Covid & Lasting Changes: Business and Innovation
While the global pandemic has caused much death, poverty, and global stagnation, with it surged a series of tech-celeration and innovation. As for businesses around the world, the coronavirus has resembled natural selection. Companies were forced to either adapt or face extinction. Those that have copied the Amazon model have been successful and e-commerce reached its peak during this time. Some of the biggest names in retail and business have filed for bankruptcy including J. Crew, Gold’s Gym, and CMX Cinemas. On the contrary, Shopify, Zoom, and Uber Ears have been more successful than ever.
In terms of retail and e-commerce, the changes brought on by the pandemic were like 2030 being pulled into 2020 according to Shopify COO Harley Finkelstein. When lockdowns became the new normal across the globe, digital businesses boomed. Food and other fast-moving consumer goods producers could barely keep up with consumer demand. In contrast, some businesses had 50 to 95 percent fewer orders compared to pre-pandemic times, and others were at a complete halt.
Economic output all across the world decreased, there were serious delays in the fulfillment business, and global trade was disrupted. This has caused a large portion of business ideas to face the brink of bankruptcy and as a last resort for failing companies to survive, they began to merge. The 3rd quarter of 2020 has seen the most mergers and acquisitions of companies the world ever experienced. Businesses have taken this time to allocate resources to new ideas that emerge from collaboration.
The post-pandemic success of companies will depend on businesses that used this stagnation period to strategize.
For the first time, manufacturers began discussing the risks to the global supply chain. How covid affected their supply chains is a reflection of how little businesses know about where the raw materials for their products come from. Ultimately, this means that manufacturers and businesses will need to have end-to-end insight into their production to avoid future obstacles. One of the ways this is being done is that companies are localizing their supply chain rather than shipping it out halfway across the world. When it is local, they have better control over their production and it is more sustainable.
How successful they emerge out of the pandemic will depend on the transformative changes implemented in the midst of all this. Likewise, just because a company was extremely successful during the pandemic, it does not mean that its destiny is set in stone. Companies have already begun to increase their investment in automation to not let future potential disruptions stall them the way covid did.
In the past businesses were hesitant to automate because they saw it as an either-or option, meaning they assumed it either be humans doing all the work or machines doing all the work. This popular perception in addition to executives’ lack of awareness had kept automation in the production lines to a minimum.
“The strongest resurgence will come from organizations that use technology to leverage the power of people, giving them automation tools and data insights to enhance their performance” according to Fujitsu, a Japanese multinational IT company.
There are two different supply sides to the retail world. These are the traditional retailers and resilient retailers. Shopify is the largest publicly traded Canadian company by market capitalization as of 2021. In the second quarter of this year, the company’s revenue was at an astounding 1.12 billion USD, and their subscription products grew 70 percent. On a year-over-year basis, their revenue has increased 57 percent. As of 2018, e-commerce took up 12 percent of global trade. In 2020, this figure reached 18 percent and is expected to hit 21.8 percent according to Statista. Still, it appears as though the ones who will benefit the most from digitalization and e-commerce are MEDCs.
“Countries that harness the potential of e-commerce will be better placed to benefit from global markets for their goods and services in this digitizing economy, while those that fail to do so risk falling behind even further,” said Shamika N. Sirimanne, UNCTAD’s technology, and logistics director. Looking at the top 100 online companies in the world, the majority of them are US and China-based. While global digitalization has given a better footing for tech companies across the world, those that had the most to gain from Covid-19 are Amazon, Zoom, Netflix, etc.
Historically, the world has seen innovation at its finest during hard times and crises. However, it also rings true that successful companies are more likely to have started in affluence rather than an adversary. As Albert Einstein put it “In the middle of difficulty, lies opportunity”. The most recent global crisis before the coronavirus pandemic was the 2008 financial crisis to date. During this time, cloud computing was adopted. Despite existing since the beginning of the 21st century, it was seen as not secure. During WWII, the first functional computers were created for code-breaking, jet engines created for war flagged the way for modern mass air travel. It can be hard for innovation to overcome old challenges. However, innovations made during the crisis stick around for the long hall.
Digitalization was never about just technology alone.
The world after covid-19 will revolve around human creativity at its peak with the assistance of technology. There are some aspects to the world of business that will not change and that is also the human centeredness and an intricate human structure in companies. Much more localization in production will take place due to the ongoing global trade war, and as risk avoidance for future disturbances. Indeed, in the future, humanity will see 2020 as the year that changed everything.