Traditionally, corporations that invest in innovation during a crisis outperform peers by up to 30% during recovery, a recent McKinsey report reveals. Ironically, the same report also reveals that current corporate commitment to innovation has been decreasing as CEOs prioritize their core business in the wake of Covid-19.
A brief look into the history books reveals another truth: The average life expectancy of corporations on the S&P 500 has been decreasing sharply — from 60 years in the 1950s to less than 20 today. The main reason is tech disruption, or the introduction of a new technology to market that renders all previous products obsolete.
But while tech disruption is nothing new — it’s been with us since the industrial revolution — the pace of technology adoption has increased sharply over the years. It took Americans about 50 years to adopt electricity in their homes, but only 10 to adopt the smartphone.
Then came Covid-19, which has accelerated tech adoption like never before. Amazon is hiring 100,000 new employees to meet record demand for e-commerce. Online grocery shopping has more than tripled in March compared to last August, with a record number of senior citizens buying for the first time. In the British Parliament, MPs can vote online for the first time in 700 years. In NYC you can get married via Zoom. And in Israel, you can file a complaint with the police from the convenience of your home. In just two months, the world has seen a digital transformation worthy of two years, according to Microsoft’s CEO Satya Nadella. And history shows us that there’s no going back: Tech adoption has never reversed.
But wait, there’s more. The previous three recessions (2008, 2000-1, and 1991) were followed by spikes of automation. The 2020 recession has already broken every record in terms of unemployment — and something else radical has changed.
For the first time, we have technologies that can replace humans not just in manual labor, but also in cognitive skills. Machine learning, deep learning, and other forms of artificial intelligence will dominate our workforce in years to come, forever changing our economy. It is an exciting time to work in tech, but also a time for governments to narrow the digital divide in the workforce.
The years ahead will be critical for every corporation. Those who will emerge on the other side stronger are not necessarily the ones with the most cash in the bank, but those who adapt fastest to a world that is radically different from the one we left behind in 2019. It’s never been more important to invest in innovation, and the best time for it is now.
This article was featured in OurCrowd’s Innovation Insider, a bi-annual publication covering tech trends, investing insights and more. Download the full edition here.
About the Author
Dan Fishel, VP Business Development, OurCrowd