Society is Changing, and Innovators Need to Seize the Moment (Part 1)
A call for corporations to continue pursuing and investing in innovation, even during a global pandemic.
I think I’ve spent the majority of the last few weeks reading every available news article for updates on COVID-19, constantly perusing through YouTube videos on the virus, studying different mathematical models about when the pandemic will peak, if ever.
Stuck at home, with only the internet connecting us to the outside world, it is easy to get lost in the moment, wondering about how different countries and communities are faring in the face of such a terrifying, invisible enemy. It is also easy to get disheartened, as in wondering when will the deluge of virus-related deaths stop, when will life return to normal, if ever.
I don’t work in the healthcare sector (and my heart goes out to all the heroes who are putting their life on the line each day). And I’m not involved in government. So, like most of the population, the only thing I can do to help is sit at home and continue reading the news… or is it? As the reality of this crisis settles in, as we have all carved a new life for ourselves at home, socially-distanced from other human beings, it is time for us to start thinking about tomorrow. What happens after this pandemic is over?
I work in the areas of corporation innovation and higher education, and my job is to help companies and students alike to plan for what’s next… and there is no greater impetus for change, for re-framing the fundamental rules of society, the workplace, and local authority than what is happening right now. So while most companies can do little more today than order their employees to work from home, they should be doing a lot more to prepare for the tidal wave of change that is coming tomorrow.
The crisis will end… but our lives are not returning to normal, or at least the normal that we used to know.
Stunned Into Cost-Cutting
In the face of this global health crisis, and an expected global economic recession, corporations have shifted into cost-cutting mode, resulting in soaring unemployment and plummeting industrial production. And they are not wrong in doing so. To ensure their survival through this crisis of indeterminate length companies need to hoard liquid assets (cash!) and shed all non-essential functions, investments, and personnel.
However, the depth of those cuts are critical. Cut too lightly and a company risks insolvency. But cut too deep, and there will be no assets, no new ideas to leverage during the recovery phase.
Cutting innovation would be cutting too deep.
In this crisis, unlike other financial crises we’ve faced before, innovation is no longer a “nice-to-have”. It is now “do-or-die”.
When this crisis hit, it was not only governments that were caught unprepared, everyone from small businesses to large corporations were scrambling to adhere to stay-at-home orders, continuing operations from distance, and adapting to a suddenly digital-only economy. It was chaos, and in many senses it still feels that way. In my conversations with friends in a variety of companies and sectors, I sense that most people are still in this crisis management phase, trying to make sense of our new reality.
However, for those outside the healthcare sector, the shock of the health crisis is over (costs have been cut, protocols have been established, employees are working from home) while the economic crisis of tomorrow is just beginning.
“This is a moment that demands coordinated, decisive, and innovative policy action from the world’s leading economies. We are in an unprecedented situation and the normal rules no longer apply… A global recession — perhaps of record dimensions — is a near certainty.”
Real world GDP is expected to contract by 2.8% or more in 2020; the US and Europe will probably see economic declines of 5% or more. And it will likely take 2–3 years for most economies to return to their pre-pandemic levels of output. More troubling is the likelihood that, because of the negative effects of the uncertainty associated with the virus on capital spending, the path of potential GDP will be lower than before.
And, while society and the economy will recover at some point, there will be some fundamental shifts that companies will have to adapt to. Those shifts have already happened, in personal interactions and expectations of public services, but we just haven’t noticed them yet, stuck in quarantine in our own homes. But as soon as the crisis lifts and society slowly returns back to daily life, companies again will be scrambling to adapt.
Focusing on innovation today will help those companies adapt faster tomorrow.
Inspired to Adapt
Employees and managers alike need to start planning for a new society, a new economy that will emerge from this health crisis. They should be re-examining their business models, drafting alternative options and looking for opportunities to invest in their digitalization. Companies need to anticipate the impending changes and quietly invest in innovation projects to seize upon the opportunities that will inevitably emerge. Sector divisions, economic rules, and brand-consumer relations are about to be rewritten.
Some businesses will thrive in the wake of COVID-19, and others will perish in the undercurrent.
Some of those impending changes could include:
- A re-examination of the relationship between citizen and state, specifically the state’s role in providing for the health and good of citizens of all different status and condition,
- A hard shift toward nationalism at the expense of internationalism, focusing on national boundaries and self-reliance,
- Stepping away from just-in-time global supply chains with a re-emphasis on localized production and accessible alternative suppliers,
- A greater dependence on the convenience of e-commerce and digital applications at the expenses of brick-and-mortar establishments,
- A re-interpretation of the work environment, specifically where work can and should be done and how it can be accomplished,
- A prioritization of a dynamic, flexible, pi-shaped employees rather than a team of only specialists, which can adapt to new opportunities,
and much much more.
In the upcoming weeks I’ll be exploring some of themes, making educated guesses about the breadth and depth of their impact, and the types of sectors they will affect.
Today, the pressure for innovation is to solve the immediate health crisis — create better tests, produce more ventilators, develop a cure and a vaccine, etc. Tomorrow, the pressure for innovation will hit all sectors, to adapt quickly to a suddenly different society, different economy, different mindset.
Start preparing today.
Make Innovation Work
Core Strateji is a strategy consulting firm that specializes in supporting leading companies to transform into ambidextrous organizations. Are you ready to move your innovation activities forward?
If you enjoyed this story, please recommend and share to help others find it! Feel free to leave a comment below.
