Chance favors the prepared; and that includes for times of crisis. One way to understand the pandemic’s impact is by knowing how it has sped up business trends that are neither seasonal nor cyclical, but are consistent over time. They have been evident to senior executives for a long while.
Since long before the pandemic, we’ve been tracking how likely a company is to successfully “leap” toward a new knowledge discipline in its efforts to prepare for the future.
Carmakers have to de-emphasize mechanical engineering; they must increase their software capabilities for self-driving vehicles. Retail banks must evolve from a physical branch network of human bankers; they must make inroads into mobile services based on AI.
It turns out this sort of preparedness is the source of resilience. The chart below ranks companies on a historic Readiness Indicator based on our data from 2019 and calculated before the pandemic. You can check out our methodology here.
Back in 2019, the top players in our ranking already included fintech developers that are household names. There’s PayPal, the digital payments firm that turns 22 this year. Then you have Square, which processes credit card payments from street stalls and coffee stands to fancy farmers’ markets. Both sit near the top of the rankings.
And yet, several incumbents have managed to grow just as fast. None are retail banks. Rather, these leading incumbents are legacy infrastructure builders: Visa and Mastercard.
Now let’s look at the stock price movements over the first 14 months of the pandemic as these global players were experiencing it. Notice a pattern?
Companies that were future-ready back in 2019 won big during the crisis. In other words, being future-ready translates into resilience.
To be sure, our Readiness Indicator will never perfectly predict share price movement. This is not our intended purpose. But the correlation is unmistakable. And it’s also something that we’ve come to observe in other industries.
That’s it. Resilience is preparedness. And as we enter the post-COVID era, companies that have scaled future capabilities will capture new growth. This is reflected in our latest ranking of 2021.