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Wake Up Call For Industry Leaders: The Time To Think About COVID-19 As A Complex Adaptive Challenge Is Now Ira J. Bedzow, Ph.D.

Photo Credit: Visionhaus

The COVID-19 pandemic is creating complex adaptive challenges that affect most (if not every) industry sector in the country. Unlike technical challenges, which are easy to identify and can be solved by an authority or expert who affects change in one or two problematic areas, complex adaptive challenges are not as straightforward. These challenges require both a change in organizational perspective to identify the issue and a change in approach across the organization to implement a solution. Don’t get me wrong, businesses and organizations are facing many technical problems as well, such as how to stay afloat in the short term. These challenges are neither easy nor insignificant. Yet potential solutions to these challenges can nevertheless be found using existing resources, problem-solving strategies and protocols. For example, decisions, such as whether companies furlough employees or seek loans to retain them, expand online or delivery services or cut supply for the time being, all make immediate changes while still maintaining the existing overarching modus operandi. If leaders look only to solve these immediate problems without also taking a step back to consider the bigger picture–i.e. which social and financial disruptions are temporary and which will change the state of business– they may stay afloat in the short term only to face existential problems later. The reason the COVID-19 pandemic is creating complex adaptive challenges across industries is due to the pandemic’s effect on both public health and economics. Because a vaccine is realistically 12 to 18 months away, even if social distancing stops the spread of the pandemic by the summer–which at this point is an optimistic goal–our reality will not suddenly snap back to the status quo ante. Just as there are regular measles outbreaks in communities of anti-vaxxers, the country must be on guard against a second wave in the

fall and future outbreaks until most of the population can get immunized. This fear of future outbreaks will change the way consumers shop and suppliers deliver goods. It will also change the way the public regulates social gatherings. The changes will last for so long that returning to the “old way of doing business” will become impossible by virtue of the fact that companies that do not adapt will not survive. And, even if they do, consumers will have become comfortable with the new mode of business and will no longer want to return to the old ways. If you have any doubt this is true, consider how the long-term effects will play out across the real estate and education industries. Even if the particular effects may be different, the challenge is the same for both. The reason I am choosing real estate and education is that the former is primarily a for-profit industry and the latter is primarily not-for-profit.

COVID-19 and the shifting real estate landscape New urbanism is a real estate movement that started in the 1980s but really took off in the early 2000s. It changed the way that real estate companies looked at development, urban planning and municipal land-use strategies. Moving away from suburban sprawl, density became more popular and mixed-use development (which combine multi-family, retail, and office buildings) created spaces where people can live, work and shop. However, real estate companies must now consider how the pandemic will change future development as well as the current real estate landscape going forward. By this I mean that leaders in the industry must predict COVID-19’s ripple effect on the real estate business, long after the pandemic has been quelled. For example, will zoning laws change to require greater public health safety standards? This might include lower density projects or increased costs of construction or renovation, by requiring more complex heating and ventilation systems to purify the air and/or larger common spaces, both of which affect the value of current property holdings. For mixed use projects or retail centers with entertainment as its anchor or shadow anchor, how will the public’s change in demand for previous forms of entertainment create leasing challenges or the need for adaptive reuse? How will changes in leasing of retail and office space affect surrounding apartments or housing located near those properties? Empty shopping malls and office buildings decrease the value of the surrounding property and potentially increases the rate of crime in nearby areas. These types of questions do not yet have clear answers that can be identified let alone solved by making one or two changes in a company’s business model. Leaders need to start thinking broadly and in new ways about the future of their business.