: Non-inclusive, product-centric retailers have been hit hard with the sudden shift away from bricks and mortar shopping and had to shut stores for ever, such as J.C. Penny, Neimann Marcus and Galeria.

In contrast, the digital platforms, with their inclusive model, have been the winners. Amazon posted its biggest profit ever and a 40% revenue jump in the second quarter. Click and collect programmes helped smaller retailers to partly increase their inclusiveness and stop wasting money through inefficient home delivery operations.

Manufacturing: Traditional manufacturers face downward pressure on demand, production, supply chains, especially when the bulk of on-site jobs cannot be done remotely. At the same time, COVID-19 is accelerating the transformation of traditional producers into more digitized, resilient approaches in production and logistics with more connectivity, advanced analytics, automation, and advanced-manufacturing technologies.

Companies that provide value-added services on their platforms, could rely on recurring revenue streams, such as Siemens. The same applies for inclusive Internet of Things (IoT) platforms like Microsoft Azure or AWS IoT platform with their resilient models.

Financial Services: Retail banking is shrinking in times of social distancing and near-zero interest rates, as demonstrated by Deutsche Bank closing every fifth outlet in their home market. In contrast, inclusive platforms have proved their resilience. Chinese insurance group PingAn transformed into an integrated financial services company and platform player, orchestrating healthcare, auto, real estate, and smart city services. Also, family offices, which provide holistic solutions, demonstrate resilience in times of capital markets volatility.

Sports and Fitness: While COVID-19 has forced many fitness studios companies to file for Chapter 11 (Town Sports International, 24 Hour Fitness), virtual workouts are soaring. Peloton could prove the resilience of their fitness platform model and reported +66% in sales in the first quarter, reaching over 866,100 connected fitness subscribers in total, a 94% increase from last year. Apple launched Fitness+, a subscription programme offering personalized workouts for the Apple Watch as part of the Apple ecosystem.

Professional Services: Consulting companies, with their project business model, were expected to have lots of consultants “on the bench”. However in times of crisis they could build on their long-standing customer relationships and now deliver most projects remotely. Some consulting firms even “productized” their project knowledge, built up intellectual property, and shifted into platform business models, such as Infosys. Hence proving business model transformation an effective lever for digital transformation.

As we can see, customization does not increase resilience per se but provides important flavours of additional resilience. Increasing customization means moving from standardized, packaged, and automated offerings to individualized offerings that are co-created by company and customer. The resulting tighter provider-customer bond and the accumulation of domain-specific knowledge bolsters resilience in a time of crisis.

The first global pandemic in more than 100 years, COVID-19 has spread throughout the world at an unprecedented speed. At the time of writing, 4.5 million cases have been confirmed and more than 300,000 people have died due to the virus.

As countries seek to recover, some of the more long-term economic, business, environmental, societal and technological challenges and opportunities are just beginning to become visible.

To help all stakeholders – communities, governments, businesses and individuals understand the emerging risks and follow-on effects generated by the impact of the coronavirus pandemic, the World Economic Forum, in collaboration with Marsh and McLennan and Zurich Insurance Group, has launched its COVID-19 Risks Outlook: A Preliminary Mapping and its Implications - a companion for decision-makers, building on the Forum’s annual Global Risks Report.

new business model after covid

Companies are invited to join the Forum’s work to help manage the identified emerging risks of COVID-19 across industries to shape a better future. Read the full COVID-19 Risks Outlook: A Preliminary Mapping and its Implications report here , and our impact story with further information.

The COVID-19 crisis will widen the gap between the winners and the losers . Reactionary management is not strategic leadership and hope is not a business model. It is time to reinvent.

Every organization needs to become digital in the sense of being software and data-driven. But not everything will be digital. It is not about either/or. Effective new business models strike the right balance and integrate the digital, physical, and human world.

Smart leaders make sure that some 30% to 40% of their transformation initiatives are focused on new business models and ideally drive new digital native revenue streams. In a disrupted world, they invest in strategic resilience and focus on inclusive – comprehensive and sticky business models – like platforms and solutions.

While challenging, these initiatives will be richly rewarding in terms of opening up much broader opportunities for long-term value creation for all stakeholders . Closing with the words of Peter Drucker: “The greatest danger in turbulence is not turbulence; it is to act with yesterday’s logic.”

Carsten Linz is the author of ' Radical Business Model Transformation '.

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License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

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Emerging Business Models That Came Out of the COVID-19 Pandemic

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Adapting to covid-19 in the digital age

  • Dating from a distance
  • Virtual storefront for virtual shopping
  • Wine tasting online
  • Digital auctions of art pieces
  • Fitness goes digital

Where Valuer comes in

Innovating and pivoting the business model is a capability that every organization needs from time to time, but updating the model near-instantly and even dramatically is very difficult. Regardless of whether they adjusted the model or completely transformed it, nearly all businesses have had to make improvements since the pandemic started. So, what are some of the new stand out business model examples? Well, first we need to take a look at what changed during COVID-19 .

Start exploring innovative technology trends  →

According to McKinsey , COVID-19 responses have increased the introduction of digital technology by many years, and a lot of these new habits may stay here for the long-term. The biggest of them all is the increase in remote working, which, according to employees, happened 40 times faster than they thought was possible before the pandemic. As a result, companies and organizations are now quickly looking for solutions to circumvent these challenges. Furthermore, entrepreneurs are finding ways to capitalize on this disruptive period and starting a business during COVID.

graph showing acceleration in company changes during COVID-19

The wide adoption of digital technologies has given companies a lot of inspiration to find new ways to become more productive. Some of them even created novel products and new business models in emerging markets based on the “new normal.” 

Either by Zoom and Hangouts meetings, online fitness classes or take-out alcohol drinks, businesses are shifting to get through the crisis in about every industry. Some ideas, like individual fitness capsules to bring people back into gyms, have been extremely innovative. But many creative new methods and market models have arisen beyond short-term solutions and are likely to stick, even though many communities are beginning to reopen in a limited capacity.

[Related Article - Rethinking Your Business Model for the Future ]

Although many of these changes and ideas were coming even before the pandemic, the way we are all obligated to behave under these unusual circumstances has accelerated their introduction to the market. The biggest factor to affect these pivots is the change in customer behavior. The customer has changed, expecting more flexibility, comfort, and the ability to do everything from home, having nearly the same experience as when they used to go out to crowded places. Technologies like bots, drones, AI, VR, and AR , are here to provide this. 

Here are some new, and emerging business model examples in 2021 that came out of the coronavirus pandemic.

Dating from a distance: online dating during covid

Now that people are more lonely than ever, they have the biggest need for love and affection. Pandemic loneliness is a real thing. According to  “The Pandemic Effect: A Social Isolation Report,” two-thirds of adults are experiencing social isolation, while 66% state that they have increased anxiety levels during the pandemic. 

Graph depicting range of emotions among adults during COVID-19

Online dating apps and sites are booming during the pandemic. So what are some of the best online dating sites gaining momentum? Well, over the second quarter of 2020, Match Group saw a 15% rise in new subscribers and since March, the Match app alone saw a 40% increase in activity. What is more, Bumble’s video calls have risen by 70%. 

Quarantine Together is a dating app designed especially for dating during pandemic times. Every day at 6 p.m., it asks users to confirm that they've washed their hands before being able to communicate with someone. Then, they get matched with another user of the app. Matched users can opt to turn to video messaging after 20 minutes of texting. 

The founders of the app, Daniel Ahmadizadeh and Christopher Smeder bought the domain on March 8 and launched the app on March 15. If you go to their website, you’ll see that they are currently at their “full matching capacity,” offering a waiting list for those who want to date with a social distance. 

"We wanted to build something that is not just great for others, but for our selfish purposes so we don't get bored. I watch basketball when I get home but that's not on," Ahmadizadeh said in an interview.

They claim that this app doesn’t offer rejections. It’s not about the user’s profile photo or what they’ve put in their bio. It’s more about their ability to make an interesting conversation for 20 minutes. The founders even hope that their app will change user habits because now is not the time for rejections, it’s time for empathy. 

Online marketplace for virtual shopping

Those who love shopping can’t visit the high streets and try out their favorite pieces on the spot. That’s why Streetify has decided to bring high-street storefronts to their homes. Streetify hopes that its free platform can help connect customers to nearby shops and help keep them alive. It also provides merchants in the UK, the US, Canada, India, and Australia with free access to the site for one year.

Users can go to the app or the website and pick the street they want to visit. Then, they scroll up and down left or right to move around the street they're in. They can see digital storefronts and can click on every store to access its Streetify site. Consumers can see all the exclusive sales, discounts and coupons that have been received from top sale pages such as Groupon and Rakuten while within the 'shop'. Company owners can also add messages, offer deals, distribution options, in-stock products and more in their interactive storefront windows.

Shoppers can also build their own personal streets with stores, where their favorite retailers are selected and then share them on social media.  Shoppers can also follow popular celebrities, who can share their code with fans, allowing them to buy at their favorite store's Streetify edition.

Streetify uses geo-referencing to switch on the shop and street lights to increase the program's realistic feeling. For example, if it's snowing in the actual street, it's also snowing in Streetify providing a genuine retail experience for the consumers. It's a complete virtual shopping experience.

Virtual wine tasting

Over the years, wine tasting parties have become increasingly common, but the COVID-19 pandemic put an immediate end to the social tasting of the new cabernet sauvignon. However, Marco Castelanelli didn't get discouraged. The founder of Club Vino , the company that organizes wine-tasting parties, found a way to digitize his company.

Marco Castelanelli is an Italian sommelier who used to work with winemakers, fascinated by the “story behind the bottle.” This inspired him to create Club Vino and offer users tasting of wine produced by small, family-owned businesses. 

Every party was concentrated on a single theme of wine and was held in some of Manchester and Cheshire's most prominent properties. In March, with the prohibition of all social events and the closing of pubs, restaurants, and hotels, the COVID-19 crisis made the Club Vino concept fully obsolete. 

Then, clients started asking Castelanelli to send them wine and organize online wine tasting events. So, he decided to pivot and provide clients with wine tasting parties from the comfort of their own home. Customers can order from the website a home sampling package that includes a customized bottle holder, printable tasting notes with suggestions for food matching, and a video that guides them through the wines and describes the history of the bottle like they're at a real party. According to Castelanelli, this is the perfect parallel to what he used to do before the pandemic and a very scalable alternative.  

Other wine clubs have also opened their subscription plans to meet the changing needs of their clients. For example, Firstleaf is an American wine club that encourages users to develop their own wine preferences. A selection of wines matched uniquely to your particular taste profile is selected by the club curators, which they decide at registration via a brief questionnaire. In their introduction package, subscribers are invited to rate the wines they get, which allows curators to further customize monthly offerings to best fit the tasting profile of a member.

Fine art auctions online

Where there’s wine, there’s art. Once the world shifted online, art was also one of the experiences you couldn’t visit at the spot. The art auction market then went on hold. To have at least some pieces in their own homes, many people started collecting art . Galleries noticed this trend and went online to meet their clients. 

Sotheby's pivoted rapidly in the wake of the crisis, hosting more than 100 online transactions between March and June. According to Amy Cappellazzo, chairman of the fine art division of the house, new buyers made up about 30% of almost all transactions. During that time, online sales totaled nearly $200 million, while the same period in 2019 saw 40 online purchases that took in $23 million.

Another innovative business models also emerged. With an emphasis on new, independent artists who are transforming the market, The Auction Collective offers unique art pieces to art lovers collectors. Their new 'Green Perspectives' curated auction was focused on the way artists adapt to climate change, with one work sold for £1,800. As traditional auctions can’t occur due to the pandemic, the gallery’s leading art expert Tom Best took all auctions online with real-time bidding. What is more, the auctions offer downloadable bidding paddles for participants to wave during the auction.

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The organization is also working on an online marketplace for independent artists to sell their merchandise. OwnArt will be one of their first partners that will help them offer monthly payment options to their members. The purpose of The Auction Collective is to adapt auctions to the new ways consumers behave and favor independent artists to help them survive.

Fitness goes digital: online fitness classes

Aside from physical benefits, exercise is also beneficial for stress control and cognitive performance. However, many individuals have struggled to find the time, especially when trying to balance their jobs, and personal, family, or social commitments. A common obstacle to fitness has also been the high cost of gym memberships.

However, after the COVID-19 pandemic struck and at-home exercises immediately became the norm, in the form of live online and pre-recorded courses, many who also desired the collective class experience switched to virtual wellness. This is why the online fitness community is now booming. 

Data from MoEngage shows that downloads of wellbeing and fitness apps have risen by 46% globally. Some countries saw drastic increases, like India, where downloads of health and fitness apps grew by 157%.

Growth of fitness app downloads between Q1 and Q2 during COVID-19 lockdown

There were many businesses that pivoted or created some innovative business models. For example, MyoMaster introduces tools that make it easier for athletes to train more and perform well. All their income was generated at sports activities, such as the London Marathon, and from sales to gyms, before the crisis struck. The founders feared they would have to close the company after COVID-19 prompted the cancellation of all these activities and the closing of gyms and were planning to have difficult talks with their small team. However, then they saw room open up for home exercises, and pivoted to becoming an e-commerce company in the period of about two weeks. Through digital content and advertising, they managed to survive and offer their products through online channels. Most importantly, they saw a lot of growth in their revenues.

For many people, the worldwide pandemic has been catastrophic, causing many problems. It is the biggest disturbance that the planet has witnessed in a long period of time. However, all massive transformations carry with them the potential to build something new and strengthen the processes that have previously been present. As such, new pandemic business ideas are constantly propping up.

Valuer is able to use concrete data that scans the entire ecosystem to find new opportunities companies are searching for to help circumvent the challenges brought forth from the pandemic. By integrating a data-driven workflow solution allows for everyone within an organization to work towards a common vision for the company and ultimately drive future growth. 

The events of this year can be interpreted by entrepreneurs as a warning that the world now needs more creative solutions that bring real value to consumers. We expect the world to look different after the crisis, and although the short-term forecast may be pessimistic, history shows that markets can not only recover, but also become more resilient and sustainable after major shifts.

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Post COVID-19 business models: Finding the new normal

If you listen to business and technology pundits, you may have heard that the post COVID-19 world will be completely different from the pre COVID-19 world. Sound familiar? In the midst of a crisis, it’s tempting to label any major disruption as ushering in a new normal. However, at least in terms of business models, the new normal going forwards may be a lot more like the old normal than we think.

That’s not to say there won’t be accelerated innovation and plenty of new business models, products and services appearing, but most businesses will likely be able to operate as usual with a few strategic pivots and changes to their standard processes as well as essential safeguards.

In this regard, here are four observations and recommendations for CIOs and business strategists as you look at the near term as well as the longer term.

Plan to pivot

In many cases, small accommodations to existing business models and processes are all that is needed to operate business as usual, and this is already happening. CIOs have been implementing many changes in their playbook , such as shifting spending to remote work, setting up IT resiliency dashboards, boosting customer engagement, and being proactive about phishing scams. 

Many non-tech pivots are occurring as well. McDonald’s, for example, has installed plexiglass screens at their drive-thru windows as a protective barrier to help further minimize contact between employees and customers. When restaurants re-open their dining areas post-pandemic, these screens and some social distancing decals may be the sole changes consumers see.

Grocery stores are following suit , installing plexiglass barriers. And we may expect similar changes in other industries, like travel, for example. It’s not economical to fly or drive with half the passenger count, so we may see plexiglass screens or other compartmentalization arrangements on planes, trains and buses.

However trivial, these small pivots can be vital because once tested and proven they can help businesses get back to work quickly and can be a potential model for the long term. CIOs should therefore explore both technical and non-technical pivots and changes that may work in their environment, and among their staff, whether or not they share physical space.

Balancing profit and protection

The new strategic lever for fine-tuning business and operating models will be striking the right balance between profit for the business and protection and personal safety for employees, partners and customers. This is not a “new normal” concept either — just think of the forced labor and unsafe working conditions that we’ve been witnessing in global supply chains for decades.

This balance will be a constantly moving target, much as it is almost daily with coronavirus. Beyond profit and protection, today’s most successful business models are all about achieving the right balance across all variables , including the many stakeholders involved in our business ecosystems and the broader economy.

Is the exchange of value between all stakeholders proportionate or are these business models skewed in favor of customers and investors at the expense of employees, partners and the social good? This is now part of the larger picture that CIOs, as well as organizations at large, need to consider and embrace for future success. Crises like COVID-19 add another independent variable to the mix and will require a new-found balance.

Extending existing business models

Rather than necessitating a net-new business model, social and physical distancing can be thought of as an added functional requirement on top of existing business models. I previously wrote about how the lazy economy is ushering in a new era of hyper convenience . The lazy economy is all about making life so convenient for consumers that they literally don’t have to lift a finger. Drone-delivered coffee when you’re looking tired is an extreme example.

Rather than brainstorming a new process that incorporates physical distancing, for example, it may make more sense to take a new business model such as the lazy economy and incorporate physical distancing into that broader value proposition. An example might be exploring how medicine, packages and groceries could be delivered autonomously. Drones are already being utilized amidst the COVID-19 crisis and the pandemic may well accelerate the longer-term adoption of autonomous vehicles and robotics.  

For CIOs with drones and autonomous vehicles already on their radar, it’s time to revisit the timing of adoption and use cases for your enterprise. Things may move faster and in some new directions and areas of opportunity.

Innovate the small things

While some may be innovating for moonshots such as life-saving vaccines, for many enterprises it will be the small things, the quick fixes, the pivots and the incremental innovations that will make a big difference. During your next innovation workshop, as you brainstorm ideas and solutions to opportunities and challenges, be sure to capture incremental ideas as well as the more disruptive ones. Whether you invent the future in one big leap or in many small steps, the outcome can be equally promising.

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Business models shifts: Impact of Covid-19

  • • Covid-19 crisis presents opportunities to firms for digitization.
  • • Essentiality of products and services combined with information intensity.
  • • Product and process information intensity present scope for digitization.
  • • Anecdotal evidence suggests agile firms adapt to utilize opportunities.

No amount of crystal ball gazing may help us fathom the full impact of the Covid-19 (C-19) crisis on business organizations in a distinct manner. Given the lack of precedence, any such analyses seem to demand routine revisions as we progress further up the “number of infected” curve. Most countries of the world have imposed restrictions on social congregations or even people working in close proximity to each other. Industries that produce and deliver information products and services therefore, have continued to function while those that manufacture physical products especially labor-intensive firms were forced to minimize operations or temporarily shut down. However, in most countries, physical products which were essential in nature were reluctantly permitted to be manufactured given the need for them in people’s everyday life. In this viewpoint, I draw upon three dimensions – information intensity of product/service, information intensity of process/value chain; along with a third dimension – essential nature of the product/service to help understand the immediate implications of C-19. I also present some anecdotal evidences of attempts to alter business models in these circumstances in order to address the challenges that certain product characteristics impose but at the same capitalize on the business opportunities presented by the essentiality of the products.

1. Introduction

There is hardly any doubt that it is impossible for the world to come out of the Covid-19 (C-19) crisis unscathed. The enormous loss of human life is alarming and distressing, to say the least. The toll that this crisis would exact is likely to be nothing close to what the world has seen thus far, given its ferocity and the very short time in which it has spread throughout the world. While the scientific community braces itself for the fervent process of prevention and cure in the immediate future and research and recovery in the long term; the business and management community has to do the same for the economic impact of the crisis.

On the economic side, the first impacts were the sudden drops in both aggregate demand and supply. Widespread shutdowns of businesses in order to control the pandemic has caused a decline in aggregate supply while the reduction in consumption and investment has resulted in demand decline. There is no dearth of back-of-the-envelope analysis on C-19’s impact on trade, sectoral performance as well as national economies. Yet, none of the crystal ball gazing attempts may help us fathom the complete impact of the C-19 crisis on business organizations clearly. Given the lack of precedence for such a mammoth crisis, such analyses seem to demand frequent revisions as we progress further up the “number of infected” curve. It may help us, information systems and management researchers if we pry upon the crisis from a perspective other than that of attempting to predict the direction and depth of the economic damage resulting from C-19.

Intuitively, we understand that the crisis will not only leave many an organization struggling for survival, but will also force some to look for alternative strategic paths. While on the one hand, the C-19 crisis has imposed enormous challenges on business organizations, on the other, it has also necessitated innovations, presenting organizations with opportunities to identify new business models that will allow them to survive through the crisis.

In this essay, I adapt a simple, yet powerful framework to analyze and examine the strategic shift effected by firms in specific industries. Although I refrain from a detailed rigorous exploration of firms which have done so, I present some anecdotal evidences from industries which have attempted to alter their business models in these circumstances in order to overcome the challenges, albeit temporary, that their product characteristics impose but at the same time capitalize on the business opportunities presented by the essentiality of their products. I conclude this essay with some questions for deeper thought.

2. The information intensity matrix

Porter and Millar (1985) argued that information technology will play a strategic role in an industry which is characterized by information intensity of product (or service) and/or information intensity in the value chain or process ( Fig. 1 ). The term process information intensity has been used to refer to the extent of information processing required to efficiently and effectively manage the activities in a firm’s value chain or its business process. Product information intensity “indicates the extent to which the organization's customers utilize information for the selection, purchase, use and maintenance of its products/services” ( Sabherwal & Vijayasarathy, 1994 ). While on a continuum of product information intensity, physical products, such as say agricultural produce or cement may have little information content in the product itself; other physical products such as textiles may have relatively more information content associated with them such as size, color, pattern, etc. ( Palmer & Griffith, 1998 ). Banking and financial services, education, news or media, are products which are purely information products. On the continuum of process information intensity, authors typically cite construction or mining as examples of industries which are comparatively lower in information intensity than logistics, oil refining or automobile manufacturing which are in turn lower in process information intensity than say banking and other financial services ( Hu & Quan, 2006 ).

Fig. 1

Information Intensity Matrix (Adapted from Porter & Millar, 1985 ).

Time and again, IS researchers have established that an assessment of existing and potential information intensity of product and process of a firm, will indicate the extent of IT investments that a firm may benefit from, extent to which the firm can go online; make and deliver its product or service sans a brick and mortar set up ( Liang, Lin, & Chen, 2004 ). Over the years, academic researchers have established that firms have also attempted to gradually move the information intensity grid ( Fig. 1 ) further towards the right, by incorporating information content into their product, making them more technologically sophisticated, or even servitizing products ( Tronvoll, Sklyar, Sörhammar, & Kowalkowski, 2020 ). For instance, automobile firms are attempting to design intelligent vehicles which not only aid the driver in having a safer and better driving experience; have innovative features such as remotely monitored access to the boot but also fully autonomous self-driving cars thus altering the structure of the industry’s ecosystem while at the same time questioning some century-old assumptions of technological supremacy being the sole differentiator ( Ferràs-Hernández, Tarrats-Pons, & Arimany-Serrat, 2017 ).

3. A ‘Temporary’ third dimension: essential nature of product/service

It is no secret, given that many countries of the world have imposed restrictions on congregations or people working in proximity to each other, industries that produce and deliver information products and services therefore, have continued to function; while those that manufacture physical products especially labor-intensive manufacturing firms were forced to minimize operations or some even temporarily shut down. However, in most countries, physical products which were essential in nature were allowed to be manufactured given the need for these products in people’s everyday life. Of course, what constitutes “essential” is neither straightforward nor uniform across countries. 1 However, there is agreement on some of the basic essentials such as food, pharma and fuel, banking and bazaar. While in France wine sellers were allowed to open shop 2 quite early into the country’s lockdown period; in the state of Tamil Nadu in India, the country’s supreme court intervened and ordered the reopening of the state-run monopoly liquor outlets despite the protests by activists. 3 Interestingly, despite the fact that in most countries the mom-and-pop retail supermarkets were exempt from closure during the lockdown, e-commerce firms which sold essentials were experiencing significant rise in online shoppers. This highlights an important aspect of essential nature of products/services – that of the essential nature of the channel or delivery mechanism that is coupled with the primary product/service. Alternative mechanisms of delivery or distribution that reduces the need for movement of people or the possibility of physical proximity, are being explored by firms in some industries such as retail and hospitality.

I add the third dimension – essential nature of the product/service - to the information intensity matrix to help analyze the immediate impact of the Covid-19 crisis on business models ( Fig. 2 ). I use this to also highlight the strategic imperative of agility as a business capability in aiding firms in some industries in their realization of a potential business model shift.

Fig. 2

Covid-19 Information Intensity Matrix.

The essentiality of some industries in today’s world such as Banking and Media is undisputed. In addition, these industries are also high on product and process information intensity, allowing the possibility of complete digitization of their services. These two industries have benefited from being early adopters of technology and have therefore been fairly insulated from the negative business impacts of C-19. Banks, have seen significant increase in the use of online banking services and digital payments 4 post C-19 crisis. Although that is not the least surprising, what is interesting is the accelerated shift to digitization of processes that so far banks have been reluctant to move online. 5

The media and entertainment industry has witnessed a mixed impact. The dependence on media to share updates with the general public during such times of crisis coupled with restrictions imposed on non-home entertainment has resulted in increased viewership of television and a surge in consumption of streaming video-on-demand services such as Netflix, Amazon Prime, etc., as well as in online gaming, again not unexpectedly. However, alternative means of generating content, reflecting the creativity and the agility of firms in the media and entertainment industry, now seems to be a prime differentiator.

One could separate “Entertainment” from the Media industry given that there are certain forms of entertainment and recreation which demand a physical space and are not typically considered “essential” to everyday living. Here again, theatre, music industry and other forms of entertainment (such as museums, synchronous collaborative performing arts), typically experienced through physical presence given their relatively low-to-moderate “essentiality”, have been significantly affected by the C-19 restrictions imposed on collective gatherings. While some have adapted creatively by leveraging digital media to reach their audience, 6 it has not been an easy journey for others, especially those who strongly believe in the emotions that a “live” performance evokes ( Fig. 3 ). 7

Fig. 3

Essential Products and Services.

In comparison, although moderately information intensive on both dimensions, the hospitality industry, world over, has faced a significant negative impact because of the lockdown measures many countries adopted, as it forced consumers to stay away from restaurants and cafes. While hotels and homestays are primarily meant for leisure and therefore, not considered essential, food is by itself an essential resource. Through the lockdown, restaurant regulars have shifted their preferences towards off-premise dining, drive-through food pickup, ready-to-eat meals, etc. 8 Some restaurants which have been traditionally dine-in have quickly adapted to producing boxes of home deliverable food which not only allow them to stay profitable, but also placed significant demands on their ability to quickly scale up and innovate on products that can remain fresh and interesting to their gastronome customers. 9

The mobility industry that includes ride-hailing (Lyft in the US and Uber across countries), ride-sharing (Gojek in Indonesia), vehicle sharing (Hertz in the US, Bounce in India) platforms came to an abrupt halt with the lockdown measures imposed by various countries, with a huge number of vehicles idling away in parking lots. Hertz has recently declared bankruptcy 10 although guesses galore the real reasons were visible far before C-19 set in, while Bounce in India is experimenting with a new business model of lease-to-own 11 vehicles, converting its vehicles to smart scooters fitted with IoT devices allowing the company to also conduct remote diagnostics.

4. Shifting business models

Some critics argue that these shifts are knee-jerk reactions to the pandemic and once “normalcy” resumes, firms will revert to their earlier business models or find a new equilibrium to settle at. That may well be what happens, yet, the opportunity that the pandemic has presented to digitize a business or identify a viable alternative business model can well be utilized by firms that are looking to expand their horizons.

In order to capitalize on the opportunity for digitization, firms need to be agile and rapidly develop capabilities that can help them survive the changes that environment imposes upon them. Such dynamic capabilities relate to specific strategic and organizational processes like product re-development; identifying and working with new partners in an ecosystem; and strategic decision making that create value within such dynamic environments by manipulating available resources into new value-creating strategies ( Eisenhardt & Martin, 2000 ). A good example of such organizations would be educational institutions which have not only adapted online platforms to hold virtual classes but have also designed educational products which combine interesting asynchronous instructional pedagogies with synchronous classes. 12

When an environment’s variability is as high as it is in C-19 situation, organizations also tend to adopt “temporary adhocracies” which function with the sole purpose of innovating. Such adhocracies would require specialists, such as design thinkers, marketers, information technology professionals be drawn together for a scrum-like project which will aim to quickly fulfill the potential for digitization the product/service offers; look for digital replacements and where neither is possible, identify ways of delivering the physical product or service with minimal physical contact.

Settling in to the new equilibrium that the post-C-19 situation brings forth demands that the deep structures which underlie the organization’s strategy, structure and processes including core values, mechanisms of control and division of power, not be ignored ( Silva & Hirschheim, 2007 ). It is these foundational elements of the firm that will allow it to institutionalize the change and strengthen them for the post-C-19 business environment.

5. Conclusion

New rules of competition often appear during periods of transition. However, when the crisis subsides, as it will, although it may leave an economic crater behind, “true economic value once again becomes the final arbiter of business success” ( Porter, 2001 pg. 65). The C-19 crisis has, in the near future, required organizations to look for digital replacements or identify ways of delivering their products and service with minimal physical contact and safely. These choices have presented opportunities for firms to be innovative in redesigning their existing products; designing alternative digital products and services; and/or rethink their product and service delivery channels and mechanisms; and to look for strategic positions and partners in the new ecosystem who can help them achieve these. In order to succeed in the new ecosystem, firms need to be agile, possess dynamic capabilities that can aid them in their adaptability to the changing times ( Tronvoll et al., 2020 ).

Two interesting questions for future research emerge here. First, what are the transition paths that firms have used to make the business model shifts. A comparative analysis of firms that have successfully made the transition into more digitized business models is a worthy exploration. Second, what are the agility and dynamic capabilities that have helped firms in capitalizing the potential for change that the C-19 crisis offered. Intuitively it seems obvious that firms that have the agility to quickly adapt to the changing environment have been able to see themselves through the crisis, and thus ensure business continuity. It will also be interesting to see if these firms can institutionalize these dynamic capabilities that they have seized during the crisis.

While there is hope that the world may return to the old ways of working, there is also the deep skepticism that warns us of the dangers of such a false hope, and cautions us of the imminent new normal that we may be heading towards. Much like us, individuals, who prefer not to be disrupted, and if we are, choose to be so in own terms ( Davison, 2020 ), organizations too are likely to exhibit stickiness to their ways of working and prefer to return to their equilibria and status quo. Although the perils of such stickiness may disappear should the C-19 crisis dissipate, the opportunity presented for increasing degree of digitization in business firms remain.

Declaration of Competing Interest

Priya Seetharaman is Associate Professor of Management Information Systems at the Indian Institute of Management, Calcutta, India. Her primary research areas include IS/IT strategy, healthcare systems, adoption, use and evolution of IT in organizations and agri-supply chains. Her papers have appeared in several journals including the Journal of Management Information Systems, Information & Management, Computers in Human Behaviour, Online Information Review, and Technological Forecasting and Social Change as well as in Information Systems conference proceedings. Her recent edited book titled "Information Systems: Debates, Applications and Impact" has been published by Routledge Taylor & Francis.

1 https://www.economist.com/finance-and-economics/2020/04/04/emerging-market-lockdowns-match-rich-world-ones-the-handouts-do-not .

2 https://www.economist.com/business/2020/03/26/how-retailers-vie-to-be-considered-essential-in-a-lockdown .

3 https://www.thehindu.com/news/national/tamil-nadu/liquor-shops-to-open-after-sc-clears-way/article31597191.ece .

4 https://eiuperspectives.economist.com/healthcare/covid-19-pandemic-accelerates-rise-digital-payments .

5 https://www.mckinsey.com/industries/financial-services/our-insights/lessons-from-asian-banks-on-their-coronavirus-response .

6 https://www.forbes.com/sites/kristinwestcottgrant/2020/05/16/the-future-of-music-streaming-how-covid-19-has-amplified-emerging-forms-of-music-consumption/#6205c49f444a .

7 https://in.reuters.com/article/health-coronavirus-france-concert/playing-to-an-empty-room-paris-orchestra-plays-strauss-in-covid-19-era-idINKBN2350H3 .

8 https://www.mckinsey.com/industries/retail/our-insights/how-restaurants-can-thrive-in-the-next-normal .

9 https://www.bbc.com/news/business-52321761 .

10 https://www.forbes.com/sites/jackkelly/2020/05/23/hertz-files-for-bankruptcy-after-16000-employees-were-let-go-and-ceo-made-over-9-million/#72a50b852bca .

11 https://the-ken.com/story/bounce-onn-bikes-personal-mobility/ .

12 https://www.nytimes.com/2020/05/25/opinion/online-college-coronavirus.html .

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A digital shift: how COVID-19 has impacted business models

In its simplest form, a business model is how an organisation makes money.

All businesses need a business model to ensure their organisation is viable, and that all the elements that form a profitable business are in place and working cohesively together to make a profit.

A business model also needs to be flexible, to ensure that an organisation can respond to changes in the market and keep making money.

This need for organisational flexibility has been tested to the maximum over the past year, with COVID-19 disrupting the operations of almost every business worldwide. According to research by McKinsey , companies responded to a range of COVID-19 related changes much more quickly than they ever thought possible before the crisis.

Most of these coronavirus-induced changes have involved increased digitization. In fact, more than half of businesses are now investing in technology for competitive advantage or refocusing their entire business around digital technologies.

A blueprint for business

In order to understand the changes that businesses have made in response to the pandemic, let’s first look at what a business model is and how it is used.

“A business model is a set of interdependent elements that model how an organisation creates, delivers and captures value, encompassing activities that transcend the focal organisation's boundaries” explains Dr Sergio Costa, lecturer from the Entrepreneurship Management and Innovation online MSc at the University of Bath, during a webinar he gave on the subject .

Business models allow us to envisage and plan how a business will work, as well as being a ‘living document’ that adapts with market changes and business growth.

“A business model is a great planning and testing tool, enabling you to think of the future without sinking too many resources into it” says Dr Costa. “It also enables you to explain the concept to others and gain their feedback. It is much easier to make changes on paper than it is to a live business.”

According to prominent business theorist Alexander Osterwalder , business models can also be used for ‘understanding, sharing, analysing, managing, simulating and patenting the business logic of a firm’.

“A traditional business model canvas has nine elements, which can be split into three sections” explains Dr Costa. “Firstly, there are elements relating to money, so the revenue streams and cost structure – essentially money in and money out. Next, we have those that relate to supply, so our key resources, suppliers and activities. Lastly, we have the elements of the business model that relate to demand – so your customers. This section includes things such as your value proposition, customer segments, channels and customer relationships. All of these must work together as a whole.”

How have businesses responded to COVID-19?

During the pandemic, consumers have rapidly moved toward online channels, and companies and industries have responded. Research indicates that COVID-19 has caused companies to accelerate the digitization of their supply chain , customer interactions and internal operations by between three and four years. The share of products and services in company portfolios that can be accessed or bought online has reportedly accelerated by an incredible seven years.

A fifth of micro-businesses set up an online presence for the first time during lockdown and more than half of businesses who already had a website bolstered it with additional content , social media posting or by adding an online store.

“Organisations are delivering the same value proposition with a more digital flavour” says Dr Costa. “The COVID-19 crisis has required organisations to look for digital replacements of their products and services and identify ways of delivering them with minimal physical contact and increased safety”.

So how can businesses amend their business models to achieve this transition?

“Firms need to be innovative in redesigning their existing products, rethink their product delivery channels and mechanisms and look for strategic positions and partners that can help them achieve their plans” advises Dr Costa.

Dr Costa also shares an example of an online clothes retailer who increased their digital marketing activity during the pandemic, whilst closing their physical store.

This particular business responded to the pandemic by changing their business model from being predominantly retail led, to completely online. They closed their physical store and increased their spend on digital marketing, utilising social media, Amazon and their own website. As a result, online sales dramatically increased, leading to just a 7% overall drop in sales, despite the pandemic. This move was a rapid turnaround for the business, as their original plans for 2020 were to improve the physical store, whereas in the end they had to go in a completely different direction.

Amending – and in some cases completely overhauling – their business model has been the key to survival for many businesses during the pandemic.

“This crisis...has proven that for businesses to survive, they must allow for variability– they must incorporate a level of flexibility and slack to how they operate, and work with their people in order to navigate challenging times” reports entrepreneur and business director Hanna VanKuiken .

So, will the pandemic lead to a permanent shift toward online business models?

“The pandemic is rapidly changing our behaviour toward online channels, and the shifts are likely to stick post-pandemic” reports Deloitte . “While many companies are challenged to survive in the short-term, the crisis also presents opportunity; bold companies that invest ambitiously and timely in their online business are likely to emerge as market leaders.”  Dr Costa agrees. “I don’t think we will go back to exactly where we were before. We are moving to more online services and products and the longer the crisis goes on the more prominent those changes become.”

Understanding the role of business models and how they can adapt is a key part of entrepreneurial strategy and business success. They can help you ensure you are planning a viable business with all the key elements, whilst also giving you the opportunity to plan and test out potential business models before committing to a final strategy. They can also give you the core framework you need to make bold and innovative business decisions.

If you are looking to develop your inner entrepreneur, the Entrepreneurship Management and Innovation online MSc at the University of Bath helps students to develop the practical business skills and pioneering mindset you need to succeed. For more information, please complete the form below and a member of our team will be in contact.

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Inside New York Fashion Week where subtle luxury still reigns supreme

  • Quiet luxury was everywhere at Badgley Mischka's runway show during New York Fashion Week.
  • Influencers, celebrities, and fashion fans told BI they think the trend is timeless.
  • The show itself was also representative of the style, featuring neutral outfits and elegant fabrics.

Insider Today

When Badgley Mischka took over the Starrett-Lehigh Building in New York City, one thing was clear: quiet luxury is here to stay.

Influencers, celebrities, and friends of the designers packed into the industrial venue on Saturday, carrying designer purses in hand and wearing chic coats on their backs.

"Gossip Girl" star Kelly Rutherford mingled with Jonathan Cheban of "Keeping Up With the Kardashians" fame, and Adrienne Bailon-Houghton shared a bench with model Madisin Rian.

The duo behind the brand — Mark Badgley and James Mischka — greeted such guests via notes left on each seat, explaining how the fall 2024 line was inspired by the luxury and reality of living in New York City.

"This collection is about the precision and drama of Park Avenue glass towers and the velvet-lined floral cocoons in their lobbies," the note read. "It is a dance we love to do, of control and extravagance."

With that in mind, it's probably not surprising that those in attendance told Business Insider that they're in line with Badgley Mischka — luxury is best served subtly.

"Quiet luxury speaks for itself. I feel like less is more," influencer Daisy Marquez told BI.

Elizabeth Woods, the mom and manager of Jordyn Woods, agreed. Because she usually prefers shopping on a budget, she doesn't flaunt her more expensive pieces when she wears them.

"I'm always quiet luxury," she said while pointing to her Cartier glasses, which were a gift from her daughter Jordyn.

And Dhaval Bhanusali, the dermatologist behind Hailey Bieber's skincare line Rhode, was right there with her.

"I think there's a fine appreciation for art that's important, but a lot of times, you don't necessarily have to shout it from the rooftops," he said. "I will always go with quiet luxury."

The loud rise of quiet luxury

A few months into 2023, quiet luxury emerged as a major trend.

Thomaï Serdari, the director of the fashion and luxury MBA program at NYU's Stern School of Business, previously told BI that the trend consists of "the highest quality" clothing that's timeless, sophisticated, and simple.

Think neutral colors and thick fabrics. Now pair them with classic accessories: gold jewelry, black sunglasses, and leather purses. You've got yourself the ultimate quiet-luxury look.

Some also describe it as the "old money" aesthetic, or dressing like a wealthy fashion icon from decades past. Members of Gen Z, like Sofia Richie, are especially fond of the style.

Of course, it hasn't risen to the top without competition. Though quiet-luxury status symbols are everywhere in 2024, some fashion fans are making the case for loud luxury looks — or outfits that feature logos, out-there silhouettes, and bolder colors more prominently.

"Quiet luxury had its moment, and the moment has passed," costume designer and stylist Molly Farrell-Savage told BI. "I'm from Connecticut, where quiet luxury is the thing, so I just see so much that I'm over it."

But even fashion fans who understand loud luxury say it's still not the best look.

Eva Marcille, a former "America's Next Top Model" winner and "The Real Housewives of Atlanta" star, told BI that quiet luxury will always remain the ultimate sign of style.

"I think people want to go loud luxury because, after COVID and everything that's happened, there's fashion from two seasons that we couldn't wear," Marcille said. "But less is more. It's still all about simplicity."

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The Booming Business of Cutting Babies’ Tongues

One family’s story of “tongue-tie release” surgery on their newborn..

This transcript was created using speech recognition software. While it has been reviewed by human transcribers, it may contain errors. Please review the episode audio before quoting from this transcript and email [email protected] with any questions.

From “The New York Times,” I’m Sabrina Tavernise, and this is “The Daily.”

A “Times” investigation has found that doctors are increasingly performing unnecessary medical procedures that generate huge profits while often harming patients.

Today, my colleague Katie Thomas — on the forces driving this emerging and troubling trend in American health care and the story of one family caught in the middle of it. It’s Monday, February 19.

So Katie, tell me about this investigation.

So I am a health care reporter who writes about the kind of intersection of health care and money. And I was working with two other colleagues, Sarah Kliff and Jessica Silver-Greenberg. And together, the three of us had long been interested in, are the medical procedures and the tests and other things that we get when we go to the doctor or into a hospital — are they always necessary?

But what we were really interested in exploring was not just are these procedures and are these tests, et cetera — are they necessary, but in some situations, could they actually be harmful to patients? And so that’s what we decided to try and take a look at. And so we had gotten started in our reporting when we got a tip. And it was from a mom in Boise, Idaho. And her name was Lauren Lavelle.

Nice to meet you.

Hi, how are you?

And my colleague Jessica Silver-Greenberg and I went to her house to meet with her.

And where does her story start?

I am a mom of two. I live in Boise. My daughter, June, is four, and I have a 17-month-old, Flora.

Her story starts when Lauren gets pregnant with her daughter, June.

So by the time we got pregnant with June, November of 2018, about eight months after we had the miscarriage, I think I was just more hesitant and nervous than anything.

Lauren and her husband had trouble conceiving, and so they were so happy when they learned that they were going to have June. And like most first-time parents, they were also a little bit nervous.

But being type-A and super prepared, I did all my homework. We hired a doula. I wanted an epidural. Having a natural childbirth absolutely was not for me.

And Lauren is very organized. She’s always on top of everything, and she makes all sorts of plans. And she gets a lot of different providers lined up ahead of time —

I didn’t know anything about breastfeeding, like zero things.

— including one that she has hired to help her with breastfeeding.

Where did you find out about her?

So I asked our doula for a list of recommendations, and she gave me a very short list. At the time, there were very few lactation consultants in the Valley. And Melanie was one of them.

She ended up deciding to work with Melanie Henstrom, who was a local lactation consultant in Boise.

She sold this package at the time. I don’t know if she still did, but it was like prenatal visit breastfeeding class. And then, she’ll come to the hospital and help you latch, and then she’ll come to the house a couple of times after. And I thought, well, this sounds perfect. Great. You know, I’m covered there.

So one week after her due date, she gives birth. And it was a difficult labor. It took 24 hours. Lauren was completely exhausted. But once June arrived, the family was very, very excited to have her.

And I remember June coming out and that surreal feeling have when you see your first baby for the first time, like oh, my God, there’s a baby in the room.

And June was a healthy baby, but she was having trouble breastfeeding.

She would not latch. Like, she wouldn’t even attempt. She would scream. It was the only time she ever cried — if you tried to make her to breastfeed.

And so as her pediatrician was making the rounds, they noticed that June was having trouble and said that June’s tongue is really tight.

We can clip it if you’d like.

And that they could clip it.

What does that mean exactly, Katie — clipping her tongue?

What it means is that there’s a small percentage of babies whose tongue is very tightly tethered to the bottom of their mouth. And for a very small percentage of babies, their tongue is almost tied so tightly down that they can’t nurse well.

So it makes breastfeeding very difficult if a baby has a tongue like this.

Exactly. If you bottle-feed your baby, the baby can basically adjust and make do. But if you want to breastfeed, some babies have trouble, basically, latching on to their mother when they don’t have that tongue motion. And so some version of clipping these tongue ties has been done for centuries. Midwives have been doing it. Pediatricians do it.

And traditionally, what it’s been is a very quick snip right underneath the tongue just to loosen up the tongue. And traditionally, that procedure is extremely straightforward. There’s little to no follow-up care. And basically, the baby naturally heals as it learns to breastfeed.

And so we said, OK. They explained that it was completely painless. They’d do it with scissors. She wouldn’t even feel it. And all of that was true. They clipped it. I don’t even think she woke up.

But in June’s case, it didn’t seem to help much, and she and Lauren were still having problems breastfeeding afterwards. So while she’s still in the hospital, she calls up the lactation consultant that she had hired — Melanie Henstrom — just to let her know what was going on. And from talking to her on the phone, Melanie said that the situation was actually much worse than Lauren had thought and that Lauren’s baby needed another tongue-tie procedure — a deeper cut under the tongue.

How did she make this diagnosis, Katie? Was it over the phone? How did she know this?

Yes, Lauren told us that it was from a phone conversation. And in addition to that, she also warned her that, basically, Lauren and her husband should really take this seriously and consider getting it done, because if she doesn’t get it fixed, it could lead to a whole host of problems beyond just problems breastfeeding.

She’ll have scoliosis, and she’ll suffer from migraines, and she’ll never eat, and she’ll have a speech impediment, and she won’t sleep — I mean, just, like, the long list of things over the phone.

And Lauren starts panicking.

I mean, first of all, I felt — I’ve never felt more terrible in my life than that first day or so after giving birth. Like, the comedown from the hormones, the drugs — all of it — the sleep deprivation. And then, here was this baby we’d wanted, we were told we probably would never have after one miscarriage. And she’s so perfect, like, the most beautiful baby I’d ever seen. And you think that she has some deformity that’s going to ruin her.

But Melanie says it’s OK. She has a solution. And she tells Lauren that there’s a dentist in town who can handle cases that are as severe as June’s.

A dentist? Why a dentist?

Well, there’s a procedure that’s done in a dentist’s office that’s a laser surgery. And dentists use this high-powered laser machine that can quickly cut the flesh that connects the lips and the cheeks to the gums. So according to Lauren, Melanie tells her that by chance, this dentist has an opening, because she said a family coming in from Oregon had just canceled their Saturday appointment.

So I thought, OK, wow, people are coming in from Oregon to see him. So we talked about it. We both felt unsure. But we said, well, let’s at least take the appointment, and then we can at least meet with the dentist, and also, someone can look at her mouth and assess.

And so Lauren agrees to go in and meet the dentist.

Like, I think some people, when they hear this story, think, like, why would you believe that? It just sounds so scammy. But to me, there is a lot of things that you hear in the hospital that sound insane. Like, it’s no different than someone saying, like, your baby’s orange because their bilirubin levels are too high, so we got to go put them under these lights. Like, that sounds insane. That sounds more insane than, your baby’s having a hard time eating because their tongue is too tight and it needs to be cut. Like, that seems rational, actually.

And all of this seemed really weird to Lauren at the time. But in the context of the hospital and having a baby, lots of things about health care are weird.

So one day after they got back home from the hospital, Lauren and her husband pack up the car and go to the office early in the morning.

You know, I was wearing my hospital diaper and an ice pack, took the elevator up to his office, and —

And what happens?

So Melanie greets them at the door. They sign some paperwork, and pretty soon, the dentist, Dr. Samuel Zink, arrives.

And then, he, like, very briefly — very briefly — looks in her mouth and is like, yeah, she’s got whatever — however he classified it — grade 4 or whatever he says — class 4 — and she has a lip tie, which — that had never been mentioned to us before, so it’s very much on the spot, this new piece of information.

You know, pretty quickly, the dentist diagnosed June as having a couple of ties. He confirmed that she had a tongue tie, and he said it was severe. He also said that she had tightness under her top lip, called a lip tie. And so the baby actually needed to get two cuts. And again, Lauren said that the dentist and the consultant told her how important it was for her to do this for her baby.

One of us says, like, what happens if we don’t do the procedure? , Like what are our alternatives? And it was basically like, there’s no alternative. Like, you have to do this. Otherwise, again, long —

So Lauren and her husband decided to do it. But before the procedure starts, Melanie actually stopped Lauren from coming into the room.

Melanie turned around and put a hand on my shoulder and said, oh, no. And I said, oh, am I not going with you? She goes, well, we can’t tell you no, but if you hear her cry, it’ll impact your milk supply, like, adversely.

What do I know? So I said, oh, OK. And she pulled out the white-noise machine and said, what do you want to listen to? And I had no idea what she was talking about. I had no idea what it was. And so then she just turned it on — white noise — and left.

What happens next is, Melanie turns on a white-noise machine in the room.

And that was the moment that I was like, get your baby and get out of here. And I didn’t listen to it. It was like all of my mom intuition firing, being like this isn’t right, you know. It’s like, I don’t know how to describe it, but your full body — you have to get your baby and get out of here. And I just ignored it.

She said her maternal instincts really kicked in, and she just had this instinctive fear about the procedure and whether June would be OK. But the procedure itself was very quick. Within just a couple of minutes, Melanie returns with June.

And she was screaming. Like, screaming, and so worked up. This was, like, hysterical, inconsolable. And she was also choking on something, like, gagging.

And June was so worked up. Lauren had only had her for a couple of days, but she said that this was on a different level than any other way she had ever seen June crying. And June just wouldn’t stop crying.

And she looked over to Melanie, and Lauren said that she remembered Melanie saying this was very typical. And so they pay the dentist. They pay $600 for the procedure, and then they go home.

Over the next several days, June did not get better as Melanie had assured them. You know, she was basically inconsolable, Lauren said — just crying hysterically. And Lauren and her husband — they don’t know how to comfort her. They’re new parents. They’ve only had a baby a couple of days. And they’re almost beside themselves.

There was nothing we could do. And I remember finally, I said, like, this is not normal. We’re going to an emergency room.

And they decided to go to the emergency room, where a doctor looks inside June’s mouth and finds a large sore in her mouth that he says is probably causing her so much pain.

And so he said, you know, it breaks my heart to see a sore that big in a baby this small. It was like the floodgates opened, and there was nothing but guilt and shame. Like, unmanageable guilt and shame.

Like, what have we done? Who are these people? What have I done to my baby? Will she ever be the same? Like, what did I do?

So at this point, Lauren is really understanding that her intuition about this surgery was probably right and that she and her husband may have really made a mistake with this. What does June’s recovery look like?

So June never did end up breastfeeding successfully, which was the main reason why Lauren and her husband had decided to do this procedure.

That was the whole point, right?

That was the whole point. Right. And over the next couple of years, June had a number of issues that there’s no official medical diagnosis for, but Lauren has attributed a lot of her behaviors to what had happened to her when she was just a few days old.

I mean, you couldn’t close a fridge door too loud, or else it would set her off. Or, we would attempt to take her for a stroller walk on the Greenbelt, which is the walking path, and she’d be asleep in her car seat, you know, stroller, and someone would try to pass us on their bike and ring their bell, and it would startle her, and it would just set her off. So she just was very, very, very fragile.

So Lauren just wanted to get answers, and she really wanted to hold Melanie and the dentist accountable. So she gathered all of the paperwork that she had — texts, emails, other correspondence — and she went to the Idaho Board of Dentistry, where she filed a complaint against the dentist. And then, she also went to a professional organization that certifies lactation consultants and filed a complaint with them as well.

And did she get anywhere with either of them?

At first, no. The Idaho dentistry board didn’t want to investigate, and Lauren appealed, and she lost her appeal. And she didn’t initially hear back at all from the lactation board.

No one wanted to take responsibility. That’s the thing. No one wanted to stick their neck out there. What’s the alternative? The story never gets told?

And that’s when she decided to reach out to us. And after our story came out, the lactation board finally told Lauren that they were investigating Melanie.

And Katie, you guys were reporting the story. I’m assuming you reached out to both the dentist and to Melanie. What did they say?

Beyond a very brief phone conversation that I had with Melanie in which she defended her work and she said that she had a number of very satisfied customers, she didn’t respond to detailed questions about Lauren’s story or the stories of her former clients. And Dr. Zink did not respond to our requests for comment, but he did tell the dentistry board that Lauren’s baby’s procedure was uneventful and that an extremely small percentage of patients do not respond well to the procedure.

And how big of an issue is this, Katie? I mean, how common is it for mothers to have an experience like Lauren’s?

So after we got the tip from Lauren and we dug deeper into her story, we found ourselves really surprised by how big this industry was for tongue-tie releases. And in part, it’s been driven by this movement for breastfeeding and the Breast is Best campaign and a growing number of parents who are choosing to breastfeed their children.

In turn, that has sparked this big boom in tongue-tie releases. One study that we found showed that these procedures have grown 800 percent in recent years.

Yeah. And also, as we started talking to other parents around the country, we learned that some of them had similar stories to what Lauren had told us. There’s plenty of instances where there’s no harm done to the baby at all when they get these procedures.

But we also found cases where babies were harmed, you know, where they developed oral aversions, which basically means that they don’t want to eat because they fear having anything put in their mouth, including a bottle. We found cases where babies became malnourished, had to be hospitalized. We found more than one instance in which babies had to be given a feeding tube just weeks after the procedure.

So these sounds so painful and awful for a newborn — these problems. But I guess there’s always a risk, Katie, in any medical procedure, right? I mean, how much of this is just the risk you sign up for when you agree that your baby should have a surgery?

Well, that’s true. I mean, there’s always a risk. But what you’re supposed to do is weigh the risks against what the potential benefits of a procedure are. And when we really started drilling down into what those benefits were and into the medical research, we found there just wasn’t a lot of potential benefit for these procedures, if at all, in many cases.

Really? So the procedures don’t have a medical reason to exist?

That’s right. We reviewed all of the best-quality medical research on this. And other than that old-fashioned snip under the tongue, which does show that in some cases, it can reduce pain for breastfeeding mothers, but otherwise, all of this growth and all of these other more invasive procedures — we found there just wasn’t good evidence that they helped babies. And the more we looked into tongue ties and started to connect it to the other reporting we were doing, we started to realize that it was driven by some really big forces in our health care system that really had the potential to harm patients.

We’ll be right back.

So Katie, we talked about this new surge in a procedure that surgically unties infants’ tongues from the bottom of their mouths, often needlessly, sometimes even harmfully. And you said your reporting found that this surgery was actually part of a broader trend. Tell me about this trend and what’s driving it.

So that’s what this investigation was really about — to find the procedures that are doing unnecessary harm to patients and to really understand why this is happening. You know, like, what’s driving the prevalence of these procedures? And there’s just a lot of unnecessary surgeries out there, but we decided to center our reporting on three particular surgeries that had the potential to harm patients, in addition to tongue ties. We focused on a particular hernia surgery, a bariatric surgery, which can be overdone and cause harm, and a vascular surgery done on patients’ legs to help us understand the forces that were at work that were driving all of this.

And what did you find when you dug deeper into those surgeries?

Well, it’s very complex, but we ultimately found three main drivers that were underlying all of these. First, there’s a financial incentive for the doctors to perform these surgeries. There’s also a real push from the medical device companies that make these surgeries possible. And last, there’s a huge information void for solid medical advice that a lot of these doctors and companies take advantage of in order to push the surgeries.

OK, so let’s start with the money, Katie. How exactly is that incentivizing doctors to perform a lot more of these procedures? Like, what are the mechanics of that?

So the reality of our health care industry today is that in many places, even in places like non-profit hospitals, the doctors who work there are not getting a salary, a straight salary that’s just kind of, you get paid for showing up to work that day. Instead, they’re actually getting paid based on the procedures that they’re doing, how complex those procedures are, or possibly how lucrative.

And it’s not every doctor. There are still doctors that get paid salaries. But it’s increasingly the case that doctors have — at least a part of their pay is tied to the procedures that they’re doing.

Interesting. So the procedure is growing in importance in terms of actual compensation for doctors.

Right. I mean, in part, it’s kind of baked into the health care system that we’ve always had. You can even think about it as the small-town doctor who operated his own independent practice or her own independent practice. It’s essentially a small business, and they would get paid based on the patients that they saw.

But increasingly, even in, for example, large hospital systems where you might think that a doctor is just getting paid a salary to work in a hospital, in fact, a chunk of their bonus, for example, can sometimes be tied to the procedures that they’re doing, and that is increasingly the case.

Interesting.

And so one particularly egregious example of this was at a hospital that’s in New York — Bellevue Hospital. And basically, what my colleagues found there was that they had basically turned their surgery department into an assembly line for bariatric surgery, which makes your stomach smaller and can lead to weight loss. But what we found was that they were greenlighting patients that, basically, didn’t meet the qualifications for the surgery, which is a serious surgery. And what they found was that there were several situations where people had very serious outcomes as a result of getting the bariatric surgery there.

OK, so this is an extreme case of a hospital turning to a particular surgery to drive profits. And it wasn’t uncommon in your reporting, it sounds like.

No, it wasn’t the only example, but it was the most striking. And when we reached out to Bellevue, they defended their work, and they said that their practices were helping patients who wouldn’t otherwise get care. But our reporting was pretty conclusive that the program was churning through a record number of surgeries.

So what else was driving this increase in harmful surgeries that you guys found?

So we found it wasn’t just the hospitals who were benefiting. The other major player that benefits are these companies that are making the tools and the products that doctors are using during the procedures. And in order for them to sell more of their products, a lot of time, what they end up doing is promoting the procedures themselves.

So like medical device makers, like the company that made the laser in June’s surgery.

Right. And they do this in a number of ways. They’re giving them loans to help them buy the equipment, and in some cases, they’re even lending them money to help set up those clinics where the procedures are performed.

So they’re really underwriting these doctors so that they can perform more surgeries and, ultimately, sell more machines.

Yes. And the other things that they do is — the laser companies, for example — they will host webinars where they will have dentists who frequently perform these procedures show other dentists how to do the procedures. We even discovered this conference that was created by one of the laser companies, and it had kind of a wild name. The name of the conference was Tongue Ties and Tequilas.

(CHUCKLING) Right. It brought in dentists to talk about how to make money off the procedures. You know, how to promote themselves on social media, how to actually perform the procedures, and of course, when they were all done, they got to celebrate with an open tequila bar.

OK, so a lot of this really amounts to these companies trying to popularize these procedures, basically, like, to get the word out, even if the procedures don’t really work or, in some cases, cause harm.

Right. But they also play a big role in the other factor that’s driving a lot of this, which is the information that they put out there about the surgeries. These companies often sponsor research, which doctors often rely on to guide their practices. And part of what we’ve found is that it can create this echo chamber where doctors feel more comfortable and justified in doing these procedures when they have this whole alternate universe that is telling them that it’s OK to do these procedures, and in fact, it’s beneficial to patients.

So tell me about this echo-chamber effect.

The best example of this we found was a doctor in Michigan named Dr. Jihad Mustapha. He calls himself “the Leg Saver.” And what we found was that he and several other doctors do these procedures called atherectomies, which is basically like inserting a tiny roto-rooter inside an artery to get the blood flowing.

And Dr. Mustapha in particular was not only a very prolific performer of these procedures, but he actually founded his own medical conference, and he even helped start a medical journal that was devoted to using these procedures. And you know, tongue ties — there’s really no good evidence that these are actually beneficial to patients. And in fact, despite his nickname as “the Leg Saver,” one insurance company told Michigan authorities that 45 people had lost their limbs after getting treated at Dr. Mustapha’s clinic over a four-year period.

45 people lost their limbs?

I mean, that is the ultimate version of harm, right?

Right. Now, he did speak to us, and he defended his work and said that he treats very sick people. And despite his best efforts, some of these patients are already so sick that they sometimes lose their limbs.

And how much did he receive for each procedure?

Doctors like him typically receive about $13,000 for each of these atherectomy procedures.

But we found that misinformation, or poor information, also applied when doctors were learning new types of surgeries.

Really? Like how?

So one of the areas we looked at was the area of hernia surgery that I mentioned. And there’s a particular type of surgery. It’s a very complex version of a hernia surgery, called component separation. And the expert surgeons that we spoke to said that it’s difficult to learn, and you have to practice it over and over and over again to get it right. But one recent survey of hernia surgeons said that one out of the four surgeons had taught themselves how to perform that operation.

Yeah, not by learning it from an experienced surgeon but by watching videos on Facebook and YouTube.

I mean, how unusual is that? I guess, to me, it strikes me as very unusual. I mean, I think of learning about how to take my kitchen faucet apart on YouTube, but I do not think of a doctor learning about how to perform a surgery on YouTube.

Right. And it has actually become increasingly popular in recent years, and there’s not good vetting of the quality of the instruction. We even found videos on a website run by a medical device company that was intended to be a how-to for how to do these surgeries, but the video contained serious mistakes.

Wow. And Katie, all of these videos — some of them with serious mistakes — I mean, is this something that would be subject to medical regulators? Like, is there any kind of rules of the road for this stuff?

You know, there’s less than you would expect. Sometimes hospitals have rules about what sort of education their doctors need before performing a surgery. But we were surprised that there was a lot less regulation than we thought there would be and much less vetting of these videos than we anticipated.

So essentially, what you found was this complex, oftentimes interconnected, group of forces — device companies pushing their products, hospitals bolstering their bottom line, and rampant misinformation that, as you said, all really trace back to the same motivating factor, which is money. But wouldn’t the fear of being sued for medical malpractice prevent a lot of this behavior?

You know, this kept popping up during the course of our reporting. I do think we have this idea that any time a doctor does anything wrong, they’re going to get sued. But it just wasn’t always the case in our reporting. There’s a lot of statutes of limitations, time limits on when somebody can file a lawsuit, and other ways that make it somewhat hard to really hold a doctor accountable.

One example is the regulatory organizations that oversee doctors. The one doctor that I mentioned earlier — Dr. Mustapha — state investigators had found that his overuse of procedures had led people to lose their legs. And yet, he ultimately settled with the state, and he was fined $25,000. That actually adds up to about two of these atherectomy procedures.

So it sounds like malpractice is not necessarily going to be the route to rectifying a lot of this. But I guess I’m wondering if the federal government could actually rein some of this in before the patients are harmed.

It’s possible. But this is just a very difficult issue. Some of the themes that we explored in this reporting are really just firmly embedded in our health care system in the way that it works. The fact is that we have a for-profit health care system, right? So everyone, from doctors to hospitals to the device companies, benefit when more procedures are done. All of the incentives are pointing in the same direction.

And so trying to find one or two simple solutions will probably not easily fix the issue, as much as we all hope that it could.

So is the lesson here, be much more discriminating and vigilant as a patient? I mean, to get a second opinion when you’re standing in front of a doctor — or a dentist — who’s telling you that you or your baby needs a procedure?

Yes. I think that is one of the takeaways. But look, we understood that even reporting on all of this was risky, because people could hear about these harmful surgeries and start wondering if everything that their doctors tells them is a scam. And of course, while some of these procedures are harmful, a lot of procedures are lifesaving. But ultimately, for now, patients are kind of left on their own to navigate what’s a pretty complex and opaque health care system. When you have somebody standing in front of you saying, you should do this, it can be very confusing.

And this is something that Lauren talked a lot about — just how confusing all of this was for her.

There’s a lot of information that you’re getting that is truly like someone is speaking a foreign language. And because they do it all day long, it’s not user-friendly. Like, it isn’t designed for the comfort or understanding of the person receiving the information.

There is so much blind trust and faith that you have in the system, in the providers who are giving you this information. You trust, like, this is what they do all day long. So there is no real reason to question. That is the system that we have in this country.

Katie, thank you.

Here’s what else you should know today. On Friday, the Russian authorities announced that opposition leader Alexei Navalny died in prison. He was 47.

Navalny, a charismatic anti-corruption activist, led the opposition to Vladimir Putin for more than a decade. His popularity was broad, extending far outside the realm of liberal Moscow. And that proved threatening to the Russian authorities, who attempted to poison him in 2020.

Navalny survived and later extracted a confession from his would-be assassin on tape. Navalny believed that Russia could be a free society, and he had the extraordinary ability, through sheer force of his personality, charisma, and confidence, to get others to believe it, too. Though he had been in prison since 2021, his death still came as a shock.

[SPEAKING RUSSIAN]

His wife, Yulia Navalnaya, made a surprise appearance at a security conference in Munich shortly after the Russian authorities announced her husband’s death.

She received an emotional standing ovation.

In Moscow, my colleague, Valerie Hopkins, spoke to Russians who were placing flowers in his honor —

— and expressing disbelief that he was gone.

Then I asked them if they believe in the beautiful Russia of the future that Navalny talked about. And they said, yes, but we don’t think we will survive to see it.

At least 400 people have been detained since his death, including a priest who had been scheduled to hold a memorial service in Saint Petersburg.

Today’s episode was produced by Asthaa Chaturvedi, Diana Nguyen, Will Reid, and Alex Stern, with help from Michael Simon Johnson. It was edited by Michael Benoist, with help from Brendan Klinkenberg, contains original music by Diane Wong and Dan Powell, and was engineered by Alyssa Moxley. Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.

That’s it for “The Daily.” I’m Sabrina Tavernise. See you tomorrow.

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  • February 20, 2024   •   40:44 Stranded in Rafah as an Israeli Invasion Looms
  • February 19, 2024   •   35:50 The Booming Business of Cutting Babies’ Tongues
  • February 16, 2024   •   39:24 An Explosive Hearing in Trump’s Georgia Election Case
  • February 15, 2024   •   29:38 How China Broke One Man’s Dreams
  • February 14, 2024   •   33:06 The Biden Problem Democrats Can No Longer Ignore
  • February 13, 2024   •   27:23 Why the Race to Replace George Santos Is So Close
  • February 12, 2024   •   21:57 Why Boeing’s Top Airplanes Keep Failing
  • February 11, 2024   •   42:04 The Sunday Read: ‘The Unthinkable Mental Health Crisis That Shook a New England College’
  • February 9, 2024   •   34:05 Kick Trump Off the Ballot? Even Liberal Justices Are Skeptical.
  • February 8, 2024   •   36:53 A Guilty Verdict for a Mass Shooter’s Mother
  • February 7, 2024   •   29:15 El Salvador Decimated Gangs. But at What Cost?
  • February 6, 2024   •   31:45 The U.N. Scandal Threatening Crucial Aid to Gaza

Hosted by Sabrina Tavernise

Featuring Katie Thomas

Produced by Asthaa Chaturvedi ,  Diana Nguyen ,  Will Reid and Alex Stern

With Michael Simon Johnson

Edited by Michael Benoist and Brendan Klinkenberg

Original music by Diane Wong and Dan Powell

Engineered by Alyssa Moxley

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A Times investigation has found that dentists and lactation consultants around the country are pushing “tongue-tie releases” on new mothers struggling to breastfeed, generating huge profits while often harming patients.

Katie Thomas, an investigative health care reporter at The Times, discusses the forces driving this emerging trend in American health care and the story of one family in the middle of it.

On today’s episode

new business model after covid

Katie Thomas , an investigative health care reporter at The New York Times.

A woman holding a toddler sits on a bed. The bed has white sheets and pink pillows.

Background reading

Inside the booming business of cutting babies’ tongues .

What parents should know about tongue-tie releases .

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The Daily is made by Rachel Quester, Lynsea Garrison, Clare Toeniskoetter, Paige Cowett, Michael Simon Johnson, Brad Fisher, Chris Wood, Jessica Cheung, Stella Tan, Alexandra Leigh Young, Lisa Chow, Eric Krupke, Marc Georges, Luke Vander Ploeg, M.J. Davis Lin, Dan Powell, Sydney Harper, Mike Benoist, Liz O. Baylen, Asthaa Chaturvedi, Rachelle Bonja, Diana Nguyen, Marion Lozano, Corey Schreppel, Rob Szypko, Elisheba Ittoop, Mooj Zadie, Patricia Willens, Rowan Niemisto, Jody Becker, Rikki Novetsky, John Ketchum, Nina Feldman, Will Reid, Carlos Prieto, Ben Calhoun, Susan Lee, Lexie Diao, Mary Wilson, Alex Stern, Dan Farrell, Sophia Lanman, Shannon Lin, Diane Wong, Devon Taylor, Alyssa Moxley, Summer Thomad, Olivia Natt, Daniel Ramirez and Brendan Klinkenberg.

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Katie Thomas is an investigative health care reporter at The Times. More about Katie Thomas

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This report on the future of work after COVID-19 is the first of three MGI reports that examine aspects of the postpandemic economy. The others look at the pandemic’s long-term influence on consumption and the potential for a broad recovery led by enhanced productivity and innovation. Here, we assess the lasting impact of the pandemic on labor demand, the mix of occupations, and the workforce skills required in eight countries with diverse economic and labor market models: China, France, Germany, India, Japan, Spain, the United Kingdom, and the United States. Together, these eight countries account for almost half the global population and 62 percent of GDP.

Jobs with the highest physical proximity are likely to be most disrupted

Before COVID-19, the largest disruptions to work involved new technologies and growing trade links. COVID-19 has, for the first time, elevated the importance of the physical dimension of work. In this research, we develop a novel way to quantify the proximity required in more than 800 occupations by grouping them into ten work arenas according to their proximity to coworkers and customers, the number of interpersonal interactions involved, and their on-site and indoor nature.

This offers a different view of work than traditional sector definitions. For instance, our medical care arena includes only caregiving roles requiring close interaction with patients, such as doctors and nurses. Hospital and medical office administrative staff fall into the computer-based office work arena, where more work can be done remotely. Lab technicians and pharmacists work in the indoor production work arena because those jobs require use of specialized equipment on-site but have little exposure to other people (Exhibit 1).

We find that jobs in work arenas with higher levels of physical proximity are likely to see greater transformation after the pandemic, triggering knock-on effects in other work arenas as business models shift in response.

The short- and potential long-term disruptions to these arenas from COVID-19 vary. During the pandemic, the virus most severely disturbed arenas with the highest overall physical proximity scores: medical care, personal care, on-site customer service, and leisure and travel. In the longer term, work arenas with higher physical proximity scores are also likely to be more unsettled, although proximity is not the only explanation. For example:

  • The on-site customer interaction arena includes frontline workers who interact with customers in retail stores, banks, and post offices, among other places. Work in this arena is defined by frequent interaction with strangers and requires on-site presence. Some work in this arena migrated to e-commerce and other digital transactions, a behavioral change that is likely to stick.
  • The leisure and travel arena is home to customer-facing workers in hotels, restaurants, airports, and entertainment venues. Workers in this arena interact daily with crowds of new people. COVID-19 forced most leisure venues to close in 2020 and airports and airlines to operate on a severely limited basis. In the longer term, the shift to remote work  and related reduction in business travel, as well as automation of some occupations, such as food service roles, may curtail labor demand in this arena.
  • The computer-based office work arena includes offices of all sizes and administrative workspaces in hospitals, courts, and factories. Work in this arena requires only moderate physical proximity to others and a moderate number of human interactions. This is the largest arena in advanced economies, accounting for roughly one-third of employment. Nearly all potential remote work is within this arena.
  • The outdoor production and maintenance arena includes construction sites, farms, residential and commercial grounds, and other outdoor spaces. COVID-19 had little impact here as work in this arena requires low proximity and few interactions with others and takes place fully outdoors. This is the largest arena in China and India, accounting for 35 to 55 percent of their workforces.

COVID-19 has accelerated three broad trends that may reshape work after the pandemic recedes

The pandemic pushed companies and consumers to rapidly adopt new behaviors that are likely to stick, changing the trajectory of three groups of trends. We consequently see sharp discontinuity between their impact on labor markets before and after the pandemic.

Remote work and virtual meetings are likely to continue, albeit less intensely than at the pandemic’s peak

Perhaps the most obvious impact of COVID-19 on the labor force is the dramatic increase in employees working remotely. To determine how extensively remote work might persist after the pandemic, we analyzed its potential  across more than 2,000 tasks used in some 800 occupations in the eight focus countries. Considering only remote work that can be done without a loss of productivity, we find that about 20 to 25 percent of the workforces in advanced economies could work from home between three and five days a week. This represents four to five times more remote work than before the pandemic and could prompt a large change in the geography of work, as individuals and companies shift out of large cities into suburbs and small cities. We found that some work that technically can be done remotely is best done in person. Negotiations, critical business decisions, brainstorming sessions, providing sensitive feedback, and onboarding new employees are examples of activities that may lose some effectiveness when done remotely.

Some companies are already planning to shift to flexible workspaces after positive experiences with remote work during the pandemic, a move that will reduce the overall space they need and bring fewer workers into offices each day. A survey of 278 executives by McKinsey in August 2020 found that on average, they planned to reduce office space by 30 percent. Demand for restaurants and retail in downtown areas and for public transportation may decline as a result.

Remote work may also put a dent in business travel as its extensive use of videoconferencing during the pandemic has ushered in a new acceptance of virtual meetings and other aspects of work. While leisure travel and tourism are likely to rebound after the crisis, McKinsey’s travel practice estimates that about 20 percent of business travel, the most lucrative segment for airlines, may not return. This would have significant knock-on effects on employment in commercial aerospace, airports, hospitality, and food service. E-commerce and other virtual transactions are booming.

Many consumers discovered the convenience of e-commerce and other online activities during the pandemic. In 2020, the share of e-commerce grew at two to five times the rate before COVID-19 (Exhibit 2). Roughly three-quarters of people using digital channels for the first time during the pandemic say they will continue using them when things return to “normal,” according to McKinsey Consumer Pulse  surveys conducted around the world.

Other kinds of virtual transactions such as telemedicine, online banking, and streaming entertainment have also taken off. Online doctor consultations through Practo, a telehealth company in India, grew more than tenfold between April and November 2020 . These virtual practices may decline somewhat as economies reopen but are likely to continue well above levels seen before the pandemic.

This shift to digital transactions has propelled growth in delivery, transportation, and warehouse jobs. In China, e-commerce, delivery, and social media jobs grew by more than 5.1 million during the first half of 2020.

COVID-19 may propel faster adoption of automation and AI, especially in work arenas with high physical proximity

Two ways businesses historically have controlled cost and mitigated uncertainty during recessions are by adopting automation and redesigning work processes, which reduce the share of jobs involving mainly routine tasks. In our global survey of 800 senior executives  in July 2020, two-thirds said they were stepping up investment in automation and AI either somewhat or significantly. Production figures for robotics in China exceeded prepandemic levels by June 2020.

Many companies deployed automation and AI in warehouses, grocery stores, call centers, and manufacturing plants to reduce workplace density and cope with surges in demand. The common feature of these automation use cases is their correlation with high scores on physical proximity, and our research finds the work arenas with high levels of human interaction are likely to see the greatest acceleration in adoption of automation and AI.

The mix of occupations may shift, with little job growth in low-wage occupations

The trends accelerated by COVID-19 may spur greater changes in the mix of jobs within economies than we estimated before the pandemic.

We find that a markedly different mix of occupations may emerge after the pandemic across the eight economies. Compared to our pre-COVID-19 estimates, we expect the largest negative impact of the pandemic to fall on workers in food service and customer sales and service roles, as well as less-skilled office support roles. Jobs in warehousing and transportation may increase as a result of the growth in e-commerce and the delivery economy, but those increases are unlikely to offset the disruption of many low-wage jobs. In the United States, for instance, customer service and food service jobs could fall by 4.3 million, while transportation jobs could grow by nearly 800,000. Demand for workers in the healthcare and STEM occupations may grow more than before the pandemic, reflecting increased attention to health as populations age and incomes rise as well as the growing need for people who can create, deploy, and maintain new technologies (Exhibit 3).

Before the pandemic, net job losses were concentrated in middle-wage occupations in manufacturing and some office work, reflecting automation, and low- and high-wage jobs continued to grow. Nearly all low-wage workers who lost jobs could move into other low-wage occupations—for instance, a data entry worker could move into retail or home healthcare. Because of the pandemic’s impact on low-wage jobs, we now estimate that almost all growth in labor demand will occur in high-wage jobs. Going forward, more than half of displaced low-wage workers may need to shift to occupations in higher wage brackets and requiring different skills to remain employed.

As many as 25 percent more workers may need to switch occupations than before the pandemic

Given the expected concentration of job growth in high-wage occupations and declines in low-wage occupations, the scale and nature of workforce transitions required in the years ahead will be challenging, according to our research. Across the eight focus countries, more than 100 million workers, or 1 in 16, will need to find a different occupation by 2030 in our post-COVID-19 scenario, as shown in Exhibit 4. This is 12 percent more than we estimated before the pandemic, and up to 25 percent more in advanced economies (Exhibit 4).

Before the pandemic, we estimated that just 6 percent of workers would need to find jobs in higher wage occupations. In our post-COVID-19 research, we find not only that a larger share of workers will likely need to transition out of the bottom two wage brackets but also that roughly half of them overall will need new, more advanced skills to move to occupations one or even two wage brackets higher.

The skill mix required among workers who need to shift occupations has changed. The share of time German workers spend using basic cognitive skills, for example, may shrink by 3.4 percentage points, while time spend using social and emotional skills will increase by 3.2 percentage points. In India, the share of total work hours expended using physical and manual skills will decline by 2.2 percentage points, while time devoted to technological skills will rise 3.3 percentage points. Workers in occupations in the lowest wage bracket use basic cognitive skills and physical and manual skills 68 percent of the time, while in the middle wage bracket, use of these skills occupies 48 percent of time spent. In the highest two brackets, those skills account for less than 20 percent of time spent. The most disadvantaged workers may have the biggest job transitions ahead, in part because of their disproportionate employment in the arenas most affected by COVID-19. In Europe and the United States, workers with less than a college degree, members of ethnic minority groups, and women are more likely to need to change occupations after COVID-19 than before. In the United States, people without a college degree are 1.3 times more likely to need to make transitions compared to those with a college degree, and Black and Hispanic workers are 1.1 times more likely to have to transition between occupations than white workers. In France, Germany, and Spain, the increase in job transitions required due to trends influenced by COVID-19 is 3.9 times higher for women than for men. Similarly, the need for occupational changes will hit younger workers more than older workers, and individuals not born in the European Union more than native-born workers.

Companies and policymakers can help facilitate workforce transitions

The scale of workforce transitions set off by COVID-19’s influence on labor trends increases the urgency for businesses and policymakers to take steps to support additional training and education programs for workers. Companies and governments exhibited extraordinary flexibility and adaptability in responding to the pandemic with purpose and innovation that they might also harness to retool the workforce in ways that point to a brighter future of work.

Businesses can start with a granular analysis of what work can be done remotely by focusing on the tasks involved rather than whole jobs. They can also play a larger role in retraining workers, as Walmart, Amazon, and IBM have done. Others have facilitated occupational shifts by focusing on the skills they need, rather than on academic degrees. Remote work also offers companies the opportunity to enrich their diversity by tapping workers who, for family and other reasons, were unable to relocate to the superstar cities where talent, capital, and opportunities concentrated before the pandemic.

Policymakers could support businesses by expanding and enhancing the digital infrastructure. Even in advanced economies, almost 20 percent of workers in rural households lack access to the internet. Governments could also consider extending benefits and protections to independent workers and to workers working to build their skills and knowledge mid-career.

Both businesses and policymakers could collaborate to support workers migrating between occupations. Under the Pact for Skills established in the European Union during the pandemic, companies and public authorities have dedicated €7 billion to enhancing the skills of some 700,000 automotive workers, while in the United States, Merck and other large companies have put up more than $100 million to burnish the skills of Black workers without a college education and create jobs that they can fill.

The reward of such efforts would be a more resilient, more talented, and better-paid workforce—and a more robust and equitable society.

Go behind the scenes and get more insights with “ Where the jobs are: An inside look at our new Future of Work research ” from our New at McKinsey blog.

Susan Lund and Anu Madgavkar are partners of the McKinsey Global Institute, where James Manyika and Sven Smit are co-chairs and directors. Kweilin Ellingrud is a senior partner in McKinsey’s Minneapolis office. Mary Meaney is a senior partner in the Paris office. Olivia Robinson is a consultant in the London office.

This report was edited by Stephanie Strom, a senior editor with the McKinsey Global Institute, and Peter Gumbel, MGI editorial director.

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Follow our news, recent searches, enterprisesg appoints new managing director amid change in leadership model, advertisement.

Ms Cindy Khoo (left) will take over from Mr Jeffrey Siow as EnterpriseSG managing director. (Image: Ministry of Trade and Industry)

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SINGAPORE: Enterprise Singapore will get a new managing director next month, with Prime Minister’s Office (PMO) deputy secretary Cindy Khoo assuming the role, the Ministry of Trade and Industry (MTI) said on Wednesday (Feb 14).

The appointment comes as EnterpriseSG changes its leadership model - from the current structure of having a non-executive chairman and a CEO - to one that will have an executive chairman and a managing director.

Ms Khoo, who is in PMO’s Strategy Group, will take over as managing director on Mar 1 and relinquish her appointment at PMO on Apr 1. She replaces Mr Jeffrey Siow, who stepped down from his role at EnterpriseSG at the end of last year.

After starting her public service at MTI as a trade officer, Ms Khoo went on to handle different portfolios in the Ministry of Health, PMO, Public Service Division and the Ministry of Education.

She joined the PMO’s Strategy Group in 2019 before taking on her current role in September 2021.

Mr Siow became EnterpriseSG’s first managing director and chief operating officer in September 2021, before being appointed Second Permanent Secretary of the Ministry of Manpower on Jan 1, 2024.

Prior to these roles, Mr Siow was principal private secretary to Prime Minister Lee Hsien Loong. He has also served in other capacities at the transport, education, and manpower ministries and at the PMO.

"On behalf of MTI, I would like to thank Jeffrey for his leadership at EnterpriseSG, and for his many contributions to the advancement of local enterprises and transformation of key industries," said MTI Permanent Secretary of development Beh Swan Gin.

"I also warmly welcome Cindy. With her extensive experience and achievements in the public sector, I look forward to her leadership in furthering Singapore’s competitiveness and fostering business growth, both locally and on the international stage."

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More Singapore firms expanding, setting up shop in the US after COVID-19 pandemic

new business model after covid

'Singapore is wide open for business': EnterpriseSG launches overseas centre in San Francisco

MTI announced last month that EnterpriseSG was changing its leadership model to enhance its "strategic engagement with business counterparts, advancing Singapore’s economic interests and the interests of Singapore companies".

As part of the change, EnterpriseSG CEO Lee Chuan Teck will relinquish his role and be appointed as executive chairman on Apr 1. He succeeds Mr Peter Ong Boon Kwee, who will retire from his role as non-executive chairman at the end of March.

MTI on Wednesday also appointed seven new members to the Board of EnterpriseSG, starting from Apr 1. Eight board members will step down upon completing their terms on Mar 31.

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ECONOMY TO RETURN TO GROWTH, SLOWLY

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GROWTH MOMENTUM TO PICK UP OVER 2024

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INFLATION TO FALL BACK TO 2%

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UNEMPLOYMENT TO RISE, BUT LESS THAN FEARED

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Mexican President Andres Manuel Lopez Obrador said on Tuesday that his government is addressing a complaint from Canada over the high number of asylum requests from Mexicans.

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Largest-ever COVID vaccine study links shot to small increase in heart and brain conditions

The largest COVID vaccine study to date has identified some risks associated with the shot.

Researchers from the Global Vaccine Data Network (GVDN) in New Zealand analyzed 99 million people who received COVID vaccinations across eight countries.

They monitored for increases in 13 different medical conditions in the period after people received a COVID vaccine .

The study, which was published in the journal Vaccine last week, found that the vaccine was linked to a slight increase in neurological, blood and heart-related medical conditions, according to a press release from GVDN.

LONG COVID IS HIGHEST IN THESE STATES, SAYS NEW CDC REPORT

People who received certain types of mRNA vaccines were found to have a higher risk of myocarditis, which is inflammation of the heart muscle.

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Some viral-vector vaccines were linked to a higher risk of blood clots in the brain, as well as an increased likelihood of Guillain-Barre syndrome, a neurological disorder in which the immune system attacks the nerves.

Other potential risks included inflammation of part of the spinal cord after viral vector vaccines, and inflammation and swelling in the brain and spinal cord after viral vector and mRNA vaccines, the press release stated.

SHOULD THE CDC DROP ITS 5-DAY COVID ISOLATION GUIDELINES? DOCTORS WEIGH IN

"The size of the population in this study increased the possibility of identifying rare potential vaccine safety signals," lead author Kristýna Faksová of the Department of Epidemiology Research, Statens Serum Institut, Copenhagen, Denmark, said in the release.

"Single sites or regions are unlikely to have a large enough population to detect very rare signals."

Dr. Marc Siegel, clinical professor of medicine at NYU Langone Medical Center and a Fox News medical contributor, was not involved in the research but commented on the findings.

"The massive study and review of the data reveals some rare association of the MRNA vaccines and myocarditis, especially after the second shot, as well as an association between the Oxford Astra Zeneca adenovirus vector vaccines and Guillain Barre syndrome," he told Fox News Digital.

"But these risks are rare," he added, "and other studies show that the vaccine decreases the risk of myocarditis from COVID itself dramatically."

COVID VARIANT JN.1 NO MORE SEVERE THAN PREVIOUS STRAINS, CDC DATA SHOWS

Siegel noted that all vaccines have side effects.

"It always comes down to a risk/benefit analysis of what you are more afraid of — the vaccine's side effects or the virus itself, which can have long-term side effects in terms of brain fog, fatigue, cough and also heart issues ," he said.

"Denying or exaggerating a vaccine's side effects is not good science — nor is underestimating the risks of the virus, especially in high-risk groups," Siegel added.

The key is for doctors and their patients to carefully weigh the risks and benefits, the doctor emphasized.

"This study does not really change anything; it just provides much further evidence of what we already know," he said.

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Dr. Jacob Glanville, CEO of Centivax, a San Francisco biotechnology company, also reacted to the study’s findings. 

"This study is confirming in a much larger cohort what has been previously identified in the original studies during the pandemic — myocarditis and pericarditis as a rare side effect of mRNA vaccines and clots as a rare side effect of the viral vectored vaccines," he told Fox News Digital.

"The odds of all of these adverse events are still much, much higher when infected with SARS-CoV-2 (COVID-19) , so getting vaccinated is still by far the safer choice."

This study was part of a more widespread research initiative, the Global COVID Vaccine Safety (GCoVS) Project.

The project is supported by Centers for Disease Control and Prevention (CDC), a component of the U.S. Department of Health and Human Services (HHS).

More than 80% of the U.S. population has received at least one dose of the COVID vaccine, per the CDC.

Fox News Digital reached out to Pfizer and Moderna, makers of mRNA COVID vaccines, for comment.

For more Health articles, visit www.foxnews.com/health .

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More than 80% of the U.S. population has received at least one dose of the COVID vaccine, per the CDC. iStock

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5 Models for the Post-Pandemic Workplace

  • Daniel Davis

new business model after covid

Many Australians returned to the office in late 2020. Here’s how they’re working now.

Since late 2020, Australians have been going back into the office with numbers approaching pre-pandemic levels in some regions. A new survey of Australian workers identifies five workplace models being used: as it was, clubhouse, activity-based working, hub and spoke, and fully virtual. The author explores how companies might weigh this decision now that vaccines are increasingly available and restrictions are being relaxed in many countries.

In March of 2020, most companies would have seen their offices as essential to their business. But as the pandemic dragged on, leaders have been surprised to learn that people often work just as productively from home .

  • Daniel Davis , Ph.D. is a senior researcher at  Hassell , an international design practice. His research focuses on the future of the workplace.

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IMAGES

  1. How to transform your business model for a post-COVID future

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  2. Start-ups’ business model changes during the COVID-19 pandemic

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  3. Coronavirus : Rethink your business model

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  5. Future of Work after COVID-19: 8 Work Trends to Expect

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  6. Fortune 500 Executives Tell Us What Their Post-COVID Workplaces Will

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