Since time immemorial, humans have been facing black swan events. These are those events that are unpredictable, have wide-spread ramifications, and change our perspectives completely. Some of the notable black swan events have been the black death in the 1300s that killed about 75-200 million people in Eurasia and North Africa ultimately resulting in more food and land for peasants. Or the SARS pandemic in 2002 that laid the foundation stone for e-commerce companies like Alibaba. Or the 2008 financial crisis that caused the rise of asset-sharing business models like Airbnb, Uber, etc. The current COVID-19 crisis is next in the league and intellectuals all across the world are trying to decipher its effects on the world economy. And the aftermath of the pandemic once a viable vaccine is developed and distributed among the masses. This article discusses 2 new impacts of how COVID-19 will drive the new wave of business innovation.
1. A new form of the global supply chain will emerge
The current supply chain system functions on the principle of keeping costs low and quality relatively constant, which is why most companies have their manufacturing hubs in China. But this steeply increases concentration risks because companies are over-dependent on one country for their production. And as luck may have it, with a large number of manufacturing facilities shut down in China due to the pandemic, this has proven to be a bad strategy. COVID-19 will drive the new wave of business innovation and will see the emergence of a supply chain that will:
- Be distributed across geographies
- Have a large web of vendors instead of relying on a few
- Make use of technologies such as IoT, Blockchain, and 5G to stay connected
- See greater adoption of drones and self-driving cars to deliver products
Also Read: COVID-19 Impact on Supply Chain Business
2. Governments that act instantly will rule the roost
When the world has come to a standstill, some governments have astonished us with their pace of action. For example, South Korea tested more than 200,000 citizens for COVID-19. It also built an application to monitor the movement of infected people and alert the uninfected. Then, China built a hospital spanning 645,000 sq. ft in a record-breaking 10 days. Another example is India which announced a 21 days lockdown, conducted rapid testing, and launched an application “Aarogya Setu” which uses a person’s mobile phone and Bluetooth to ascertain whether they have come in contact with an infected person.
So how does this point explain that COVID-19 will drive the new wave of business innovation? It’s because organizations and institutions that can take quick actions during calamities will draw investments in the future. Their level of preparedness, ability to adapt according to changing circumstances, and resource allocation proficiency depicts that if we are ever to encounter such black swan events in the future, the financial losses will be minimum, and businesses will be able to restart their operations without much difficulty.
Pandemics occur once in decades but they alter our perceptions, change the way we live, and most importantly, transform the way we do business. COVID-19 will drive the new wave of business innovation as the companies that build a methodology to deal with these changes will compete effectively while those that don’t will dwindle in obscurity.
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