As 2022 is moving towards its end and this post is supposed to come out on Christmas day, I felt it might be worthwhile to share some of my reflections on 2022. In many ways, it has been a bit of a strange year in my view in that we on the one hand moved out of the pandemic and what many expected to be a return to the way things were before the pandemic. On the other hand, the stock market took a major nosedive, inflation is through the roof and many are talking about a recession.
So, I thought I would share some reflections on how I have seen society evolve over the last year, what happens in the companies that I work with and how the professionals that I work with have changed over the last year.
At the societal level, it seems to me that we can see at least three major topics that jump out at me. First, coming out of the pandemic caused a reevaluation of life and priorities. Many that I met during the year went through a process where at first everyone was happy to get back to a normal state of being in office, in person meetings and traveling. Then many realized that this comes with lots of overhead in terms of travel time and other waste and that it requires us to spend time with people we may actually not like that much. We realized that life during the pandemic wasn’t too bad and that we should keep some of those elements. Hence, many did not return to the office but continue to work from home and meetings that would require travel earlier are now conducted online.
The second observation that is interesting to me is the dichotomy between the stock market and busyness. As we have all felt in our investment portfolios, the stock market is around 20% off from its high and many have a net worth that is significantly lower by the end of this year than what it was at the beginning of it. On the other hand, everyone that I work with is extremely busy and feels overloaded with high priority projects. For all the talk about a recession, I am not seeing it (yet?) in the industries that I work with.
The third major change that one can see rolling through the world is the changing, and maybe diminishing, role of globalization. With the supply chain challenges that we have been experiencing coming out of the pandemic, many realized that relying on partners halfway around the globe comes with significant risks when there are major disruptions. In addition, the geopolitical climate with Russia invading Ukraine and starting a war on European soil for the first time in decades and the rising tensions between China and, mainly, the USA, many have come to the conclusion that localizing parts of the supply chain and business activities is prudent. It’s great to get low prices for components, but if you don’t have access to these components, you can’t manufacture and sell anything at all and your revenue drops to zero.
In the companies that I work with, there are three major shifts that have materialized, or at least become significantly more prevalent, during the last year. First, even the most technology and manufacturing heavy companies that I work with have started to realize the importance of providing services and generating recurring revenue. Rather than being a minor part of the business, some companies have set the goal of generating 50% of their revenue from services, starting from very low numbers today. Although I think that the increasing awareness of the importance of digitalization and the continuous value delivery that it allows for through DevOps, DataOps and AI/MLOps plays a role, the more financially oriented folks have realized that the company valuation associated with recurring revenue is much higher than for transactional revenue.
The second shift, in part driven by the previous one, is a significantly increased desire to own the end-customer relationship. Whereas many of the companies in my network were perfectly happy to manufacture products and deliver these to wholesalers or dealers, retailers, installers and service providers, many are now seeking to have direct connections with the final customer and user of their products as a key enabler for providing services and generating recurring revenue.
Finally, especially during the fall, the talk of an upcoming recession caused many companies to start battening down the hatches. I don’t know if this is a genuine fear of worse economic times or if many companies are using this as an excuse to trim some fat and get rid of low performers. The pandemic made it difficult to reorganize and shift resources around, so it might be a bit of both. And, of course, with many employees resisting to come back to office, it could also be seen as a lever to put some fear in the hearts of employees to convince them to return to office to a more significant extent.
When reflecting on the individuals that I work with in these companies as well as elsewhere, there are at least three observations that I want to share. First, even for the most ambitious, hardworking professionals, there is a shift in the priority of work and of physical presence. The pandemic taught all of us that there is more in life than work and although work is important as a tool for self actualization, for most it takes a smaller role than before the pandemic. Also, many of us have experienced the hassle of travel, both for business trips and the commuting to office, and have started to take more and more meetings using virtual means. Sitting in airport lounges and the back of taxis, coming home late at night gets tired rapidly.
Although often attributed to millennials and Gen Zers, I see in general an increased awareness and prioritization of purpose and meaningful work. Doing something that feels meaningful and contributing to society in a positive and impactful way receives more attention and space than before the pandemic. The great resignation that many companies, especially in the US, experienced post pandemic is, in my view, indicative not of laziness or lack of work ethic, but out of a genuine desire to put the hours we spend at work into meaningful, positive and contributing activities.
The final observation I want to share concerns the focus on sustainability. Several of the people that I met over the year showed signs of shame and embarrassment for working for a company that could be considered to be bad for the environment. Whether it is folks working in automotive, logistics, telecom or industry, many realized that the products they build and the services they provide consume energy and could be viewed as polluting.
My concern is that as humankind, our well-being and quality of life is directly proportional to the amount of energy consumed per capita. I recently read somewhere that each western individual would need 600 slaves to maintain the same quality of life if it wasn’t for all the machines and automation in our lives.
In my view, many have a bit of a naive and one-sided view on environmental sustainability. If you want food in your local supermarket, you need a truck to get that food to that supermarket. That truck may use electric motors instead of a diesel engine, or soon will, but the energy needed to transport the goods does not change. If you like your mobile phone, it probably is predominantly because of the network connectivity. Base stations use quite a bit of power so demanding to cut that electricity usage equates to losing access to your mobile phone’s internet connection. And this is true for almost everything in our lives.
So, I am fully supportive of a transition to renewable energy sources or, at least, non-CO2 generating ones such as nuclear power and I am glad to see that we are in the midst of that transition. Renewable sources are already cheaper per kilowatt hour than traditional sources. We just haven’t sorted the storage problem yet, but battery technology is making great strides and hydrogen technology is very promising for more long-term storage. I just wish that folks had a more holistic view on the whole topic.
Concluding, 2022 was the year we came out of the pandemic, but we didn’t return to the old normal that we maybe expected. Some changes in norms, values, practices and processes will be longer lasting and maybe permanent, resulting in a new normal. I tried to share some of my reflections about society, industry and the individuals that I work with. For all the negative news in the media, ranging from hot wars to economic wars, I still believe we live in the best time that humankind has ever experienced and, for me, there is no reason to assume that life will not continue to get better. Onward and upward!