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Trends from before the pandemic have been accelerated in the New Normal

Adam Krasoń, country managing partner of PwC in Poland, talks to the BPCC’s Michael Dembinski about how business is adapting to the pandemic and what changes are on the horizon
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Now that the economy is reopening, how do you assess the damage from the lockdown, and how has it altered the way we do business?

While the reopening gives us some hope that the damage won’t be as great as we expected at the start of the pandemic, most economists agree that we are still facing an uphill battle, and the final effect on Poland and the region will be seen with a certain delay, most likely only in the autumn. We still cannot assess the risk of damage from the potential second wave of infections. In terms of lessons learned, I’d say that companies and leaders shall recognise and react to the trends from before the pandemic that have been accelerated in the New Normal.

Before Covid-19, many executives recognised that the changes were under way in their company’s operating environment and in the economy as a whole. Adjusting to these conditions, in particular the need for digital transformation, was and remains critical for increasing competitiveness. Social isolation has only made these trends more dynamic: some observers believe that the changes accelerated by 10 years. It is true that the need for social distancing and the resulting restrictions surprised all of us. But the difference lies in the approach and reactions of leaders to the unexpected situation – those who were already engaged in the process of digital transformation, have even been able to use the lockdown to their advantage. For the market, it was a real-life test of organisations’ resistance to shock, business-continuity plans and ability to modify business models and adopt remote working.

What trends has the pandemic accelerated?

In 2017 we identified a set of urgent, interdependent challenges facing the world. We called it the ADAPT platform – Asymmetry, Disruption, Ageing Societies, Polarisation and a shortage of Trust. Asymmetry describes a world where millions of lives and jobs are affected by wage differences and the erosion of the middle class. Extremely fast technological development causes disruption as society is ageing. Finally, political polarisation is growing, along with populism, feeding on and contributing to a shortage of trust, particularly in governments, organisations, and toward leaders. Even before Covid-19 it was already clear that the pressure would result in a completely different world by 2025, and organisations would have to adjust if they wanted to justify their continued existence and remain profitable. These trends have been accelerated by the pandemic; we have to remember that this won’t be the last such impact on the world’s economic system. If we do not address the risks identified by ADAPT quickly and comprehensively, and we don’t find a way to handle today’s crisis, the next one may be much more harmful.

And how do you assess companies’ ability to address these threats?

I take an optimistic approach, I’m looking for opportunities rather than threats. I see them in building a more balanced and resilient future in which everyone can grow. That is why it is necessary to analyse closely the challenges the world is facing, to share the lessons of the pandemic at the international level and as a result to implement the tools and technologies to chart a new, more adaptive course. It is a difficult time for many companies and industries, so wherever possible it is worth focusing on a sustainable approach to business, while remembering that true, long-term business relationships are based on trust.

In the current phase of the New Normal, it is crucial for business leaders both to assess the prospects for their organisations ‘here and now’ and to think comprehensively about potentially transforming their businesses. Key directions of change include learning how to engage with clients in the new reality, strengthening digital channels, and operational effectiveness. Please note that both data and new technologies play a huge role in each of these areas.

Have you identified any sectors that have used the current crisis to their advantage?

There are indeed some sectors for which the current situation has created a positive environment for development, for example companies with already well-developed e-commerce channels or modern logistic companies supporting e-commerce, but I would also mention Shared Service Centres (SSC) for which the current situation and the increasing digitisation and automation create even better development prospects. Betting on innovation and paperless processes can strengthen the perception of the SSC sector as one of the most flexible and crisis-resistant, which ultimately will result in businesses entrusting them with even more processes. Remember that while SSC in Asia can offer lower costs, Central and Eastern Europe has geographical closeness to Western Europe (and the same or similar time zones), with a large group of highly educated, multilingual workers. Over the past 25 years the business services sector in this part of Europe has been built up from scratch, creating an industry that employs almost 750,000 people. Additionally, the crisis caused by the pandemic has clearly shown that more tasks can be carried out remotely. That is why I’m convinced that the role of outsourcing will grow, benefiting our entire region.

How has the crisis affected companies’ relationships with their clients?

Consumer behaviours have almost certainly changed permanently as a result of several months of social isolation. It is not enough to focus mainly on cost cutting; this is the time for strategic planning and investment. First and foremost, we must build resilience and support the processes of acquiring new clients while increasing the satisfaction of the existing ones. It is essential to understand how our clients’ and stakeholders’ priorities have changed and what is currently most important for them. We need to look at the innovations in products and services that appeared during the crisis, and decide which ones are key to our business. We shall concentrate on our clients’ hidden and unmet needs and create a map of experiences that precisely track the customer journey. Good service shall be rewarded, not just with higher sales – programmes that strengthen the quality of relationships shall be implemented. Rewarding employees and contractors for good customer service practices will also support cultural change from sales to service and strengthen client-centredness.

And what about other relationships?

The current situation may be regarded as an opportunity to recalibrate our relationships, think of new partnerships we have created and identify opportunities we can seize to introduce new partners into our ecosystem. We need to be alert and ready for unexpected and innovative solutions, and learn how to adopt them. We need to actively look for innovative solutions ourselves, including new ecosystems with potential partners in related sectors who can provide long-term benefits for everyone. Most companies, particularly in the B2B space, are deeply connected in commercial networks of dependencies among suppliers, partners and supply chains. The crisis gives us a fresh perspective on all of our business relationships and experiences. In other words, if you see space to renegotiate agreements, use it – not only with the objective of reducing costs, but also redefining or expanding the scale of existing cooperation and relationships.

What do companies need to do to ensure they protect their human capital?

Employers have a tremendous responsibility: both to maximise protection of jobs and to invest in training employees and equipping them with the skills that are increasingly needed in the company. This will shape the job market of the future. It is exceptionally important to create opportunities for people to acquire the new skills they need in order to meet employers’ new expectations. Business leaders should make an effort to limit the scale of potential lay-offs and maintain employment, if possible. Ensuring people have work, at decent wages, will allow the economy to emerge from the crisis faster.

Similarly, what advice do you have for employees to make sure they can survive, and even thrive, in the New Normal?

The PwC report Upskilling Hopes & Fears found that as many as 89% of Poles say they are ready to learn new things and re-qualify in order to remain on the job market. That’s another reason for optimism, and this openness to change is reflected in the number of training courses people are participating in. In the digitalising economy, some jobs are becoming less necessary, but new ones are appearing in their place. When it comes to automation, it must be stressed that this isn’t a question of replacing people with machines or algorithms, but rather it’s about supporting people with new technologies.

What has the crisis taught us about the importance of CSR?

The pandemic has proven that the business success cannot be separated from the social context. If you still need to be convinced that values, goals and genuine concern are truly important, sometimes it takes a genuine crisis – and the one we encountered due to Covid-19 is an unprecedented one. The traditional imperative to grow a business was strengthened by a greater truth: a company’s financial success cannot be separated from its social success. There will never be a better time to demonstrate the power of positive change in broader strategic goals and corporate credibility.

What new behaviours and structure that developed during the lockdown will remain in place going forward?

The scale of transformation is so extensive that it is difficult to distinguish one factor responsible for this kind of change. In the recent weeks and months, many decisions have simply been taken by crisis-management teams consisting of both board members and representatives from across the company: from finance through HR, sales and IT. Now that we are in the next phase, it is time for all these people to shift from crisis management to managing transformation. Without this scope and depth of experience and commitment, we will be left with a set of single changes, not a real coordinated transformation at all levels.

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