The COVID-19 pandemic has profoundly influenced the lives of most people on the planet. It has changed daily activities. The same is true for businesses because many businesses have shut down or changed to accommodate social distancing. Likewise, new patterns of consumer and worker behaviour and expectations have emerged.
The COVID-19 pandemic represents a tremendous economic shock and burden. In recent weeks, the focus has begun to shift towards ways to address its health and safety risks; while also accommodating an appropriate level of economic activity. Businesses have historically overcome this type of challenge through the introduction of risk-mitigating technologies, which in this pandemic include technologies, business practices, and strategies that improve customer and employee safety by mitigating the risk of contagion.
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. This, 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.
“AN INCREASE IN RISK PERCEPTION MAKES CONSUMERS MORE WILLING TO PAY FOR SAFETY FEATURES.”
Already during the pandemic, companies have been creative in identifying “low-hanging fruit” that could be quickly implemented in their operations. Additionally, grocery stores install 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at their checkouts, restaurants and groceries have expanded to takeout and deliveries, and face-to-face meetings have been replaced by video conferences across many sectors of the economy.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, various essential and nonessential on-premises businesses have implemented pre-booking to control customer flow. They also use temperature-detection technologies, wearables, and apps to identify customers who are at high risk of carrying the virus.
EXPERIMENTS USING RISK-MITIGATION TECHNOLOGIES
Due to COVID-19, 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, meals, and to collect bed sheets and rubbish in hospitals. likewise, 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 businesses where digital and automation technologies are not commonly used, the crisis led to drastic changes in their interactions with consumers. In education, teachers are gradually transforming content and delivering it online or through phones. Retailers started to license Amazon’s Just Walk Out technology. This innovative technology combines computer vision and AI to bill customers directly as they walk out of the store. What makes this very innovative is that no checkout is required.
Museums and galleries, cinemas, concert halls, independent musicians and artists have found means to create, perform, and connect with their audience through online platforms or drive through.
A key question many entrepreneurs face now is; how much and in what form to invest in risk-mitigating technologies and corresponding changes in products and services?
If risk of contagion persists substantially into the future, there will not only be high demand for contagion mitigation but may also lead to long-lasting changes in consumer and worker behavior. These may, in turn, generate new demand. This has important implications, both opportunities and challenges, for technology users, innovators, as well as regulators and policymakers.
Firms are forced to be smarter
Learning from forced experimentation and investment in risk-mitigating technologies may help firms become smarter and more flexible. Before the crisis, firms may have regarded the investment of time and resources to experiment with remote-work as too costly. The unfortunate COVID-19 crisis left many with no options. In China, large call centers invested massively in IT equipment and systems to allow their employees to work from home and to ensure the security of client information. Our discussion with local executives in the country suggests that 20 to 40 percent of these call-center workers have continued working remotely as these companies started to resume normal operations, and flexible work-from-home arrangements are likely to become a permanent policy after the crisis.
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Credit: Harvard Business School.