I asked a senior manager last week whether people at his global manufacturing company were going on business trips again. They weren’t, he said, but they would eventually — “you can’t smell things if you don’t travel”.
He’s right. Video calls engage two of our senses: sight and hearing. That’s not enough. It’s not that you need to touch, taste or smell your business colleagues and contacts in other countries. What the manager meant is that you need to sniff around your foreign subsidiaries and sales prospects. You need an on-the-ground idea of what’s happening — where the opportunities are, what might be going wrong, what the business and political environment is.
That business travel was necessary for business success appeared clear before the Covid crisis. The Growth Lab, a research unit at Harvard’s Center for International Development, looked at international travel spending by holders of corporate credit and debit cards between 2011 and 2016. It found that where there was business travel, there were measurable benefits in growth and employment, both in the countries the travellers came from, but particularly in the countries they travelled to.
The transfer of knowledge was vital to business growth. It was particularly prevalent in multinational companies with foreign subsidiaries. Multinational companies “have become ubiquitous in the global economy, because they can easily deploy anywhere the knowhow that exists somewhere in their network, provided they can travel,” the Growth Lab said.
Given that video technologies were available before this crisis why, in the words of the Growth Lab, had “moving brains” in the form of business travel become so prevalent? And have we learnt during this crisis we can do without it?
We can almost certainly do with less business travel than before. But we can’t do without it entirely. “Moving brains” is not just about exchanging ideas. It’s about being around people and places, taking in the opportunities and drawbacks. It is about learning how things are done elsewhere, what expertise you can bring back home and what people elsewhere can learn from you.
But necessary as business travel is, it is not going to come back fast. After previous downturns, business travel took longer to recover than leisure, according to a recent McKinsey paper. Following the 2008-09 financial crisis, international leisure travel returned to its previous level in two years. It took international business travel five years.
So when people feel safer — because they are vaccinated, because infection levels have fallen or because frequent testing tells us which people are contagious — who will be the first business travellers to venture out? McKinsey talked to corporate travel managers and looked at what was happening in countries such as China, which entered and began to exit the crisis before other places. Their paper forecasts, reasonably, that travel in a private or rented car will come first, followed by domestic flights or trains. International flights will come last.
The more hands-on, production-oriented industries will restart travelling before others. Manufacturing, construction and pharmaceuticals will come first, tech, real estate and finance next and professional and educational services last.
As my pre-lockdown travelling was to design and deliver classes for the FT’s business education arm, this suggests I will be among the last to take to the air. But, as the McKinsey paper points out, it depends what our competitors do.
At present, everyone else is marketing and conducting business education remotely. If, as the virus retreats, clients become comfortable with in-person sales and delivery, those that offer it will have an advantage. Other industries will be the same.
If your competitors are out there smelling the new opportunities, you will have to resume travelling too.
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