When a herd of sheep moves from one pasture to the next, there is a particular moment while it stops in front of a gate. Eventually, when the gate is opened, the herd rushes through. Watch this video to get a glimpse of what this movement looks like. And then think about what the pandemic did to the digitisation and virtualisation of our lives. Suddenly, we find ourselves in a hybrid world.
In many ways, we ran into closed gates when Covid-19 hit in early 2020. But then, the floodgates to the digital world were wide open, and we raced through, whether we really wanted to or not. In many parts of our lives, defaults had swiftly switched from physical to virtual: work came away from the office to become predominantly remote, shopping moved from the city centre or the shopping mall to e-commerce, physical meetings became Zoom calls, entertainment focused on the living room.
More than a year after the gates closed for the first time, the herd is still in turmoil, exploring the new pasture. Shepherds are trying to exercise leadership. In times like ours, this precious craft is in high demand. These are times for leadership, not management. People are on the move, behaviours change and shift. We need someone who helps to find the way when we are in uncharted territories.
The change we are seeing at the moment is a massive change of value and values. And both shifts are interconnected. Values like sustainability in particular and the question of purpose in general gained importance. Value creation moved to the digital sphere and the user interface. These trends have been underway for at least two decades, but it has now become impossible to ignore them. They have moved through the gate, if we stick with our metaphor.
Likewise, the future of work or new work, as some people like to call it, had been discussed for years. Now, it’s high on the agenda, and the future of the office is only half of the equation. Everyone is talking about hybrid work models, but nobody knows what this really means. What is a hybrid company? We need to figure it out. Again, these are questions of leadership. Work and companies are, to a certain degree, digitised and virtualised.
We work in the cloud, and companies operate in the cloud. Value creation has moved to the digital sphere. Of course, we still need factories and other physical premises of work, but even there, value creation shifts to the software. It’s not unlikely, though, that personal human care, or proximity services, may gain more value just because they are hard to digitise.
The new urban experience
The same might even be true for cities. The digital revolution and now the pandemic have eaten into two basic functions of urban agglomerations: work and commerce. Living in the city has been a problem for years, with skyrocketing rents and ever-longer commutes. The separation of work and living had reached the breaking point already before the pandemic hit:
“The growing energy consumption of traffic and the imminent collapse of the infrastructure make the situation untenable. In metropolitan areas like Munich, Frankfurt or Hamburg, more than one in three employees lives outside the city.
Meanwhile, both the factory and the office become more and more automated and virtualised. For average workers, it makes ever less sense to commute over longer distances to an office where they just use the very same tools they have at home. Hence the trend towards work from home.”
But the value of cities is still in the proximity, the density of people, ideas, experiences in a confined space. We are in the midst of a great restructuring. The current imbalance of housing and office space in urban areas – not enough living space to accommodate all these employees – forced people into long commutes. Their urban experience was cut in half: working in the city, living in the suburbs or the countryside. This is going to change, but in many different ways. There is no single, uniform model.
A world of hybrid cities?
However, even the top rent for living space in Munich, Germany’s most expensive city, at €18.4 per square metre, is significantly lower than the top rent for office space, at €45 per square metre, in Frankfurt (in Munich, it’s at €40). Not to mention the top rent for retail properties which is at €360 per square metre in Munich. Given these numbers, it won’t be easy to convert retail or office space into living space.
Hence, structural changes in the real estate sector will take some time. Rents need to decline first before significant restructuring can occur. Real estate itself won’t move to the cloud, that’s for sure, but what about cities? Will cities become virtualised? To a degree, they already are. When work and commerce migrate to the cloud, when entertainment is virtualised as well, the city as a physical spot needs to be redefined – probably along the lines of the superior experience.
These, again, are questions of leadership. Where will the flock move to? Probably to where the grass is greenest:
“People will always flock to regions, industries and professions where value creation is higher than elsewhere. These days it is the digital sphere where that is the case.”
The new normal
Our world is now inherently a physical/digital hybrid. This is the new normal. But the digital part is taking the lead. That means our world is now programmable like never before. This opens up new degrees of freedom, but it also comes with new caveats:
“As human beings, we’ve new and powerful means to strive towards fulfilling our values. But these same means can also turn against us and our values, simply for the sake of capturing economic and business value.”
It’s the dialectic of light and darkness that is at work here in our post-Covid, hybrid world. But:
“What we really need is a new Renaissance: a break from the past, a new (digital) humanism, a cultural movement that takes the best from the past and translates it into our day and age. Or even better: into the next age. Whatever that will be.”
Maybe we can call it the hybrid age.