Crisis as Catalyst: The COVID-19 Impact on Innovation


April 21, 2020

Photo by engin akyurt on Unsplash
Photo by engin akyurt on Unsplash

Quarantine Angst

What does the jet engine have in common with penicillin, the world’s first antibiotic? Both, as it turns out, were born in 1928, but it took the crisis of the Second World War for either to be brought into the mainstream and deployed. The war’s stresses also served as catalyst to usher in both the nuclear age and the age of computing. All four of these developments then helped lay the foundation for human society for the remainder of the century, and indeed continue to do so today.

Pandemics too have caused crises throughout human history: the bubonic plague, cholera, smallpox, tuberculosis, typhoid. The human toll of each helped catalyze quantum improvements in public health practice which have benefited all succeeding generations.

COVID-19 has thrust us into a new worldwide crisis. Illness and deaths climb daily around the globe while the macroeconomy continues in freefall. But once again, necessity can serve as mother of invention. Once again, crisis can serve as catalyst for fundamental innovations that will lay the foundations for a better future.

Innovators pride themselves as masters of disruption. Divining what those disruptions may look like over 5 to 10-year horizons is a constant struggle. But COVID-19 has delivered our future world to us today; there is to be no more guesswork. The clear evidence? The future will be virtualized. This shift to the (“socially-distanced”) virtualization of all business models was already fated to happen one day. Rather than occurring as a normal evolution over a multi-year span, COVID-19 has pushed the virtualization of business upon us with immediate effect. And crucially, not only are business models now being disrupted, business processes are too. Tomorrow’s winners will be those who can quickly master both.

Everything Virtualizes: Business Models

It’s been 25 years since Netscape’s IPO, definitively giving birth to the modern Internet. In that time industries as varied as retail, media and financial services have all been virtualized, with the steady replacement of moribund incumbents with a new set of giants. The impact of virtualization has largely been restricted to transaction-driven – see Amazon, Google, and Facebook – business models, however. Applications that must also supply an element of human connection have yet to experience the impact of virtualization. COVID-19 will now act as the catalyst to change that dynamic.

For example, how will the forced social-distancing within the real estate market drive business model innovation through virtualization in that worldwide industry? COVID-19 lockdowns have relegated another massive worldwide industry, education, to online platforms. But if distance learning is defined merely as a teacher-to-student “transaction” of educational content it is doomed to fail. From an innovation standpoint, how can education be re-envisioned as a virtualized transmission of both knowledge and our most basic need – simple human connection – as part of the equation? Without innovative mechanisms for virtualizing the latter the former will never reach its potential.

For all industries that have complexity beyond mere transactions, being fully virtualized requires innovation to deliver key aspects of human connection. Healthcare, yet another large, worldwide industry, remains largely a contact-driven practice: patients need in-person contact with care providers, and the treatments given, whether drugs, devices, or procedures, also require in-person contact. Not only is this challenging under the constraints of COVID-19, but in-person contact with the healthcare system just isn’t a possibility for much of the human population even in the best of times.

The broad population impact of COVID-19, including its non-pharmaceutical interventions such as social-distancing, drives a re-envisioning of healthcare. Maximizing the virtualization of healthcare will be the key to achieving scalable mitigation, but the all-important human connection must also be delivered; healthcare is not a transaction. Tomorrow’s virtualized healthcare solutions will be a seamless combination of: telemedicine (a human healthcare provider accessed electronically); behavioral economics-driven virtualized interventions (e.g., personalized, humanized chatbots); data-driven mobile apps (virtualized diagnosis) that act as bridges to in-person care; and potentially even hospital-at-home “admission”.

If we can build virtualized healthcare for the COVID-19 crisis we will by default also build scalable solutions for our post-COVID future. As with education, mankind has never been oversupplied in healthcare. Virtualized solutions with human connection built in will work not only for today’s socially-distanced COVID-19 populations but, going forward, will also bring some measure of equity to populations currently under-served by healthcare. This innovation was always slated to happen “tomorrow”. The exigencies of COVID-19 have brought tomorrow to us today.

Everything Virtualizes: Business Processes

Imagine Steve Jobs in his signature black turtleneck, blue jeans and running shoes, dramatically pacing the MacWorld stage, introducing us to Apple’s next blockbuster product. Powerful, right? Now imagine that preternatural communicator – let alone any of us mere mortals – reduced to a talking head in a small videoconferencing square. Not quite the same?

Just as COVID-19 has disrupted business models so too has it disrupted business processes. The changes in business practice being wrought by social-distancing will be profound and permanent: we’re already living in The Day After. From now on we will all have to define, learn, and practice a new paradigm of social presence and engagement.

Virtualizing business processes means more than abjuring gabardines for pajama pants! At a minimum, we will need to become as effective engaging on virtual media as we are in person. But in addition, COVID-19’s realities bring an opportunity to fundamentally re-engineer companies to virtualize, and hopefully even democratize, our business processes.

Most obviously, virtualized business processes are cash-efficient. Business travel reduces to a minimum, and hot-desking happens at your kitchen table. No lost hours or environmental emissions due to grid-locked traffic. It’s promising that employees have been shown to be more productive and don’t shirk (Bloom, Liang, Roberts and Ying 2015) their responsibilities under work-from-home arrangements. They’ve also been able to work more hours without sacrificing (Hill, Erickson, Holmes and Ferris 2010) personal work-life balance.

Best practices for building cohesive virtualized workplaces have been explored in numerous academic studies. All share a common foundation – going beyond the transaction “to shift the emphasis from information systems as ‘pipes’ or channels to information systems as vehicles for conveying shared meaning and symbolic value” (O’Leary, Wilson and Metiu 2014). Results have shown, for example, that the “frequency of communication predicts both closeness and willingness to share better than frequency of collocation” (Wiese, Kelley, Cranor, Dabbish, Hong and Zimmerman 2011), with direct implications on information systems design. From an organizational standpoint, companies “can provide substitutes for proximity in the form of structural assurance, strong work cultures, norms for interaction and the technology to support the teams’ interactions” to achieve the benefits of proximity (Wilson, O’Leary and Metiu 2008).

Virtualized workplaces are certain to extend beyond the COVID-19 crisis and become a permanent fixture of the corporate landscape. Being successful will require innovation to construct them with virtualization as a strength, for employees and companies both, and not a weakness.

Finally, virtualized companies promise to free us from the autocracy of location. When companies operate in virtualized space, they can democratize access to employment to people located anywhere in the world. The virtualization of location also democratizes access to start-up capital. Under COVID-19’s social-distancing, investors may soon find themselves very comfortable engaging with potential investments exclusively over virtualized media. A company located in the same city as the investor will no longer find itself at an advantage when competing for funding with another potential investment located on the other side of the world.

Andrà Tutto Bene

The COVID-19 crisis has deposited us in unprecedented and uncertain times. We humans find uncertainty to be profoundly anxiety-inducing due to our fear and apprehension of what the future holds. Certainty in the present circumstance won’t be recaptured until a cure for COVID-19 has been found. But in its way, COVID-19 has brought us certainty: we now know what the future demands. The future has been thrust upon us.

The COVID-19 crisis gives us an opportunity to bring impactful solutions founded on virtualization to ever more applications and ever more people. As with the crises surmounted by preceding generations, COVID-19 gives us an opportunity to harness our collective will, to catalyze innovation, to write our own history, and to bequeath a safer world to succeeding generations.

Uncertain times are wellsprings of opportunity. There are no established and certain paths to tread. Uncertain times call for new paths, agency, and action. As Abraham Lincoln said, “The dogmas of the quiet past, are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise — with the occasion. As our case is new, so we must think anew, and act anew.”

Companies that will have impact and win in the age of COVID-19 — and in all the days after — will with certainty think anew and act anew. Let’s rise with the occasion and be one of them.