COVID-19 Distance Dynamics: Crisis is the seedbed of innovation
With over three decades of experience in the technology industry and having played critical roles in the transformation of three centurion organizations, PricewaterhouseCoopers, IBM and Ericsson, Amitabh Ray, the Managing Director of Ericsson Global Services, has successfully weathered continuous disruptions throughout his career. From the Dot-Com Bust, to 9/11, the collapse of Enron and break-up of Big Four consulting business to the 2008 financial meltdown, Amitabh has been through it all. However, the COVID-19 pandemic is the Big One, that none of us ever faced before. There aren’t any templates to apply to handle this pandemic. Yes, now it is certain that COVID-19 will go down as a watershed moment in history when the world changed forever.
Amitabh Ray also happens to be a member of the Board of Governors at Praxis Business School. Praxis is driven by the purpose of creating resources that will lead India’s transformation into the digital world and delivers top ranked programs in the areas of Business Management, Data Science and Cyber Security. The Praxis editorial team caught up with Amitabh to understand the changes that the COVID-19 will bring in its wake.
Q: How do you think the COVID-19 is different from any other crisis?
Amitabh: All crises in the past have been single events which set off a series of events. COVID-19 is a crisis that is coming in waves. It has a beginning, but it doesn’t seem to have an end as of now. We will have to live with it for a long time to come. Only hope is a vaccine and that too looks 18 months away, according to experts. The other major difference is that COVID-19 is a health crisis which has triggered an economic crisis and geopolitical tensions that will impact global power equations. It will have long-term effects on global trade and commerce. The obvious ones that people are talking about is the reconfiguration of supply chains. However, that is easier said than done. Nevertheless, some amount of insourcing will happen in the near term.
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Q: Are there any lessons that can be borrowed from your experience to help us grapple with this challenge?
Amitabh: My mantra has always been to take each day as it comes, regardless of how daunting the challenge is. This takes me back to the first major challenges in my life: to lead a project, for a Big Four consulting firm’s client, that was for all practical purposes given up as a failure. It risked the reputation of the firm where I was working then, and any hope of it breaking into the growing business of information technology outsourcing. I was leading a team into this great unknown. There was a byzantine project plan which was far too focused on all kinds of complex trackers and dashboards but had little to do with execution. The first thing I did was to literally throw the plan out of the window.
We broke up the challenges into smaller pieces and slowly, bit by bit, worked to execute those pieces to the very best of our ability. This made the crisis look less daunting and more manageable. The entire focus of the team was on execution on those smaller pieces and taking each day as it came. Over time, the strategy worked, and the bits neatly fitted into a solution that delivered on the promises. Since then, it has been taking each day as it comes throughout my career; it became my mantra for survival, and success was only a by-product without having to focus on it.
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Q: Is your mantra working now?
Amitabh: Right now, it seems to be working (keeping my fingers crossed) at a time when we are faced with the worst global health crisis ever. Hunkering down in the relative safety of our homes, working over video conferences and telephone calls, we are slowly trying to navigate through this crisis, figuring out how to land on our feet once this is over, and perhaps discover new ways to stay competitive and continue delivering value to our customers, society and our people. This is a time for crisis-induced innovation.
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Q: Crisis-induced innovation sounds like an oxymoron. Aren’t we battling to save our lives now? How do we innovate when our lives are at stake?
Amitabh: COVID-19 is different. No country is immune from it, millions of lives have already been lost, millions more are at risk, the world has hit a pause button that is threatening our livelihoods; it’s like we have put our economies in a self-induced “Corona-coma”. The world is faced with an unparalleled paradox – if we stay at home the virus stops spreading, but this means that economic activities are frozen, putting our livelihoods at risk. Yet, it cannot stop humans from thinking how to chart a way out of this catastrophe. And from this thinking process, I am sure, innovations will come. I look at the past and feel hopeful and there are evidences to support my optimism.
During the past economic crises, human endeavours continued relentlessly to find new ways of survival and even innovate. Harvard political economist, Joseph Schumpeter, argued long ago that crises were seedbeds of innovation and entrepreneurship. Innovations developed during crises generate gales of creative destruction that launch new technologies, remake existing industries, and give birth to entirely new ones – setting in motion new rounds of economic growth. Others have argued that innovations bunch up during crises, only to be unleashed as economic conditions are restored. Economist Alfred Kleinknecht had tracked patents granted from 1901 to 2005. There were clear spikes in innovative activity during the Long Depression of the 1870s and 1880s and the Great Depression of the 1930s. Magnetic tape recording, helicopter, nylon and the ballpoint pen were all milestone innovations during the 1929 Depression.
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Q: Could you share some instances of innovations from the past disasters?
Amitabh: There has always been a trend of finding treasures out of the debris of economic downturns. The recession of the early 1990s hit hard in the UK, lasting for almost three years. ARM was founded right near the beginning of that dip. Processors based on its designs now power most of the smartphones and tablet computers in the world. Microsoft was founded in New Mexico in April 1975, right after the end of the recession that kicked off in 1973, and then re-incorporated in Washington state in June 1981, just as the deep recession of the early 1980s started. Dave Hewlett and Bill Packard formed their company in a garage in 1939, when the effect of the great recession was still lingering.
The 2008-09 financial meltdown found this trend unabated. Back in October 2007, housemates Brain Chesky and Joe Gebbia were unable to pay their rent and so they turned their living room into a bed-and-breakfast and set up a website, charging $80 per person. In 2008, they got former roommate and tech whiz Nathan Blecharczyk on board and the site Airbedandbreakfast.com officially launched on August 11, 2008. In 2009, the site name was shortened to Airbnb.com. WhatsApp, too, was founded in 2009 by Brian Acton and Jan Koum.
True innovators are seldom daunted by economic conditions. By the middle of 2001, the dot-com bubble had burst – leaving a sour taste for many when it came to anything involving new-fangled technology. But that didn’t stop Apple’s Steve Jobs and his team to whip up a prototype for a new personal music player, a gadget later dubbed the iPod. Launched on October 23, 2001, after just one year of development, the 5GB iPod allowed music lovers to put “one thousand songs in your pocket.”
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Q: What is the seedbed of innovation in this current crisis?
Amitabh: The COVID-19 challenge will spur another round of innovation which we will witness once it is over, and some of it will happen during the crisis as well. Let’s accept the fact that Coronavirus will continue to be in our systems even after a vaccine has been discovered. Like many other viruses which killed millions but were later tackled with vaccines and modern medicines, COVID-19 too will most likely follow a similar pattern. Meanwhile, people will continue to practice physical distancing. This, in turn, will result in a surge of technologies that minimize human contact and automate entire processes. In one sweep The Fourth Industrial Revolution has been collapsed into a few years, instead of panning out over decades. Industry 4.0 will be driven by what I call the Distance Dynamics; which is using our need for physical distance to create new value propositions.
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Q: “Distance Dynamics” sounds interesting; could you give us a few instances?
Amitabh: We are already seeing autonomous robots tackle some of the challenges of the pandemic in medical institutions – such as providing ultraviolet light sweeps of rooms and surfaces as part of a deep clean, hence not putting cleaning staff at risk of infection. Of course, the same technology that is being used to clean the infrastructure can also be safely applied to any robot. In buildings, such as hospital delivery, robots can and should be used to ferry equipment and supplies. This was already happening for room service in some hotels pre-pandemic and is now being used to deliver to self-isolated people sheltering there, providing a further safety barrier.
The Future has arrived. COVID-19 is already having a direct fallout in speeding up the process of automation, driven by the need to reduce physical contact between humans. JD.com, the Chinese e-Commerce giant, tested a level-4 autonomous delivery robot in Wuhan and operated 24X7 warehouses to cope with surge demand. A level-4 vehicle can move autonomously on a particular trajectory and under specific conditions that are generally made known in advance. On a given trajectory (for example on the highway, on a known route), the driver does not always need to be behind the wheel and can take his attention away from the road. This level is also called “Mind Off”.
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Q: How well do you think organizations are responding to this challenge?Amitabh: Every company must consider what it can digitally transform and what it can automate. This won’t be the last pandemic, so this crisis acts as a wake-up call for everyone to fast-track adoption of useful technology. That includes augmented reality, AI, 3-D printing and autonomous robots. As physical contacts reduce, we will see a massive rise in popularity in multiplayer video games. Revenues from online games are expected to touch US$17 billion in 2020 according to Statista; and this is a pre-COVID-19 estimate. The use of augmented and virtual reality will significantly boost this market during and post COVID-19.
The same technologies will have a tremendous impact on learning and education. Distance learning will become the norm rather than an option. Technologies like 3D projections and holograms will allow a single teacher to deliver lectures in different classrooms across countries. This has been a long-standing promise, but we will now see the Crisis-Push to crush the innovation time to meet the urgent needs of the day. Regulations for providing tele-health and remote medical analytics are being relaxed to ease the pressure on physicians. You don’t need to stretch your imagination to visualise these technologies becoming standard in conferencing and remote working in our offices. Innovation in our ways of working will happen, as right now we are in a 100% work-from-home (WFH) mode.
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Q: When are we going to get back to our normal BC (Before Corona) days?
Amitabh: We won’t get back to the past normal even when the threat of COVID-19 retreats. Organizations will discover their individual blend of percentages of employees needed to be present in the office and those whose roles can quality for WFH. This will of course lead to a reassessment of roles and responsibilities.
Leadership, which is used to large teams, will also be transformed. Team sizes will become much smaller, as remote management will not be possible otherwise. Outcome-based management will replace the current industrial-age managerial practices that depend on physical supervision of the employees to ensure completion of tasks.
When it comes to shows and conferences, employees would no longer be expected to attend events they have attended in the past. The fact is that, several billion people now have the experience of working from home and must be taken as seriously as being at the office. The need for improved home networking is clear, and better home office equipment/furniture will drive change and opportunity for some vendors. However, the overall experience is what needs upgrading. Plenty of collaboration tool vendors see this as their ‘moment.’ But over and above the collaboration-tool hype, there will be a bounce for work management, converged and intelligent workspaces, and employee engagement tools.
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Q: Are organizations geared to make this transition from the physical to the digital interaction world?
Amitabh: Simply transitioning physical to virtual events by streaming sessions with some kind of Q&A won’t be a feasible long-term platform. All companies will need to explore new ways of attracting, engaging and connecting audiences digitally, as well as demonstrate enough value to attend. So long, opt-in delegate chat, demos and webinars have mostly been digital froth to physical events – the challenge now is to turn these and other kinds of devices into what delegates will want to interact with and in.
The big push will come in the Internet of Things (IoT) and robotics process automation in manufacturing. We were already witnessing factories with negligible number of employees where assembly line processes were being controlled by robotic arms. This will now become commonplace.
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Q: What will be the social impact of these changes?
Amitabh: All these will have huge adverse social impact as employment opportunities in these areas will shrink. While reskilling and upskilling of employees will have to be taken up by organizations, this will also lead to disruptions and new thinking in the political systems. Around the world, governments are doing things that three months ago looked impossible. In Spain, private hospitals have been nationalised. In the UK, the prospect of nationalising various modes of transport has become very real. And France has stated its readiness to nationalise large businesses. A form of state socialism seems to be coming in place.
Likewise, we are seeing the breakdown of labour markets. Countries like Denmark and the UK are providing people with an income in order to stop them from going to work. This is an essential part of a successful lockdown. India is taking measures to protect its companies from being subject to global takeovers. Direct benefits of food and cash are being transferred to citizens; once again a form of Universal Basic Income (UBI) seems to have taken shape; something that was envisioned to take care of people who would have lost their jobs in the technological disruptions of the Fourth Industrial Revolution.
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Q: What else is there in this crisis that makes you so optimistic?
Amitabh: COVID-19, which has been disastrous for humanity, has also unleashed an extraordinary global collaboration involving companies, research organizations, and countries that are battling this crisis all together and coming out as one. Healthcare organizations are collaborating with technology companies and research outfits to find a cure for the pandemic. Pharma giant GSK has joined forces with Sanofi, bringing together two of the world’s largest vaccine companies in an unprecedented collaboration to fight COVID-19. Apple and Google are pooling their technologies to find solutions to contact tracing. This is breaking the silos of R&D, and we expect that not only we will find the vaccine, but fallout economic gains will be substantial.
Collaboration, as a strategy to survive a crisis, was also noticed in the earlier periods of economic distress. Organizational characteristics like exploring new market opportunities, swimming against the tide, using methods of technological appropriation, and working with suppliers to reconfigure supply chains will define the winners in a post-COVID-19 era. Losers are more likely to be found among those firms that react not just by reducing employment and productive capacity in general, but also by downsizing their investment in innovation.
The rapidly evolving situation today is tailor-made to work out the mantra of each day at a time. No one has a crystal ball about the future. This is an unprecedented crisis, the likes of which we haven’t seen earlier. There are no solution templates to apply to something that the world hasn’t experienced before. We can, at best, draw inspiration from organizations that have weathered past crises and emerged stronger. The only way we can survive is to take each day at a time, doing our best in the situation, preparing for the long haul, never giving up on our basic principles, being compassionate in dealing with our people and stakeholders, and continue to value the basic purpose of being in business – to deliver technology for the good of the planet. I have worked in three centurion organizations which have gone through all the three industrial revolutions and have stayed strong by remaining faithful to their core values. This will be true this time as well. The world must be ready to reap a dividend from Distance Dynamics, which will be driving tomorrow’s business.
