HOW 20 COVID-19 PANDEMIC TRENDS WILL TRANSFORM INNOVATION – Part 2
Insight | May 29, 2020
HOW 20 COVID-19 PANDEMIC TRENDS WILL TRANSFORM INNOVATION
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This is the third 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.TOP 20 EMERGING TRENDS THAT WILL TRANSFORM THE FUTURE OF INNOVATIONAs the society becomes accustomed to the new normal as a result of the pandemic, the customer behaviors will change. This change will create the need for new products and services that can deliver the new benefits and rewards that the market will demand. In this blog series, we will present the top 20 trends that are already creating the need for change and new innovations: 1. Welcome To The Isolation EconomyThe rapid growth of the Covid-19 Pandemic forced the businesses to adopt the government mandate of “socially-distanced” policy. Out of necessity, companies adapted to employees working from home (WFH) once states began shuttering non-essential businesses. As a result, for the first time we are witnessing the emergence of a new type of economic activity known as “Isolation economy” wherein participants interact in a virtual manner. Socially-distanced work in a virtual manner is creating a new and lasting business model that necessitates the need for a new bread of solutions to enable virtual collaboration and lifestyle transformation. 2. The Increased Propensity to Unite Around a PurposeHistorically, crises have inspired the members of an organization to unite around a key purpose to achieve specific goals and business outcomes. This can result in a massive spike in energy present in the workforce as they strive to achieve common goals to survive the crisis.However, with the advent of Covid-19 pandemic and significant impact that it has had on the lives of people and the well-being of the global economy, what we are witnessing is that uniting around a purpose is no longer limited to an intra company effort. Rather, it is now becoming an inter organizational effort as humanity is discovering that its survival and prosperity can no longer be measured by the success of individual organizations. The pandemic for the first time has created the necessity for multiple organizations to collaborate together for a common good and purpose that is much larger than the sum of the combined organizations’ goals.Hence, we expect to see a lot more collaboration in the forms of co-opetition, co-creation, and co-innovation in the future as a mainstream business activity rather than an isolated organizational initiative. So, the sharing trends that emerged as a result of the 2008 financial crisis and spurred the sharing economy movement will be accelerated. Therefore, more companies are expected to adopt open innovation and co-innovation activities. This means that eventually the prevailing “company-led” model of innovation will transition into a new and more sophisticated “network-led model” that expands on the capabilities of open innovation and co-creation initiatives to enable distributed co-innovation in the form of specialized innovation ecosystems as a new model of innovation.3. Seeing the Systems DifferentlyWhen a crisis hits, it quickly highlights the weaknesses and vulnerabilities of the existing systems. This creates the opportunity to revisit the existing ways of doing things and find areas where innovation can occur to overcome these weaknesses. What we are witnessing now is that many organizations are confronted by the truth as the pandemic has revealed the magnitude of vulnerabilities that they have had but have not been aware of.What is so unique about the pandemic though, is that it represents a meta trend. Therefore, it is not just magnifying the existing vulnerabilities, but it is also revealing new types of them that present existential threats to many organizations. For those familiar with innovation and the study of trends to identify future opportunities, we know that at least four (4) types of trends can shape the future of markets and inspire innovation. They are micro, macro, mega, and meta trends. For the sake of time, we will not dive into the definition of these trends. However, we will mention meta trend as the current pandemic is characterized by this trend. Meta trends are massive trends that typically shift the entire foundation of the systems and cause a transformation and a disruption in the way things are done. For instance, the emergence of the Internet and globalization were meta trends that caused massive transformations.The current pandemic is also a meta trend and has already brought to fore the significant vulnerabilities that our medical, supply chain systems, education, and financial systems face, to name a few. Hence, it is a not surprise to see innovations that have already started to happen in these domains. However, this is just the tip of the iceberg. What we should expect are significant changes and breakthrough innovations in the future. We believe that we are currently at a tipping point and cusp of a new trend. Hence, in the next decade we should expect to witness a new wave of innovations that will completely transform the future of humanity.4. The Rise Of The Do-It-For-Me (DIFM) Business ModelsThe prevailing innovation paradigm is based on an outdated R&D-driven methodology that uses a linear-value-chain model and advocates building and optimizing centralized do-it-yourself (DIY) operations. This model was developed for businesses operating in the 3-C infrastructure-driven world that was centralized, capital intensive and controlled by hierarchy.However, it is failing in the current 3-D digital world—diversified, distributed, and decentralized—that is built on a multi-dimensional value-chain model and relies on everything as-a-service (XaaS), pay-per-use (PPU), and do-it-for-me (DIFM) business models to deliver outcomes. Albeit beneficial to the SaaS revolution, the DIY model is failing in many cases as it requires massive inhouse capabilities and resources that are in short supply. The result has been widening gaps that have incapacitated innovators and their ability to deliver on their expected business outcomes. These gaps are forcing many businesses to adopt the simpler and more efficient full-service DIFM models as consumers have already done. 5. The Rise Of Frugal InnovationFrugal innovation is not a new phenomenon as it has for long been practiced by countless resource-starved and nimble entrepreneurs mostly in the emerging markets. The availability of cheap cash and funding sources in more industrialized nations such as U.S. made it significantly easier for entrepreneurial innovators in these markets to raise capital and build companies using external resources. Therefore, frugal innovation has been less popular in these countries.As for the corporate America, sadly the large American enterprises are ill-equipped to innovate frugally and flexibly. Indeed, frugal innovation, which emphasizes creativity, collaboration, speed, agility, and affordability, is the antithesis of how corporate America innovates. The large American enterprises instead still rely on the outdated 3-C model consisting of R&D labs, silo-based operations, big budgets, political cultures, and rigid go-to-market processes.However, it seems like the current crisis is changing the way innovation will be done even in the more industrialized countries. Empirical evidence suggests that the happy days maybe behind us. Moving forward investors are not going to lavishly invest in as many startups with the objective of spurring hyper-growth and creating the next unicorn. Despite the fact that there is so much money sitting on the sidelines, it is doubtful that investments are going to be plentiful—at least in the short-term—to finance many innovation initiatives. This means that innovators—regardless of their size—must become much more resourceful, collaborative, frugal, and less reliant on outside capital to finance their projects and innovate faster.6. The Increased Complexity Of Innovation ChallengesThe inconvenient truth about innovation is that it has become too complex. According to a study done by The Emerging Future, the rate of technological change and the resulting levels of innovation challenges are growing in an exponential manner. Based on their forecast at the current rate of development our technological ability will grow 32 times in 5 years, 1,000 times in 10 years, and eventually quadrillion (1015) times in 50 years. With such a rapid growth multiple, the level of complexity of the innovation challenges will also increase significantly. This makes it nearly impossible for many innovators to solve these challenges on their own using the old 3-C model. 7. Growing Gaps In Organizations That Hinder InnovationOver the past decade innovators felt immense pressure from all directions as change happened much faster than ever before. Digital transformation and increased pressure to innovate faster created significant technology and capability gaps for innovators and hindered their innovation efforts.The Covid-19 Pandemic is making the matters even worse. Not only it is widening the existing gaps, but it is also imposing massive changes on an already fragile system that has been pushed to its limit. In addition, it is creating new resource gaps as companies are forced to lay off talent as a result of losing revenues and not been able to raise adequate levels of capital. The combination of the widening gaps and increased complexities will negatively impact innovators and hinder their innovation efforts—at least for the short-to-medium term.(Cont’d…)
4 Business Trends Emerging From COVID-19, Stephanie Burns Forbes, April 22,2020
10 technology trends to watch in the COVID-19 pandemic, World Economic Forum, Yan Xiao, Ziyang Fan, April 27, 2020
Outcome-Driven Innovation® (ODI): Jobs-to-be-Done Theory in Practice by Anthony W. Ulwick, updated January 1, 2017
International Deal Making in the Age of Coronavirus, David Kaufman Director of Global Strategies, Nixon Peabody, LLP, Advantary CEO Roundtable Series Presentation, May 5, 2020
M&A Activity Plunges, It Could Get Much Worse As Coronavirus Hits Markets And Prevents Face-To-Face Meetings, Sergei Klebnikov, Forbes, April 3, 2020
Outlook for global M&A, Financier Worldwide Magazine, May 2020
World Economy Working From Home Gets a Glimpse of the Virtual Future, Enda Curran, Bloomberg, April 14, 2020
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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.