Innovation After Corona: This does not change everything

Kevin McCullagh

‘There are decades in which nothing happens, and there are weeks when decades happen.’

This quote, often attributed to the Russian revolutionary Lenin, captures this epochal moment well. As we start to find our feet after the initial shock of the Corona crisis, innovation leaders are looking to rock from their heels to their toes and figure out how to survive and thrive in the post-crisis world. It’s already clear that the economic and social impact will be more seismic than 9/11 or the 2008 financial crisis. How can we start to think about its implications for innovators After Corona?

The common refrain is, ‘This changes everything’, which is an understandable overreaction while we’re in the epicentre of the emergency. But even a cursory familiarity with history would suggest that Corona does not change everything. There will be fundamental changes, temporary changes and much will remain relatively unchanged. Now is the time for innovation leaders to put in the hard yards, to gain enough strategic perspective to divine the most likely trends and separate the changes from the continuities. Then we will be best placed to consider the potential strategic pivots that this level of disruption often demands.

We can’t predict the future, but there are better and worse ways of understanding change. The first pitfall to avoid is projecting our hopes and fears on to the future. While catastrophism (and to a lesser extent wishful thinking) is currently rife in the mainstream and social media, this is a time to keep our heads. We need to find ways to distance ourselves from our unconscious biases and gain a more objective perspective on likely futures. The distinctions and questions below should help structure your thinking, as will

collecting data points and ensuring you have differing viewpoints in your strategic team – so as to robustly interrogate your assumptions and hypotheses.

During Corona

It has become common to refer to the time before late 2019 as BC – ‘Before Corona’. But when thinking about the impact of the pandemic, it is also useful to think about DC and AC – During and After Corona. Most commentary on Covid-19’s impact can be filed under DC, much of which risks confusing temporary shifts with far-reaching permanent change.

Innovators mostly plan in years rather than months, so need to distinguish between temporary (DC) and permanent (AC) shifts. We should be wary of the tendency to extrapolate short-term, crisis-driven changes in behaviour indefinitely into the future. For example, the drop-off in podcasts and car usage is likely to rebound rapidly once the lockdown is lifted, and people click back into their commuting and exercise routines. I also doubt if Quarantinis on Zoom will be much of a thing once the bars, cafes and restaurants eventually reopen, as people relish the richness of face-to-face interaction. The tourism industry has faced one of the harshest of blows, and many businesses will go under. But despite the dark publicity around the Diamond Princess cruise ship, which was quarantined for two weeks off Japan in February, global cruise bookings for 2021 already exceed those of 2019. We should remember that it took three years for global air travel to recover from the 9/11 attacks in 2001 – but global flight passengers numbers had more than doubled by 2019.

While many behaviours and businesses will revert to something like BC norms and patterns post-pandemic, some are likely to change. For example, will wearing a mask when down with a bug and higher hygiene standards become socially de rigueur in the West? Will commuters return to packed public transport systems to BC levels? While not a direct parallel, ridership passenger numbers on the London Underground dipped slightly following the 7/7 bombings in 2005, which targeted London’s underground metro system, but rose by 30% in the following 10 years – although they have started to decline in recent years.

Structural shifts

Before we get onto how to assess if changes are temporary or permanent, we first need to frame some macro social, political and economic shifts, which are likely to set the context for innovation for the next decade or so.

Deglobalisation

While the response to the Corona crisis has in many ways been a model of international scientific collaboration (with the arguable exception of China), collaboration between governments has not fared so well, as each nation has fallen back on its national interests and resources. Transnational organisations such as the EU and the World Health Organisation haven’t had a good crisis. One lesson governments and companies are likely to take from the crisis is that long just-in-time supply chains are too fragile – especially ones which look overly reliant on China. The list of industries considered ‘strategic’ – from agriculture to PPE – will expand and there will be more talk of national self-reliance or ‘economic patriotism’ – but less action, as it becomes clear just how interdependent the global economy is. Many supply chains will be shortened and diversified, including more ‘reshoring’ or ‘nearshoring’ of production, to better withstand future shocks, such as another Eurozone crisis and heightened trade tensions with China.

More state, city and neighbourhood solutions

Governments, many of them right-of-centre, have intervened in their societies and economies to an extent that was unimaginable only months ago. Cities, as dense population centres, have also been at the forefront of lockdown measures, such as NYC laying emergency bike lanes to cater for a surge in cycling as commuters avoid crowded public transport. One of the few silver linings in the pandemic is the revived faith in the local community, as neighbourhood WhatsApp groups sprang up to coordinate support for those in need. In an incredible display of public spirit, 750,000 volunteers answered the call in the UK to support the National Health Service (NHS); the target was 250,000 and recruitment was quickly paused. This heartening rise in social solidarity, which paradoxically was born out of self-isolation, reverses decades of social fragmentation and loss of community bonds. This could change the context of services designed for local communities, such as shared micromobility schemes.

Corporate consolidation

All downturns result in a period of industry concentration, as stronger companies absorb distressed competitors at knock-down prices. The severity of this recession will lead to the mother of all consolidations, with auto and airline sectors looking like top candidates. For example, Daimler’s market cap is now half what it was when Geely bought 10% of its stock in February 2018. However, in further signs of economic nationalism, Germany’s economy minister has called for state investment to defend big German companies from foreign takeovers.

Big Tech is likely to emerge stronger than ever. Zoom, Slack, Microsoft Teams, GoogleHangouts, Netflix and Epic Games (owner of Fortnite and Houseparty) are the obvious DC beneficiaries. Amazon is hiring 100,000+ more employees, as it scales to meet the spike in demand for home deliveries, and has even been called the ‘new Red Cross’. Post-crisis, it will be interesting to assess the status of the ‘Techlash’. It is unlikely that the EU and The Democrats will be quite so keen to pursue Big Tech on privacy and antitrust concerns as the world economy tries to get back on its feet, and Tech is seen as a motor for economic and – critically – job growth.

Equality tensions

Low paid, ‘low skill’ workers have been reframed DC as essential workers and sometimes as heroes, who actually keep society ticking. The vulnerability of gig workers has also been highlighted; they are the first to be cut adrift by businesses with the smallest of safety nets. While more will question why the ‘exam passing classes’ get treated so much better, businesses are likely to continue to cut deeper and look to automate more low-skill tasks.

This will lead to heightened tensions, in which political parties and some brands will take positions on the side of the vulnerable. Gig and ‘Frontline’ workers may also win more legal protections in this climate, which will challenge many service businesses to rethink their business models.

We should try to identify and distinguish between two distinct types of permanent change. First and foremost, there will be pre-existing trends that have been accelerated by the crisis. Second, there will be changes which represent a more fundamental shift in assumptions.

Accelerated change

Most of the permanent changes that will characterise the AC era will be BC trends that were rapidly accelerated by the Covid-19 crisis. For example, Amazon and Walmart may not retain all the hundreds of thousands of extra employees they have hired, but it’s fair to assume that a lot more consumers will be converted to the benefits of online grocery shopping and home delivery AC.

Remote working, learning and medicine

The most obvious example of a boosted trend is that towards white-collar staff working remotely. It’s been growing for years, but Covid-19 has been the great accelerator. Some companies will go virtual AC. Most will return to the office, but more workers will be practised in alternative ways of collaborating, such as via Slack or Asana, rather than face-to-face meetings. Equally, they are likely to value the more social elements of office life as an antidote to working in isolation. Finance directors and facilities managers, meanwhile, will have other considerations in mind as they adapt to even leaner times. The need for personal desk space and business travel will be questioned, after the team has proved so productive from home. Office space requirements are likely to be trimmed, as will rents, as commercial landlords adapt to disrupted demand.

Kids have been socialising remotely on Minecraft and Fortnite for a while, and have quickly adopted remote learning on Google classroom. The evidence behind ‘screen-time shaming’ was always thin, but the range of things kids did on screens during lockdown may prompt parents to feel less anguish about it. The Corona homeschooling experiment will open the door for EdTech companies to show parents what else can be done.

The massive push Covid-19 has given telemedicine may be one of the biggest lasting consequences of the crisis. As the quaint nineties term suggests (remember Telecottaging anyone?), the concept of doctors remotely visiting patients has been around a while, but hadn’t taken off. A survey in 2019 found that only 8% of US patients have had virtual visits from their doctor. Covid-19 has swept away many health and privacy regulatory barriers, along with doctor and patient resistance, in a matter of weeks. As John Brownstein, Chief Innovation Officer at Boston Children’s Hospital made clear at a conference in March, ‘We are doing more virtual visits in a given day than we did the entire proceeding year, so things can change… I don’t see us going back to the way things were’.

Automation surge?

Some economists point to previous recessions being catalysts for automation surges, as extreme economic dislocation forces industries to restructure and invest in labour-saving technology to reap new efficiencies. In the case of the Corona recession, an extra case might be made for machines, in that they can work cheek-by-jowl 24/7 during a pandemic. Whether this recession and recovery will follow previous patterns is far from clear, but if the level of state intervention and job support programmes continue, there may be more pressure on companies to re-employ people, rather than re-invest in capital intensive technology and lead a disruptive industry transformation.

Micromobility and public transport

While public transport and micromobility have been hit hard DC, their AC prospects are likely to diverge – and for related reasons. Densely packed public transport was quickly identified as a risk; as people cut down on their movements (and shared handlebars), micromobility took a hit too, as many operators shuttered or withdrew their services from cities around the world. However, as lockdowns lift, more citizens are likely to try out micromobility alternatives to public transport, and take advantage of extra bike lanes that have been rolled out DC. Others may follow Chinese preferences for private cars – with high-quality air filters – although cities may use the crisis to introduce further restrictions on cars.

Game-changing shifts

While most of the change will involve the acceleration of existing trends, some shifts will be genuine volte-faces and step-changes that were not on the cards BC.

Heightened hygiene

Attitudes to hygiene are likely to be among the most obvious new changes. We have all upped our hand-washing game and it may become socially responsible for Westerners to adopt the habit of wearing masks in public spaces when down with a bug. South-East Asians adopted this after the SARS outbreak (2003), and the habit was reinforced by the Swine Flu (2009) and MERS (2015) epidemics.

This heightened hygiene sensitivity will wane, but to a higher base level of stringency than BC. Cleaning of public spaces and shared interfaces will not only become more prominent – but will need to be seen to be done. The smell of disinfectant may well become a welcome reassurance. The air ventilation and filtration systems in new buildings and vehicles will also come under more scrutiny. Designers will be asked to design ‘clean’. Industrial, and Colour, Materials and Finish (CMF) designers will need to develop deep expertise in self-cleaning and antimicrobial surfaces for the likes of touchscreens, handles and handlebars. One study of hygiene in air travel found 10 times more contaminants on touchscreens at the check-in kiosks than on toilet seats. Interaction designers will also be asked to explore more ‘Zero touch’ or ‘Zero UI’ user interfaces.

Digital surveillance

BC there was a growing push-back against what Shoshana Zuboff dubbed Surveillance capitalism, where private firms capitalised on our ‘digital exhaust’ – the information trails of our behaviours and preferences that we create online. AC there is likely to be acceptance of more state-sponsored surveillance. South Korea has been lauded for how well it initially contained the epidemic, with a range of measures including highly effective contact tracing. What has been less widely commented upon is that these relied on accessing the public’s mobile phone, CCTV and credit card data – without a warrant.

As governments around the world scramble to develop exit strategies, contact tracing apps are likely to play a central role. As emergency powers introduced during crises have a tendency of becoming the new normal, critical decisions are being made right now that seek to balance public health and privacy considerations. The Chinese app, AliPay Health Code, which opaquely assigns users a red, yellow or green health status and is then used to limit their freedom, is clearly not the way to go. Apple and Google’s joint announcement (yes, these are indeed unprecedented times) on OS updates, to enable private Bluetooth-based contact tracing, is a big step forward. As is the DP-3T basic code for a privacy-first contact tracing app, developed by 25 scientists across eight European universities. The privacy context that digital product designers will be working in is moving quickly.

Resilience over optimisation

‘Lean’ and ‘optimisation’ were two keywords in business BC. While this modus operandi may have suited steady-state conditions, systems designed in this way tend to get exposed by shocks. For example, highly specialised Just-in-time global supply chains prevalent in the automotive industry quickly ground to a halt when factories and ports in China closed.

The AC business world will still value efficiency, but more consideration will be given to the system’s resilience, as we acknowledge that other pandemics could well be part of our future. Workflows will be redesigned to be better able to function when more people are off sick or self-isolating. Teams will be better set up to work remotely. Many workplaces will be adapted to better cope with a future need to physically distance. Words like redundancy, contingency and ‘Anti-fragile’ will feature in more system design principles.

Build foresight

Not all of the shifts mentioned above will be relevant to you, nor will all of the others that are likely to fill the media over the next month or so. At Plan we encourage our clients to identify and focus on a few key factors that could potentially shape the context in which your business will operate AC. This will provide a firm base from which to drive the development of your strategy.

Given that most of the big changes will come from accelerated pre-existing trends, it is important to focus on those things which are most relevant to and will impact on your business, rather than becoming preoccupied with shiny new trends pedalled by the media and ‘Futurists’. It is usually more insightful to get under the surface of recent developments in an important dynamic that existed BC, rather than to get distracted by every hot new fad.

Once you have listed the key driving forces impacting on your business, give the list more meaning by mapping them on some common axes, to highlight inter-relationships. Plotting these dimensions of your sector’s future landscape will be useful to map scenarios and test concepts against later. Also, remember to include key continuities in your assumption base – those factors you expect to remain relatively unchanged.

You can then develop different scenarios based on these assumptions, that represent alternative potential futures. Ideally, you should build four scenarios, positioned on common axes; avoid offering only three scenarios to remove the temptation that gives senior management to plump for the middle one! Use scenario planning frameworks if you like, but robust scenarios do not assemble themselves; they require you to make many judgement calls. That’s fine – just be explicit about what these judgement calls are and the basis on which you have made them.

However you structure them, the scenarios should address the following questions:

  • What is changing, and what is driving this change?
  • What risks and opportunities do these changes bring?
  • How can your organisation best gain from this potential situation?

Ultimately, the scenarios should be judged by how credible, coherent, compelling, and commercial your organisation finds the stories about how it will prosper in the AC world.

History in fast-forward

Covid-19 does not change everything, but it has flicked history into fast-forward. It is a great accelerator of many BC trends, and it has spurred a worldwide rush of innovation and experimentation. Innovation leaders are not oracles and cannot predict the future, but it is our responsibility to develop a solid perspective on change and continuity in our industries. We need to plan and act today, if we are to best position our organisations to survive and thrive After Corona.

10 Innovation strategy questions for After Corona

As a follow-up to the article above, this 5 minute questionnaire clicks down to 10 practical questions you should ask when planning your innovation strategy for 2021 and beyond.

Subscribe to future content from Plan here, and my previous articles can be found here.

Kevin

Kevin founded Plan in 2004. Before this, he was a director at product design consultancy…

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