The One Good Thing Caused By COVID-19: Innovation

Hong Luo and Alberto Galasso see risk-mitigating innovation everywhere the virus spreads.

by Hong Luo and Alberto Galasso

The COVID-19 pandemic has profoundly influenced the lives of most people on the planet. It has changed daily activities; something as simple as a walk in the park is perceived very differently now. The same is true for businesses. Many businesses shut down or changed to accommodate social distancing. New patterns of consumer and worker behavior and expectations have already emerged.

COVID-19 represents a tremendous economic shock and burden, and businesses had to find ways to address health and safety risks while also accommodating an appropriate level of economic activity. Businesses have historically turned to risk-mitigating technologies to overcome this type of challenge. In this pandemic, that can include technologies, business practices, and strategies that improve customer and employee safety by reducing the risk of contagion. Other examples of this in the past have been less extreme, but include medical devices that were developed in response to rising consumer awareness of radiation risk.

We recently explored this example, which shares an underlying business response with the pandemic. An increase in risk perception makes consumers more willing to pay for safety features, which, in turn, provides producers greater incentives to develop and commercialize technologies that address consumers’ demands for safety.

In this process, firms have an opportunity to reassess their options. They can invest in new as well as shelved technologies and product designs that are particularly effective in mitigating risk and improving safety—even when they are initially inferior in terms of costs, user-friendliness, or other quality dimensions.

Already during the pandemic, companies have been creative in identifying “low-hanging fruit” that could be quickly implemented in their operations. Grocery stores have installed plexiglass shields at their checkouts, restaurants and groceries have expanded to takeout and deliveries, and face-to-face meetings have been replaced by video conferences across many sectors of the economy.

In China, which is ahead of the curve both in terms of the outbreak and the subsequent restart of its economy, various essential and nonessential businesses have implemented pre-booking to control customer flow. They use temperature-detection technologies, wearables, and apps to identify customers in near real-time who are at high risk of carrying the virus.

Experiments using risk-mitigation technologies

At the same time, we are witnessing firms developing and experimenting with much more radical risk-mitigating technologies. These include developing new products and processes that mitigate contagion risk. For example, in China, robots have been designed to deliver medicines and meals, and collect bed sheets and rubbish in hospitals. The e-commerce giant JD developed a drone program to drop parcels and to spray disinfectant. Smart helmets can identify anyone with fever within a five-meter radius.

For other businesses, especially those that don’t typically use digital and automation technologies, the crisis drastically changed their interactions with consumers. In education, teachers from elementary schools to universities transformed content and delivered it online or through phones. Retailers started to license Amazon’s Just Walk Out technology that combines computer vision and AI to bill customers directly as they walk out of the store, with no checkout required. Many cultural industries—museums and galleries, cinemas, concert halls, independent musicians, and artists—found means to create, perform, and connect with their audience through online platforms, which brings much appreciated comfort to people confined in their homes across the world.

A key question many managers face now is how much and in what form to invest in risk-mitigating technologies and corresponding changes in products and services. This, to a great extent, depends on how long the crisis will last and what form the risk (and the fear) of contagion will persist once the peak is behind us. All these factors will also likely vary greatly across businesses, markets, and locations.

Hong Luo is the James Dinan and Elizabeth Miller Associate Professor of Business Administration at Harvard Business School. Alberto Galasso is a professor at Rotman School of Management, University of Toronto.