The importance of innovation in times of crisis

06/30/2020

A crisis by definition is a difficult or dangerous time leading to taking of tough, critical and important decisions where the changes taking place indicate either a recovery or a deterioration. COVID-19 is no different than a major crisis causing significant social and economic disruptions to financials, assets and human capital. However, albeit disruptive, these dynamics are in fact the elements from which new business models arise. This statement has in fact been proven previously, particularly in 2008 with the occurrence of the global financial crisis which lead to the emergence in the use of technology in the marketplace. A similar scenario to the one we are currently living, is that of the SARS epidemic that took place in 2002 across Asia. As deadly as that epidemic was, it led to the proliferation of e-commerce in that region, which in turn placed China as the lead country in innovation and social commerce ever since. Innovation is not only a phenomenon associated with a global health and financial crisis, but targets as well different sectors which are pushed to adapt, such as the environmental sector. With the climate change crisis, several environmentally friendly creations have been under the works such as electric cars for instance, or plant-based meat substitutes.[1] Innovation plays a crucial role in growth as it is one of the most important elements for survival. Its role and development are inviolable.

As governments prepare to get out of the COVID-19 crisis successfully and oversee policies which will spur growth, it is important for everyone to understand that things will most likely not function the way they have in the past. Post COVID-19 will force people and organizations to change the way they operate to accommodate new needs and adapt to work around certain restrictions to create opportunities that may have never existed before. However, what is exceptional about innovation in times of crisis is the speed in which things get done. Innovation usually take years to effectively take place and make a difference but in time of crisis, this can be witnessed within days. A report issued by Mckinsey on innovation stated: “Crises are like adrenaline for innovation, causing barriers that once took years to overcome to evaporate in a matter of days. Entrenched orthodoxies on ‘the way things are done’ are replaced with ‘the new way we do things’ almost overnight.”[2]

In order for policy makers to grasp an understanding of the future and analyze the necessary steps that should be implemented, a look into the past should be done to see what will and will not work. Historically, successful governmental initiatives have always prioritized human welfare and human capital when going through epidemics, financial or environmental crisis. Secondly, as the crisis would have resulted in huge economic disruptions, a long-term policy plan is always established to accelerate growth and finally, a long-term economic recovery that starts early.[3]

 

By: Lana Fadel

Picture source: https://www.freepik.com/premium-photo/hand-stopping-wooden-domino-business-crisis-effect-risk-protection-concept_7032296.htm#page=1&query=crisis&position=27

 

 

 

 

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