Pandemic. Crisis. Recession. We are currently experiencing a shockwave across almost all sectors of the economy. Economists found that there was already a 5% decrease in GDP in Germany alone in 2020. Other countries were hit even harder. More so, the current projections of a shrinking economy are just the tip of the iceberg. Many long term side effects cannot yet be foreseen. We are facing an incredible rise in the number of zombie companies. Some industries are heavily fed by state aid, which may help to artificially prolong the life of companies with unsustainable business models. The fact is: we don’t have the slightest idea how this current crisis really affects the economy and how many bankruptcies are yet to come.
But one thing we know for sure: We are in the middle of economic uncertainty and change. But before we end up being petrified with horror, let us take an entirely different perspective. A perspective of positivity and confidence. A perspective that embraces change. A perspective that seeks new opportunities rather than pondering problems. To put it simply: we have an absolutely unique opportunity to get many of the things right that went wrong in the first place. Right here. Right now. Right at our doorstep.
The correlation of recessions and new company creation
First, let us learn from history. So what has happened in past crisis times? A landmark study by my colleague Dane Stangler titled The economic Future Just Happened was done in the middle of the last crisis, in 2009: This study found that more than a remarkable half of the companies on the 2009 Fortune 500 list were launched during a recession or bear market, along with nearly half of the firms on the 2008 Inc. list of America’s fastest-growing companies. Moreover, it even suggests a broader economic trend, with job creation from startup companies proving to be less volatile and sensitive to downturns when compared to the overall economy.
This adds to the interpretation related to the current crisis: Within every crisis, there is a land full of entrepreneurial opportunities that are waiting to be discovered and exploited.
But who are the winners in the current crisis?
A hasty conclusion seems appropriate. Just look at the skyrocketing share prices of Amazon, Zoom, Slack or DocuSign. Since the Coronavirus spread worldwide, the home office revolution is in full swing. Zoom had its first success with its first million users in 2013. But these numbers are nothing compared to today. In March 2020 Zoom had over 2 million downloads in one single day. Just one month later, in April 2020, 300 Mio people were participating in zoom calls.
But does this answer suffice? Not at all. These companies were already smart enough prior to the crisis. They built their business models on the 3 overarching technological disruptions of the past thirty years (since the introduction of the World Wide Web in 1989 and the introduction of Internet Explorer in 1995):
1. The way we search, organize and categorize information. Knowledge is out there. It is everywhere. Who remembers “The Yellow Pages ” since Google emerged in 1998?
2. The way we communicate. Not only to speak of the 140 letters, but recent platform inventions such as Clubhouse prove that a change in how we as humans interact and communicate is still in full swing.
3. The way we distribute information and goods. Delivery Services, e-commerce, and platforms are still mushrooming.
Those that currently win are the ones that embraced technological changes irrespective of and prior to the crisis. So this answer is not the whole story.
In addition, change and disruption never happen overnight. It takes time. We don’t yet see the new entrants and more importantly, their impact on the market. Per definition, disruptive innovations are not breakthrough innovations or “ambitious upstarts” that dramatically alter how business is done. At first, they often appear modest at their outset but over time have the potential to transform an industry.
So, the big waves of change are yet to come. Currently, we only see glimpses of them.. But if we look closely, we’ll see that some of these waves are already huge. They are obvious.
The Data Economy
Every human is collecting on average 1,7 MB of data per second. Daily, we all collectively share 95 million photos or videos on Instagram, 500 million tweets on Twitter and send 364 billion emails. In the last two years alone, an astonishing 90% of the world’s data has been created. Not surprisingly, almost all businesses are starting to circle their business models around data. Kevin Kelly famously coined this trend “cognifying” (Source). We are making everything much smarter using cheap powerful AI that we get from the cloud, harnessing intense personalization in order to anticipate our desires. AI is now powered by cheap parallel computation and better algorithms, with rapid advances being made. Cognification will happen in arts, performances, laundry, marketing, real estate, nursing, toys, sports, and even in robo-car ethics. New kinds of minds, intelligences and consciousness will emerge.
In short, the age of Big Data’s transformation of all aspects of our life is no longer hype.
That is only one of the reasons why Jeff Bezos famously stated that the question “What is going to change” is nowadays irrelevant. Today, it is far more relevant to find out what is not going to change and build your business on that core assumption. Everything else is innovation. Everything else is experimentation. A very prominent prediction is that 65% of children entering primary school today will ultimately end up working in completely new job types that don’t yet exist.
The positive side of the coin: opportunity is currently everywhere. An opportunity is a favorable juncture of circumstances with a good chance for success or progress. Trends like an aging society, lifelong education, or disruptive technologies like Big Data, Artificial intelligence, quantum computing or blockchain are only some of these junctures. Trends like deregulation and globalization have served as major opportunities for entrepreneurs across the globe in recent years.
Collective responsibility to tackle challenges
There are junctures everywhere. But we can only take advantage of these junctures, if we possess the skills and the mindset to turn to them. It is imperative to constantly analyze sources of discontinuities on a societal, market, and technology level. But analysis is not enough. We need the skills to facilitate discovery, manage complexity and develop solutions.
We need the ability to see these waves of change coming as the opportunities that they are.
We are living in a world full of change. There are grand challenges we face as a global society. Challenges not one individual or a small collective can solve. Challenges like climate change, the loss of biodiversity. Challenges that threaten the very existence of all species, including us. We are in dire need of innovative solutions for these grand challenges. But where from? We need innovators and entrepreneurs that tackle these grand challenges. Challenges that we created with our very own hands in the first place.
What can we as individuals and humans do?
Today more than ever, we need to ask ourselves: Are our educational systems preparing us for a world driven by disruptive scientific and technological advances in artificial intelligence, robotics, biotechnology, clean energy, or quantum computing? Are we educating to think critically about how science, technology and innovation can help address - or aggravate - economic, geopolitical, environmental or societal challenges? The pressures that individuals, organizations and societies face in this crisis are accelerating.
I do believe that one of the biggest responsibilities of our society is to leverage technology for education to be fit for the 21st century. We need an educational framework that combines knowledge with 21st-century creativity, entrepreneurial thinking and acting, communication, and collaboration skills. We cannot simply move classes from the chalkboard to a video call. The pandemic has forced an entire future generation, more than 1 billion students and youth, out of school almost overnight. This has triggered the world’s biggest educational technology (ed-tech) implementation in history. Schools and universities are scrambling to redesign their teaching and learning to allow for students of all ages to study from home. While this raises huge practical and logistic issues for students, teachers, and parents, it opens up a world of opportunities to reimagine what learning looks like in the 21st century.
We need to harness this opportunity. Now. This is the one chance we have to radically transform the way we teach, from one-way content dissemination and memorization to personalized, self-directed learning. Let us not be satisfied and just move on. It is time to push the reset button and rethink from scratch.
Most importantly, in a rapidly changing world, where we cannot predict what technologies will be ascendant in the future, we have to teach people to teach themselves. The future generation needs not just knowledge, but the mindset and network to thrive in and shape their own future for a more empowered global citizenship. This has never been more evident than in the current pandemic.
Let us focus on building character and mindset. Let us focus on the grand challenges. Let us start today to inspire and empower the change-makers for a better tomorrow. Today.