Okay, this pandemic is a problem.
And yet—as many entrepreneurs know—looking forward while addressing the problem is one of the hallmarks of sound strategy. So let’s put the damage of COVID-19 in the rearview mirror and start talking about how private sector businesses will recover.
The Economics of Innovation and New Technology
Innovation economists already know that society’s growth is no longer centered around productive efficiency or the savvy allocation of scarce resources. These still matter, yes, but the 21st century has brought a knowledge-based economy that has radically changed the role of innovation in economic growth.
Allocative efficiency is not nearly as impactful as it used to be. In the past, innovation was a lucky byproduct of the single-minded pursuit of ever-leaner, ever-faster production models. That ended with the industrial revolution and the rise of information technology. Nowadays, innovation is itself the goal to be pursued, and resources must be devoted to achieving it—actively.
What Can Businesses Do?
Growth and innovation are always taking place within the institutions that enable them: higher education, thriving business clusters, private investments, research bodies, government incentives, and entrepreneurship. We must deliberately fuel creative thought and the development of new technologies through these institutions. It takes investments, research, and smart public-private partnerships to drive the innovation economics a knowledge-based economy needs to grow.
The World Economic Forum suggests that we accelerate the development of the “new infrastructure” by pushing the adoption and deployment of technologies like:
- 5G networks
- Data centers and Big Data
- Artificial intelligence
- Industrial internet
- The Internet of Things
- Smart supply chains and logistics
Countries worldwide have already realized many of the benefits of these recent societal advantages during quarantine. Most C-suite execs, according to McKinsey, have already led their companies to “digitize at least some part of their business to protect employees and serve customers facing mobility restrictions as a result of the COVID-19 crisis.” Their data shows the pandemic has vaulted us five years into the future of technology in about eight weeks.
The economics of innovation and new technology directly enabled fresh food supplies, medical materials, and other essentials to get where they needed to go with efficient logistics and distribution. Now that we’re slowly returning to work, this rapidly expanded technological infrastructure will give us much more economic resilience.
A Catalyst For Recovery
JPMorgan has predicted that our recovery from COVID-19 “could see productivity-enhancing technologies unleashed on a massive scale.” We tend to embrace significant changes when business models get upended, and COVID-19 is just this sort of transformational catalyst.
- Remote work has risen to sudden prominence, alleviating some cost-of-living issues for workers in major metro areas and boosting productivity—not to mention the hours salvaged by eliminating long commutes and off-site meetings.
- Efficiency-improving tech has been rapidly adopted in healthcare, where inflexibility and capacity issues threatened the entire medical system. These technological changes (like similar ones in other industries) will have a lasting impact on the way services are performed.
- Digital-first business models are taking center stage, interconnecting all functions from warehousing to marketing and customer support.
Where to Begin?
Odds are you’ve already made plenty of sudden shifts in your business to adapt to the challenges of COVID-19. But to truly fuel recovery through the economics of innovation and new technology, we’ve got to think bigger than individual business strategies. A rising tide lifts all ships, after all.
Put an eye to the long game and devote strategic effort to regional or local economic development initiatives to help your own business (and indeed, your industry) grow into the post-COVID future. A great place to start is with data and analytics. Are you aware of:
- How your business cluster performs within your market?
- Where your company ranks?
- Which technology partners would benefit your company if they were located within your region and allowed for the synergies of close proximity?
- Are there public partnerships that would benefit your company?
- Are there opportunities to bring more recognition to your field or to your company’s market?
- Does your company have access to the talent it needs?
- How does your region fare in talent recruitment and retention?
Your company’s health is most definitely affected by your region’s economic health, its position within the global economy and its ability to grow its workforce. Take advantage of the economics of innovation and new technology with the right industry engagement strategies. Call us up for a consultation. Waymaker Group is ready to talk about the possibilities for your business.
