There are three ways that organizations in the Middle East and North Africa region and elsewhere might respond to Covid-19 variants, war in Europe, stagflation, and the uncertainty — and costs — associated with these things.

Of course, it is highly unlikely for anyone with decision-making power to always guess correctly and therefore be precisely in sync with chaotic events. Given that, one can either be ahead of the curve, behind the curve, or — as it turns out — profitably indifferent due to technology.

For example, in Dec. 2020 Google CEO Sundar Pichai said that its workers would have their work from home period extended to Sept. 2021. The tech giant added that employees should live within commuting distance of their physical offices and be physically present three days per week.

Not surprisingly, in Sept. 2021, this deadline was again pushed back until Jan. 10 2022. But the omicron variant flared, and the deadline was again extended and is still in operation. Presently, there is also talk of stealth omicron and variant XE. Case numbers remain high in Europe with US cases also high this year.

The current Google policy is behind the epidemiological curve. Management is essentially basing current and future work policy on present or immediate past realities, and then combining this with apparently ill-formed expectations that could be far better — or worse — than what might emerge shortly. This is evidence of highly bureaucratic processes causing a largely ineffective policy to emerge at a glacial pace, essentially bad ideas that come too late.

In stark contrast, Facebook and Twitter have allowed employees to live and work remotely on a permanent basis. These firms have shown the flexibility necessary to address the current state of affairs. They have embraced good ideas that are far in advance of changing circumstances, and essentially side-stepped epidemiological changes as they sweep the country. They are ahead of the curve —  but they still have capital to maintain and increasingly idle infrastructure that must be paid for.

Ahead of the curve or behind it, many firms continue with patchy solutions tied to dated work or home-based technologies. They are ready to move half-heartedly online if things get truly dangerous, even prepared — perhaps erroneously — to declare their work from home status permanent, thus offering what amounts to an inferior online-based product.

They hope that long-term working patterns will return to something like normal, and that they can get away with not having changed their fundamental approach to business. This seems like a mediocre short-term strategy that fails to embrace the opportunity being presented.

This is the point where fundamental paradigm shifts can take place. Gulf and MENA region economies are now in a rare situation where massive second-mover advantage exists. In general, economies in this region are less diversified, or possess an abundance of human capital, but a shortage of physical capital.

The firms that will thrive over the next 50 years will not be those with the most impressive campuses, the newest buildings, or even the fanciest employee wellness centers

John W. Salevurakis

For example, most of Saudi Arabia’s top companies are either in the petroleum or financial sectors. This is a dangerous homogeneity in spite of the fact that there is now every reason for a tech economy to flourish in the Gulf region as physical capital becomes less necessary. Indeed, the timing of the current Digital Saudi 2030 program is perfect and its objectives should be dramatically expanded. In parallel, a country such as Egypt has historically experienced horrific levels of ‘brain drain.’ However, Dubai-based transport app Swvl recently became the largest Middle-East based unicorn — a private firm valued at over $1 billion — to go on to trade publicly on America’s Nasdaq. Why?

Frankly, this is early evidence that the age of bricks and mortar is over. It is time for wealthy but undiversified economies to commit to the development of a tech sector with its low upfront costs.

It is also time for countries with an educated, but lower-income population, to invest in the development of new ideas given the lower capital spending involved. Also, existing but likely immature firms, may also have to be downsized and decentralized permanently. As it will be easier than in the west, it is clearly time that the MENA region adopts these new business models, which governments and private institutions should encourage.

Nonetheless, there will be resistance from existing firms as this means a complete — and costly — revamp of expectations and the selling of capital that may hypothetically prove useful when and if life “returns to normal.” However, by now we should all realize — even if life does return to normal — that efficiency and cost gains can be made through permanently decentralized work. The rather undesirable experiment of the last two years has been illuminating.

The firms that will thrive over the next 50 years will not be those with the most impressive campuses, the newest buildings, or even the fanciest employee wellness centers. The most profitable firms of this century will be those that most effectively integrate technology allowing off-site working to closely approximate the office — at a disproportionately small fraction of the cost — and offer it to the highest number of clients and employees who are no longer constrained by geography.

Most corporate CEOs and boards of directors, and even governments, however, lack what Austrian economist Joseph Schumpeter called a “pre-analytic vision,” which allows them to see the opportunity before them. Or, they have perhaps simply invested too much in bricks and concrete and feel compelled to commit the sin of not disregarding what amounts to sunk costs.

The list of the top 50 American firms by market value in 1970, is very different in 2022. This is largely explained by the deaf ear of many firms who failed to heed changing social, political, economic, and technological circumstances. In another twenty years, we will see the American and MENA region top 50 again re-shuffled and transformed by second movers overtaking firms that could not feel how sands had shifted.

• John W. Salevurakis is an associate professor of economics at the American University in Cairo and an author.