Does anyone out there recall a time when we have not had crises in our world? Of late, it seems that we slide chaotically from one crisis to the next. Most countries spent more than the last decade recovering from the oh-so-heavy impact of the 2008 global financial crisis. The global economy had not yet received a clean bill of health by the time COVID-19 struck. In the meantime, various countries had been lumbered with catastrophic consequences of environmental events: floods, earthquakes, bush-fires and hurricanes. We've seen them all on our screens.
Crises, whether wars, catastrophes or pandemics can be pivotal in ultimately moving our societies to their next levels of economic development, to promoting social and environmental movements and opening the way to innovation.
Innovation examples from previous crises
Let’s bear in mind that previous wars saw the birth of the International Red Cross and a nursing profession that – having slipped down the greasy pole of perceived necessity over the last few decades – is highly valued as an “essential” service to society in these troubled times.
Indeed, wars and crises have stimulated innovation on multiple levels, leapfrogging technological innovation and enabling social empowerment, human rights or environmental movements, and even the creation of multilateral organizations such as the United Nations and the World Health Organization, an institution that is so pivotal to getting our heads around what is going on currently.
Other than triggering significant economic shock-waves, the 2008 financial crisis stirred innovation; think of the tech innovations driving prominent businesses in the last decade and manifested in companies such as Airbnb, Uber, Amazon, Netflix and other service platforms.
Organizations and industries stepping up to the plate
Currently, industry is adapting to new circumstances by innovating, with global players sometimes even taking on a social entrepreneurship role. It’s inspiring when global companies start to think like start-ups and encourage “intrapreneurship”. And it does show that manufacturing industry can find a social purpose rather rapidly when push comes to shove.
In Switzerland, where I sit in lock-down, companies such as Firmenich (Swiss based fragrance and flavor B2B) have switched some production lines to producing hand sanitizer, as have Dow, Shiseido, l’Oréal and others. More unlikely targets for such a switch – such as distilleries – are doing likewise.
Fashion brands have re-purposed production chains to make hospital gowns, masks and much-needed protective equipment for medical staff and patients. Automotive and other manufacturing companies are producing desperately sought-after ventilators. Online platforms for entrepreneurs such as Shopify have found that their mid- to long-term strategic ambitions were made more immediate with a global rush from multiple start-ups to move online during the lock-downs.
Opportunity knocks
So, once the lock-downs are over, what will the brave new world look like? The COVID-19 crisis will no doubt help advance our health-care systems in parts of the world that are not tone deaf to the fact that we desperately need effective public health systems.
Will businesses really abandon “working from home” routines completely and go back to business as (pre-pandemic) usual? Unlikely.
Will social entrepreneurship become more mainstream? The jury is out on that.
Will there effectively be new opportunities for entrepreneurs? Definitely.
However, will they be able to take advantage of them? It depends.
To what extent will the expected massive levels of unemployment push more “necessity-” as opposed to “opportunity-” driven entrepreneurs into the business space? A great deal, probably.
Some of these questions will be tracked by our organization, Global Entrepreneurship Monitor (GEM). GEM has been providing policymakers with data on how to foster entrepreneurship for the past 21 years. In the midst of the current challenges facing the world, GEM will provide robust data on how entrepreneurs and policy-makers are thinking and acting mid and post-crisis, including in reaction to stimulation policies. GEM is akin to a diagnostic tool or health check allowing policy-makers to take the temperature of policies targeted at motivating entrepreneurs to create businesses, wealth, and much needed jobs in economies.
And make no mistake, during this prolonged lock-down period, consumers are changing their habits…and permanently. Those that were dragging their heals on becoming technologically savvy, will re-enter normal life so much more accustomed to online learning, online teaching, online ordering and home delivery. Business travelers and other professionals will all have done a crash course in online meetings, online workshops and online consultations. Habits will have been disrupted.
Attitudes and expectations will have changed. An emerging “crisis-woke” generation will seize the day to encourage continued saving of carbon emissions and reductions in natural resource destruction. Businesses will see easy ways of reducing travel costs further (which, by the way, are likely to go up exponentially as costs of risk are integrated in price profiles post-crisis).
Companies that wish to experience rapid growth in the aftermath of this crisis, can do so if they become competent or re-purpose in areas that are relevant to economic and social recovery. They will do well if they can capitalize on the transformed mindsets, attitudes, perceptions and behaviors of customers and consumers. This is what will enable strategic competitive advantage in a post-pandemic economy.
And what is to come?
Companies that did things well and with a social conscience during the lock-downs may be able to capitalize on a newly loyal customer base and trust. And crucially, companies that are thinking ahead may reflect more strategically on looming future crises such as further pandemics or climate catastrophe and provide goods and services in a meaningful way to avert further meltdowns. This means rethinking product and process innovations (including supply chain resilience), but also thinking about the value added of businesses or start-ups to society and as well as their environmental impact. This will be hard to do when economies are failing so badly, so resilient leadership, solidarity, institutional collaboration and the sheer grit demonstrated during the lock-downs will be required.
Is COVID-19 the mother of all crises? Maybe the ultimate is yet to come if we do not listen to today’s harsh lessons. It rather has to do with Mother Nature; global meltdown owing to ecosystem collapse and the knock-on effects of extreme climate change effects is an even greater threat to mankind than the insidious COVID-19 virus. Let’s hope we do not bury our heads in the short-term thinking sand yet again.
Aileen Ionescu-Somers, Ph.D, is Executive Director of GEM. She will be moderating a series of webinars focused on COVID-19 crisis impact on entrepreneurs and entrepreneurship. The fourth episode takes place on June 1, 2020 with GEM researchers from the USA and Canada. Learn more and register.