The new normal of work, business travel and multiple industries is being written as we speak as the economy tries to re-open after the COVID-19 pandemic.
While exact details are evolving, this earnings season provided a bevy of comments on what the future looks like.
Here's the tour.
Microsoft CEO Satya Nadella on the three phases of recovery.
As COVID-19 impacts every aspect of our work and life, we have seen 2 years' worth of digital transformation in 2 months. From remote teamwork and to sales and customer service to critical cloud infrastructure and security, we are working alongside customers every day to help them stay open for business in a world of remote everything.
He added that recovery takes place in three phases. The first is where we are now. The second phase...
If you think about the next phase of recovery, it's more like a dial. Things will start coming back in terms of economic activity and we'll have to keep adjusting the dial. This hybrid work is going to be there with us for a period of time. That's where some of the sort of architectural product strength of ours will be very useful to our customers.
According to Nadella, the third phase is structural change such as telemedicine, online education and digital twins.
UPS CFO Brian Newman on recovery and changes ahead.
We view the current global situation as having 3 distinct stages: pre-coronavirus pandemic, stay-at-home restrictions and then a recovery phase. The U.S. began the stay-at-home stage in March, and it has continued into the second quarter. At this time, we are not able to determine the duration or depth of this stage or the resulting recession. We will leave those debates to the economists, and instead, we'll focus on keeping our employees safe, serving our customers and ensuring ample liquidity for our shareholders.
It is also likely that future consumer and business behavior may change as a result of this crisis, and UPS' transformation initiatives will help bridge us to new market realities by delivering more automation, increased network flexibility and new technology-enabled solutions that position us well for the future.
UPS Chief Strategy and Transformation Officer Scott Price on the brick-and-mortar reset.
I think substantially, the brick-and-mortar world has had a reset. What that reset will mean into the long term is not yet clear until we emerge into recovery. But I think that there is now a behavior that is baked, and we continue to assess now what our estimates are going to be: one, the penetration of retail in terms of digital platforms, and then what volume that creates for UPS.
Honeywell CEO Darius Adamczyk on shortening the supply chain to be more local post pandemic.
You have to remember that our strategy always has and is kind of a regional-for-regional or local-for-local production change. I mean, if anything, I'd like to accelerate that. I'd like to be really local-for-local. I mean, we're mostly there. And I think that's still very much the right strategy. You got to produce in the countries in which you operate and leveraging those supply chains and operate locally. So I'm not sure that's a dramatic change from where we have been. If anything, it's probably an acceleration of the strategy that we already had.
Honeywell CFO Gregory Peter Lewis on factories and services going forward.
Until people movement becomes freer, we're going to struggle with service and project execution in the solutions businesses. While social distancing norms become clearer in the factories, that's going to have an influence over capacity and attendance and so on. But it's near impossible for us to put a number on that. It's changing almost daily, and it's different in every region of the country. It's going to be different in certain states in the U.S.
Comcast CEO Brian Roberts on how China's recovery could be instructive with new safety practices.
I'm heartened by what we're seeing in China. Where we have been building a magnificent park in Beijing. As we all know, the first case of COVID occurred in China right around the Chinese New Year. Going into that holiday, we had 12,000 construction workers going full bore. But as a result of the virus, that number soon went to 0. As of today, we now have over 15,000 construction workers back at our site, even more than before the virus started. We have a safe working environment with many protocols in place. I'm pleased to announce we expect to be open amazingly on time and on budget in 2021. Beijing may be different, but perhaps it shows the mark of this crisis.
Wyman Roberts, CEO of restaurant chain Brinker International, on the customer experience.
If you walk into our restaurants, the doors will be open, there will be sanitizer right there at the front of the doors. You'll be sat at the table and the 2 tables next to you, for the most part, won't be sat. And so there won't be a table next to you that's sat. There'll be a table that's usually a sanitizing station. That has paper towels and sanitizer. The table will be clear of almost -- there won't be anything on the table, and the menu will be -- we're working quickly to get new menus out, but they'll either be paper, or they'll be easily cleanable menus, kind of 1 or 2 pagers.
The bars will not be sat at the bar top. So the bars -- we won't have patrons at the bar because that's very hard to distance and it's also hard to regulate. So we will have some tables pushed up to the bar. So the bartender could react with a party, interact with a party, but they'd be 6 feet away or more. And that's how it feels. And so when you walk in, again, the spacing is there, and all of our servers will be masked and gloved. And they will also have been asked before they can check-in several questions about how they're feeling, have they taken their temperature that day, we have a -- we have a thermometer in the restaurant that they can use if they haven't. And before they can check-in, they have to validate that they feel good and they're ready to work, and they haven't come in contact with anyone that they're aware of.
Amazon CFO Brian Olsavsky on returning to 1-day shipping going forward.
The shipping is still pretty fast and is still coming quickly. It's just it's taking longer to get things into our warehouse and out of our warehouse. So that's really the challenge right now is to speed that up, and that will -- when we do that, we'll see a resumption of more 1-day service. But right now, things are still so up in the air that I can't really project when that day will be at what point in Q2 or Q3 or beyond.
As for the second quarter, it's difficult to model.
It's an odd quarter because generally, the biggest uncertainty we have is customer demand and what they'll order and how much of it they'll order. Demand has been strong. And the biggest questions we have in Q2 are more about ability to service that demand and that -- the products that people are ordering in a full way, not blocking or making it hard to find nonessential items, increasing marketing and everything else. So I think the challenge is really on everything besides the top line. Top line is certainly not to be taken for granted. There's always the importance of having attractive offerings in stock for customers. But usually, things that you can count on the cost structure, the ability to get products, your capacity for shipping and delivering, those are usually things that you can take for granted and in this quarter, you can't. And that's really where the uncertainty is driven.
Xerox CEO Giovanni Visentin said going back to offices may be tricky.
While there are some positive trends emerging in the fight against COVID-19, there remain important questions about how and when economies and businesses around the world will reopen while keeping their people safe. We are working closely with other companies, government leaders and health care professionals to implement new work guidelines in line with recommendations.
It's important to remember working from home is not a new concept. Many companies have implemented flexible policies over the last 10 to 20 years, and many in recent years also asked employees to return to the offices to speed decision-making and foster collaboration. I can tell you this. In all the conversations I'm having with the CEOs, government officials and others, the prevailing question isn't whether to return to the office, it's when. That said, the next pressing issue businesses are dealing with is ensuring their employees can be productive and secure when they are working from home.
Southwest Airlines CEO Gary Kelly on recovery, business travel and the new normal.
We're in a recession. And historically, it has taken years, typically 5 or more, for business travel to recover. With some businesses issuing no travel orders, that has to be the expectation going forward that business travel will recover very slowly. Further, this recession has already put tens of millions of Americans out of work, and consumer sentiment has been severely damaged. That will also affect near-term travel demand expectations.
Southwest COO Michael Van de Ven on the flying experience.
Distancing is just one additional form of mitigation, but there are a lot of other things that are going on in the airplane. We've got a deep clean program of the airplane with those electrostatic misters and antimicrobial. So there will be no disease floating around on that airplane. We have -- we'll have -- everybody will have access to good personal hygiene with wipes or hand sanitizers and masks on board. And then I just don't want you to forget that everybody is sitting and facing in the same direction. We have very sophisticated filtering systems on the airplane. So it's not like those viruses just spread around the airplane. I think the airplane environment is set up really well to be a pretty disinfected environment for our customers. And if we can go find a way to just enhance that a little bit with some social distancing, that's just additional goodness to it. I think you'll see the same thing as you go through the airport with respect to the cleanliness of the facilities and then the availability for our employees and our customers to have exceptional personal hygiene in place as they go through that environment.
Zebra Technologies Anders Gustafsson on this recession and recovery compared to 2008-2009.
I think in 2009, every customer had concerns about liquidity and so forth. Here, we have a bit more of a have and have nots. So if you're a mass merchant, a grocer, e-tailer or in health care, some of the delivery businesses, you're doing very well. They are super, super busy. And if you're more of a brick-and-mortar retailer selling apparel, you might be having shut down all your stores. I think from a customer behavior perspective, I'd say when the -- kind of the orders around work from home started to be enacted, it probably took 2, 3 weeks for our customers to kind of scramble and get themselves organized to adapt to the new kind of working environments. They were very focused on just making sure their operations were continuing to run.
But in the last month, I'd say, they've started to come back and start engaging with us on both current and more future-oriented projects. And we're trying to be -- make sure we make good use of video conferencing to continue to engage and have the sessions with our customers. And I don't perceive that our customers overall are maybe as concerned with how long or how they're going to come out of this recession, maybe it feels like they have a bit more confidence.
Facebook CEO Mark Zuckerberg said that new normal for SMBs means digital transformation.
A lot of small businesses that are out there that are still primarily physical, there's a -- there's been a big push to get online and to do more selling online. And I think that there are lots of opportunities for us to support them and building the tools that they need to do this. We're seeing a lot of businesses that were primarily physical, now moving towards selling stuff online for the first time, and we're seeing a lot of businesses that already had a digital presence now really transition to having their digital presence be their primary presence. And that -- I think that trend, while there may be some short-term spike, I do think plays into a pre-existing long-term trend.
Google CEO Sundar Pichai says "the world will not look the same."
It's also clear that this is the first major pandemic taking place in a digital world. Many parts of the economy are also able to continue with some semblance of normality. Thanks to advances in remote work, online shopping, delivery options, home entertainment and telemedicine. At the same time, newer technologies like AI, Bluetooth exposure notifications and 3D printing are being used to help fight the disease head on. It's now clear that once the emergency has passed, the world will not look the same. Some social norms will change, and many businesses are speaking to us, looking to reinvent their operations.
We've seen that the most pressing concern of small and large businesses right now is business continuity, solving for issues like employee safety, dramatic falls or surges in demand, supply chains and managing a remote workforce. Ultimately, we'll see a long-term acceleration of movement from businesses to digital services, including increased online work, education, medicine, shopping and entertainment. These changes will be significant and lasting.
Citrix CEO David Henshall on the future of work.
Longer term, we believe that employees and employers will view the way in which we all work through a very different light.
I think that this current crisis is really going to accelerate the overall trends that we've seen in the industry, whether that is the adoption of public cloud, SaaS, remote and flexible working. These are trends that were already in place before this crisis hit. I think this will just serve as an accelerant to continue to move those forward because businesses realize that this isn't a onetime event.