COVID-19 SPECIAL: Economic Affairs- Innovation in the time of Covid-19
Companies and governments must adjust to a new world
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History shows us that crises often inspire innovation. Tectonic shifts in demand and supply spur the emergence of new technologies and changes in behaviour.
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Out of the Great Depression of the 1930s came such innovations as instant coffee, produced by Nestle, amid a glut of coffee beans. DuPont created nylon, a low-cost material that revolutionised clothing, rope-making and parachuting. And there was a boom in television, as the jobless masses spent more time at home.
Out of the rubble of the dot.com bust of 2001 came companies like Google and eBay, which were innovating while their competitors were busy trying to survive. Google transformed search and advertising, while eBay’s auction model gave rise to the phenomenon of person-to-person e-commerce.
The Sars (severe acute respiratory syndrome) epidemic of 2003 catalysed the boom in China’s online commerce and boosted the fortunes of companies such as JD.com, previously a small offline retailer that cleverly pivoted to a new reality, as well as Alibaba, which launched its online mall, Taobao, from founder Jack Ma’s apartment.
After the Great Recession of 2008 came companies such as Airbnb and Uber, responding to financially stretched consumers eager to save on accommodation and commuting.
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A NEW WAVE OF INNOVATION
In the last four months, the Covid-19 outbreak has triggered a tidal wave of innovation around the world, particularly in the medical field. Among start-ups alone, there are more than 500 innovations, and counting, from over 100 countries, ready to be deployed or already up and running.
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Professor Javaan Chahl of the University of South Australia is developing a drone-based system, which includes thermal cameras that can detect body temperature, to identify Covid-19 hot spots, including among crowds.
In the United States, a San Antonio-based company called Xenex is making robots specialised in disinfecting hospital and office premises, which can wipe out all traces of viruses.
In Singapore, Veredus Laboratories has developed a “Lab-on-a-Chip” that can detect coronaviruses, including that which causes Covid-19, and produce results in two hours, compared with at least half a day for most other tests.
In Israel, a company called Vaica Medical provides remote monitoring systems for Covid-19 patients that can send instant alerts to healthcare professionals and family members.
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You can check out more innovations at this website.
And there is much more to come because knowledge-sharing around the world – made possible by remote communication technologies – is exploding.
Through both formal and informal channels, scientists, researchers and medical professionals are sharing data, test results, clinical protocols and on-the-ground experiences with their peers around the world. Academic journals are providing free access to Covid-19 research – all of which offers hope, amid all the gloom surrounding the disease, that at least knowledge of best practices and treatments will spread. An effective treatment, which may well come before a vaccine, will be a game-changer.
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Companies are also sharing some of their proprietary knowledge. For example, Dublin-based Medtronic, the world’s leading maker of ventilators, has made public the design specifications and product manuals for its PB560 portable ventilator, allowing inventors and start-ups to produce or adapt it. Autodesk, which creates 3D printing software, is offering free access to its design tools, which enable creators to manufacture such items as medical face shields or other personal protective equipment (PPE). Some 3D printing enthusiasts have started making PPE components and parts for ventilators at home.
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PIVOTING AND REPURPOSING
Invention aside, companies, professionals and institutions are pivoting and repurposing.
The Covid-19 pandemic, even in its early days, has already triggered big changes. It is accelerating the shift of supply chains by forcing companies to build more redundancies in their networks by diversifying their sourcing. It has spawned a work-from-home culture which, if it endures – and it probably will – could have major implications for many industries.
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Around the world, including in Singapore, wholesalers, retailers and restaurants have either started or ramped up online ordering and deliveries.
Among some doctors and even health systems, such as Britain’s National Health Service, video consultations have become routine. Schools and universities are also routinely providing education online. Theatres have joined the movie industry in delivering entertainment digitally, some of it live, including productions of Shakespeare plays and award-winning musicals.
Companies are repurposing their capabilities and facilities to meet new needs. Vehicle manufacturers such as Ford, General Motors and Tesla are using some of their idle facilities to produce ventilators. Ford, Volkswagen and Chinese electric vehicle manufacturer BYD are also making PPE, including face masks from the material used for airbags.
Clothing companies and fashion houses such as Louis Vuitton, Zegna and Prada are also making PPE, including fashionable and medical face masks as well as hospital gowns – which, besides filling vital supply gaps, also enables them to be classified as essential industries and thereby continue operations.
Distillers and brewers like beer-maker Anheuser-Busch, and fragrance manufacturers like L’Oreal are making hand sanitisers.
Many of these changes may not be short term. Having expanded their customer base, new online retailers as well as providers of telemedicine, distance learning and digital theatre are likely to continue with these offerings after the Covid-19 threat is over.
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Nor is it far-fetched to think that having acquired the expertise and repurposed their factories, some auto companies could branch out into medical equipment manufacturing as well, or that fashion houses could continue making PPE and hand sanitisers, especially if the threat of Covid-19 lingers and/or consumer habits change.
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SOCIAL AND ECONOMIC INNOVATION
There have also been innovations in social and economic policies.
In the area of public health, governments are using global positioning systems and Bluetooth-enabled smartphones for contact tracing, as in the Singapore Government’s innovative Trace Together app, which can detect whether someone has had close contact with a person who has tested positive for Covid-19. In China, robots and drones are being used to disinfect areas of cities.
Economic policies are being reinvented. In the area of monetary policy, we are in the midst of “quantitative easing unlimited”, with major central banks showering money on their economies as if from helicopters.
Fiscal policy spigots have also been turned on full blast, with governments granting unprecedented levels of subsidies and some central banks buying up corporate debt indiscriminately, including junk bonds. Pre-pandemic, most economists would have considered such policies to be heretical, if not insane – and some of their future consequences could indeed be problematic. But for now, they are being cheered as indispensable.
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There may be more innovations to come in social policies and economic arrangements.
The Covid-19 pandemic, even in its early days, has already triggered big changes. It is accelerating the shift of supply chains by forcing companies to build more redundancies in their networks by diversifying their sourcing. It has spawned a work-from-home culture which, if it endures – and it probably will – could have major implications for many industries.
For example, it might reduce the demand for commercial real estate and public transportation – companies will need smaller offices, and commuting will decline. The widespread adoption of digital communication tools will also reduce the demand for business travel.
However, the behavioural changes resulting from the pandemic will also increase the demand for cloud services, e-commerce and logistics, as well as automation, which would change the dynamics of labour markets.
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In the area of social policies, the pandemic will bring into sharp relief the financial consequences of illness on individuals, families and national health systems. It will lead to more demands for greater investments in health infrastructure, including public health, as well as basic universal health insurance and low-cost healthcare solutions.
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It might also expose new vulnerabilities in the workforce – for example, among workers who are not able to work from home and will have fewer face-to-face customers to serve in a new-normal world of social distancing, in which restaurants will have fewer tables, stores will have fewer shoppers and events will have fewer attendees.
Governments will need to come up with new safety nets to support such workers on a sustained basis – including through variants of a universal basic income, which may no longer be as radical an idea as during the pre-Covid-19 era.
In the Covid-19 and post-Covid-19 world, both companies and governments will need to adjust and innovate to adapt to these emerging trends.
What we have seen so far is only the beginning.
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