HOW 20 COVID-19 PANDEMIC TRENDS WILL TRANSFORM INNOVATION – Part 4
Insight | June 5, 2020
HOW 20 COVID-19 PANDEMIC TRENDS WILL TRANSFORM INNOVATION
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This is the fourth and the final part of the blog series. To read the previous parts, please scroll to the bottom of the page and click on the link of your desired part in the Related Posts section. 15. A Return To Faith In Serious ExpertsOne interesting byproduct of the pandemic is a change in the mindset of the American people. As Tom Nichols the professor at the U.S. Naval War College and author of “The Death of Expertise” explains America has become a fundamentally unserious country.This is the luxury afforded us by peace, affluence and high levels of consumer technology. We didn’t have to think about the things that once focused our minds—nuclear war, oil shortages, high unemployment, skyrocketing interest rates. Terrorism has receded back to being a kind of notional threat for which we dispatch volunteers in our military to the far corners of the desert as the advance guard of the homeland. As a result, we became a complacent nation with false beliefs that resulted in the colossal failure of the system that resulted in the implosion of the economy.However, on the positive side, the pandemic also sounded the alarm and acted as a wakeup call for all Americans to remind us that moving forward we will need to become a lot more serious. Hence, the expertise should matter and that moving forward we should put more faith in domain experts and scientists.We are already witnessing this trend as many VCs are going back to the basics and putting more emphasis on “Team, team, team” as their top three criteria for investing in the new deals. In other words, they are betting on experienced teams with expertise who can build a successful company versus cool ideas for shiny gadgets and gizmos ideated by younger and less-experienced entrepreneurs to-be.16. A New Investor Mindset As life moves online and the digital migration accelerates, the need for a whole new breed of technologies and investment philosophy is emerging. Technology companies will be the drivers of the new innovations but the existing model of investment is no longer going to work. As Dr. O’Mara, author of the book “The Code: Silicon Valley and the Remaking of America” states “It became very clear that tech was not only not adequate to address some of our most complicated social problems … but that it was not changing the world in the right way.” “The pandemic has made clear this festering problem: the US is no longer very good at coming up with new ideas and technologies relevant to our most basic needs. We’re great at devising shiny, mainly software-driven bling that makes our lives more convenient in many ways. But we’re far less accomplished at reinventing health care, rethinking education, making food production and distribution more efficient, and, in general, turning our technical know-how loose on the largest sectors of the economy.”Two factors could be cited that contributed to this issue. First, tech industry as a whole largely ignored politics until itself became a political headline due to its ongoing weakness in safeguarding the privacy of personal data and controlling the spread of false information. Second, the industry failed to address complicated social problems. For a long time what drove investment decisions in the technology companies was greed and maximizing the return on investments for investors rather than solving socio-economic problems and investing in technologies that improved our quality of life.As the economist James Meadway argued, ”The correct Covid-19 response isn’t a wartime economy—with massive upscaling of production. Rather, we need an ‘anti-wartime’ economy and a massive scaling back of production. And if we want to be more resilient to pandemics in the future we need a system capable of scaling back production in a way that doesn’t mean loss of livelihood.”So what we need is a different economic and investment mindset. For a long-time U.S. economy has been a consumer economy mainly focused on turning resources into things that we can sell and consume. This has resulted in building wealth for producers while a large portion of the society lived in misery. As Meadway argues “We can start to see more opportunities for living differently that allow us to produce less stuff without increasing misery.”This means that going forward the investors’ mindsets and qualifications about what constitutes a truly “valuable” company will change. Rather than solely focusing on the quantitative aspects like funding rounds, revenue, ROI and hyper-growth potential investors will place a greater emphasis on the qualitative aspects, such as an organization’s structure, team, culture, flexibility, and profitability as well as how it can contribute to building socially just and ecologically sound futures.17. The Spread Of Global Innovation DistrictsThe recent pandemic caught everyone off-guard as it spread very rapidly and impacted at least 183 countries in a relatively short period of time. In response, a growing group of influential researchers and practitioners established innovation districts in many cities worldwide to find a cure. Driven by broad economic and demographic trends, cities are supporting these initiatives as they have realized that the task today is not to fight the virus in order to return to business as usual, because business as usual was already a disaster. The goal, instead, is to fight the virus—and in doing so transform business as usual into something more humane and secure.Innovation districts are dense hubs of economic activity where innovation, entrepreneurship, creativity, and investment intersect. These districts have leveraged their academic research capabilities, innovation infrastructure (e.g., laboratories, advanced technologies, Big Data for modeling), and local and global peer networks to understand and contain the spread of the coronavirus. These efforts demonstrate the power of coordinated and concentrated efforts to address an unprecedented global challenge.However, the emergence of these districts is not a short-lived phenomenon that is going to disappear post pandemic. These districts are not there to provide short-term fixes so that we can quickly reopen the economy. Rather, they will play a pivotal and long-term role in the way we will build our cities in the future, the way we live and move around in those cities, the way we will use energy, the way we will provide improved social services to prevent future pandemics, and ultimately how we will change our lifestyles. These districts will be mostly focused on innovation in areas that truly count for the future where the traditional innovation hubs have failed.18. The Emergence Of Radical Risk-Mitigation TechnologiesOne positive aspect of the recent crisis is that it has increased the propensity to develop and experiment with more radical risk-mitigation technologies and practices that are fostering breakthrough technologies that we would not have otherwise needed in the past.According to Dr. Hong Luo the Associate Professor of Business Administration at Harvard Business School, “An increase in risk perception makes consumers more willing to pay for safety features even when they are initially inferior in terms of costs, user-friendliness, or other quality dimensions.” This has created the opportunity for a new type of devices and automation solutions such as robots, drones, smart helmets, and AI-based payment systems that reduce the need for personal interaction and the risk of contamination. She believes that the experimentation and use of these new technologies will increase as some market segments will continue to prefer the physical interactions embodied in the “old” model and will be willing to pay a premium for high-quality and safe physical consumption. 19. Artificial Regulatory Barriers Are FailingGreater use of risk-mitigating technologies and expedited need to move to an online life in the post-pandemic era will put the regulatory and liability systems of many countries to the test. As we have already witnessed in the U.S. there will be increased demand to reduce the artificial regulatory barriers currently in existence specially in areas relating to the use of online tools. For instance, in the hard-hit industries such as healthcare and education where significant bureaucracies prevented them from adopting digital technologies, we will witness regulatory easing to enable faster migration to a healthier digital lifestyle.20. Shift To The Virtualized EconomyLife and work post pandemic will not be the same as before. Evidence is already starting to emerge that suggests that we will not go back to the “Old Normal” but rather a “New Normal” is already here. This new normal is a “Digital everything virtualized workplaces and economy” where distant work and collaboration are rapidly becoming the new norm. While many had predicted that the virtualization of all business models—future of work—was already fated to happen one day, nobody expected it to happen so soon. However, instead of occurring as a normal evolution over a multi-year span, the pandemic virtualized the business fairly immediately. In other words we’re already living in “The day after” and there is no going back to the old ways of doing things prior to the pandemic. The impact on the businesses and employees, however, will be more profound than many think. It is not just about getting used to working from home. Rather, the speculation is that the changes in business practice being wrought by social-distancing will be profound and permanent. What we are witnessing is a paradigm shift that will have profound impact in the way we perceive and conduct business moving forward.Meanwhile, innovation will play a major role in enabling the virtualized economy. Successful companies of the future will be the ones that will not only adopt virtualization as a way of doing business but also build core competencies that enable them to weave virtualization in the fabric of their business model. As the pre-pandemic business models are disrupted the underlying business processes that enabled these business models are also getting disrupted. Hence, tomorrow’s winners will be those who can quickly master both.KEY TAKE-AWAYSProducing this blog series was a challenging endeavor. As we dug deep into research to identify how the Covid-19 pandemic is impacting the future of innovation, we came across many wonderful insights and predictions. This made identifying and selecting the top 20 trends a difficult task. However, we hope that we have done a reasonably good job of identifying them. Furthermore, we hope that our effort could add value to your business and hopefully spark new ideas that lead into new innovations. Finally, we would like to share the major take-aways and what we learned during this process with you:
The current pandemic is not a short-lived phenomenon. Rather, it represents the beginning of a new era—“a new normal”—that will have a profound and lasting impact on the future of humanity;
Covid-19 pandemic highlighted the tremendous weaknesses and vulnerabilities of the existing systems and sparked a new wave of innovations. We have already witnessed many of them focused on solving the specific challenges that we are facing today. This trend will gain significant momentum in the next few years;
The pandemic is making a profound impact on our way of life. As anything “personal becomes dangerous,” we will adopt more of isolation economy practices and move toward a virtualized future. This will have a great impact on the society, peoples’ behaviors and our lifestyle as a whole;
As the level of complexity of the challenges increase we will witness more failures of the systems and companies that are built on the old and obsolete model of 3-C. This will give rise to faster adoption of 3-D models and new breed of companies and solutions that will disrupt and displace the incumbents;
The increased level of complexities will also result in more collaborative innovations in the form of centralized innovation districts and decentralized co-innovation activities using digital platforms and ecosystems;
As innovation moves away from focusing on creating more fancy gizmos and shiny objects and focuses more on solving fundamental challenges that societies and humanity as a whole is facing, we will witness a major shift from valuing cool ideas generated by unproven teams to valuing insights from teams with deep domain expertise. In other words, innovation will lead the way but unlike before expertise will matter more as we will need to tackle more complex challenges.
Covid-19 has blown apart the myth of Silicon Valley innovation, David Rotman, MIT Technology Review, April 25, 2020
How ‘innovation districts’ are continuing the fight against COVID-19, Julie Wagner, The Brookings Press, April 28, 2020
The One Good Thing Caused by COVID-19: Innovation, Hong Luo and Alberto Galasso, Harvard Business School, MAY 7, 2020
The Future Of Technology And Innovation 2020, Brian Hopkins, VP, Principal Analyst, Forrester, APR 6 2020
2020 technology trends and the future of work, DXC Technology, 2020
The Impact of M&A on Rivals’ Innovation Strategy, Giovanni Valentini, Science Direct: Long Term Planning, Volume 49, Issue 2, April 2016, Pages 241-249
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Ron Dabbagh – Founder & CEO, Cenergim
Ron is a seasoned marketer, strategist, and entrepreneur with over 25+ years of experience in developing and marketing 20+ innovative technology solutions with a variety of startups and global market leaders. He is also a serial entrepreneur who has a passion for identifying market inefficiencies and building solutions to address them.