COVID-19 ISO Insights

How Will Innovation Shape the World After COVID-19?

April 13, 2020

By: David Geller, CPCU

The sheer velocity in which COVID-19 has upended the way of life for hundreds of millions—if not billions—of people may serve as a deterrent to try and process what the world will look like in a month. Or in 6 months. Or by 2021.

And while the daily deluge of news seemingly changes the outlook on an hour-by-hour basis, perhaps we can look at history as a guide to at least paint a sketch of how the world will evolve when COVID-19 is finally in the rear view mirror.

In March, the Brookings Institution examined research conducted by various economists pertaining to how automation has increased in the aftermath of different recessions. For instance, one study indicated that, in a three decade span starting in the mid-1980s, 88% of jobs that individuals lost due to automation occurred within 12 months of NBER dated recessions.

The Brookings Institution also points to another study that focused on roughly 100 million online job postings before and after the Great Recession:

[The study] found that firms in hard-hit metro areas were steadily replacing workers who performed automatable “routine” tasks with a mix of technology and more skilled workers.

With respect to the contemporary workforce, the Brookings Institution notes that around 36 million jobs have a “high” susceptibility to automation. Also, according to The Guardian, a survey of company executives indicated that “a majority of companies” were planning “major transformation” before this pandemic hit—the transformation, per the article, included investment in digital and technology.

Not Your Typical Recession?

There are other factors that may prove to accelerate automation beyond what has historically followed recessions in the past three decades:

  • Technological Improvements – Continuous developments with technology may increase the scope of what automation is capable of doing. The deployment of 4G in the early 2010s helped enable the environment that has launched so much innovation that has been particularly crucial during this social distancing period. 5G capabilities may only serve to accelerate these trends further.
  • The Need Exists – The lack of technology in the U.S. healthcare system has been addressed, such as in this New York Times opinion piece, before COVID-19 wreaked havoc on the country. With these deficiencies being exposed in recent months, it stands to reason that significant technological upgrades could be implemented in the wake of this pandemic.
  • Cost Reduction Measures – Perhaps the root cause behind the shift to automation after prior recessions, companies may need to look to technology to reduce costs in order to survive the economic shutdown COVID-19 has reportedly necessitated.

What Industries Could Technology and Automation Disrupt the Most Post-COVID?

Healthcare
As mentioned above, technology could have played a major role in supplementing the efforts of doctors and healthcare professionals across the U.S.—and the world.

One aspect of automation that may be incorporated in the coming years is using robotics and other technology to bring the medical supply chain back onshore. While relying on offshore manufacturing has reportedly helped keep prices low for the equipment, it also left the United States effectively paralyzed when a medical crisis hit. Now that it is clear that this equipment may need to be produced, at least to some extent, onshore as well, there is a possibility that capital and technology is devoted to technology that can help make medical equipment in the U.S. while keeping costs reasonable.

Additionally, through the course of this crises, robotics has displayed some viability as a tool for assisting hospital workers. Back in January, a robot was used to help treat the first citizen to test positive for COVID-19 on American soil in order to limit the exposure of doctors to the patient. Unfortunately, as the number of COVID-19 cases exploded throughout the U.S., it became unfeasible for doctors to avoid contact with sick patients, leaving some of the most critical workers in this crisis most exposed to falling ill.

Lastly, telemedicine has prominently played into COVID-19 treatment activities as well (see our article here for more info). By 2022, 12.5 million Americans are projected to fall under an “aging population” category. And by 2050, the United Nations estimates that 2.1 billion people across the world will be 60 or older. The ability for doctors to treat an elderly population remotely, as well as potentially incorporating sensors and other Internet of Things (IoT) technology to consistently monitor vulnerable individuals in their day-to-day activities, could be immensely helpful in preventing—or at least mitigating—future health concerns.

The Food Delivery Economy
Will the dramatic lifestyle changes that COVID-19 has wrought be habit forming, or a blip on the radar? As more time passes with containment measures in place, the possibility of the former emerging becomes more realistic.

Food delivery has become increasingly commonplace throughout the 2010s, and these platforms have mobilized during this social distancing period. Restaurants that normally offer only dine-in services are partnering with these services in order to stay open.

According to Pew Societal Trends, 30% of adults aged 18-29 and 25% of adults aged 30-49 (the present and future of the market) have used a food delivery service in lieu of going to a restaurant or the grocery store because of COVID-19. And the Wall Street Journal notes that in the first week after various cities ordered U.S. residents to stay home, use of food delivery platforms increased by 10%.

If these trends solidify past the COVID-19 pandemic, and more restaurants need to have the capacity to deliver food to ensure survival, then the services and technology underlying the food economy may change as well. What does this mean? We could see food delivery services turn to autonomous vehicles to handle some of their deliveries, a concept a major company in this space had already experimented with in 2019. Autonomous vehicles are reportedly displaying some viability while operating in short, defined routes, which could lend itself for the exact tasks that food delivery services require.

Aside from autonomous vehicles, other technology that can be used to deliver food include robots and drones. The former have been deployed on college campuses in recent years, and a story from the Sentinel-Tribune details how robots on the campus of Bowling Green State University have helped keep students and staffs fed during social distancing measures.

Prior to COVID-19, drone delivery had also been targeted as a method to bring food to the doorways of customers. In 2019, according to The Verge, Uber Eats announced that their drones would be used in partnership with San Diego fast food establishments to make deliveries in the summer of 2020.

Conclusion: The World Was Already Changing, Now it Could Change Faster

A professor of history and science at Johns Hopkins University recently expressed the following to NBC News:

"What I've found as a historian is that emergencies, for example like World War I, World War II, the Great Depression, they tended to accelerate rather than necessarily innovate new kinds of relationships, new kinds of ways of life."

An anecdote on hiring patterns from the Wall Street Journal may substantiate this sentiment. Prior to the crises, the number of AI jobs globally was reportedly projected to increase around 13% in 2020. That estimate has subsequently risen to 16%, in part, due to the need for technology to help tackle the onslaught of problems caused by this pandemic.

Before COVID-19 stunned society, automation was a concept of the past, present, and future. However, as the Brookings Institution noted, and due to the unique nature of this pandemic, a strong possibility exists that market forces will accelerate these trends.

While we only touched on a couple of industries that stand to be disrupted as a “New Normal” emerges, it stands to reason that increased automation in one industry could feed into more automation in another. The e-commerce industry, an arguably more mature delivery sector than food, has reportedly been struggling with keeping costs down in the “last mile” of a delivery. According to Business Insider, as of 2019, the costs to execute the last mile of a delivery, which is “the product’s journey from warehouse shelf to customer doorstep”, represents 53% of the shipping costs.

In addition to food delivery platforms, enterprises engaged in the competitive e-commerce space have also reportedly targeted the likes of self-driving cars, robots, and drones as a way to reduce these last mile costs. Therefore, if this technology proves to be efficient for food delivery, then e-commerce platforms may integrate them as well (or vice-versa).

What other shifts do you anticipate in this “New Normal”? E-mail us here with your thoughts.