Time to set sail for your new ideas
For most of us, the past 100 days have been history in the making. Some call it the Black Swan of our time, others a human tragedy. But the borderless march of the Coronavirus (Covid-19) has undoubtedly turned our once familiar world into an ocean of uncertainty.
With nearly 40% of our world population in lock-down today, more than 3 billion people have been forced to change their daily habits overnight. By the end of last month, no less than US$26 Trillion had been wiped off the value of our global equity markets, leading up to more than 10% of the US workforce filing for unemployment and shaking up our debt-ridden economies worldwide with 120,000 deaths and nearly 2 million infected cases to date.
Needless to say, we’re in the open waters. And the decisions made today will determine the direction of our future.
While personally, it’s been heartbreaking to witness the magnitude of this wave hitting the most vulnerable, giving rise to political exploitation turning us against one another, I’ve been equally inspired by the solidarity, resilience and resourcefulness of many from Wuhan to Milan and Tehran to New York.
And it is the latter, the resourcefulness, that is breathing new life into those with a curious mind. Even with zero visibility ahead and no playbook to follow — the new reality post-coronavirus will emerge not only with new technology but fundamentally different business models.
What the Past Has Taught Us
We all know that a smooth sea never made a skilled sailor. This is not the first time we’re in a global crisis and will definitely not be the last. While the first two quarters of 2020 may have felt like a massive reset, many seasoned CEOs are doubling down on their R&D and tech investments as our global economy slumps into what is already being referred to as the mother of all financial crises.
History has taught us that recessions have a peculiar way of giving birth to innovation.
General Motors, IBM, Disney, FedEx and Microsoft, companies that have changed our lives, were all born during an economic recession. More recent examples include Instagram, Whatsapp, Airbnb and Uber, all born during the 2008 financial crisis. So if our past is anything to lean against, the best time to launch a new venture might just be now.
But what if this time is different?
As it already is.
Harvard economist Kenneth S. Rogoff warned that this is shaping up as “the deepest dive on record for the global economy for over 100 years”. The IMF is making comparisons to the 1930’s Great Depression and the UN chief calls the Covid-19 pandemic the worst crisis since the Second World War.
While predicting an accurate future outcome is about as easy as winning the Nobel Peace Prize, it is undeniable that before the pandemic our systems (political, economical and social) were already in a vulnerable position facing unprecedented levels of complexity, speed and change. With this, the Covid-19 has exposed our weak spots and highlighted the need to redesign many of our existing systems: healthcare resilience, misinformation, digital bureaucracy and augmented experiences, just to mention a few.
Echoing Richard Branson’s words, a business is simply an idea to make other people’s lives better.
Businesses born today will be the success stories our future generations will study the same way we study innovation from past recessions.
This space is opportunities galore.
As an unwavering optimist, I see a huge testing ground as nearly half the world’s population is in quarantine, isolated from the physical world, exploring new ways to connect, communicate, express and create. While some behavior is frozen, new consumption habits are being formed. New business models are emerging and along with them, entire economies.
Hoping to inspire those exploring new ways of creating value, here are 6 economies with fundamentally new ways of doing business.
Let’s dive in.
The Digital Economy
And just like that, things went online.
Schools, labor unions and public institutions, offline services that were once considered impossible to digitize and corporates that had been contemplating their online presence for years and years — things changed overnight.
Transforming traditional businesses into digital form isn’t just about the operations themselves. It opens up an entirely new territory where market domination is sourced by the crowd and governed by algorithms. From staff-on-demand to crowdfunding and leveraged assets to the sharing economy, we’ve seen this trend recently being embraced by yoga instructors to flower retailers and design coaches to gourmet chefs.
Once the genie is out of the bottle, it’s hard to lock the new digitized habits back in. By 2022, more than 60% of our global GDP will be digitized and 70% of all new economic value over the next decade will be based on digital platforms. Data innovation, evidence-based information and governance as well as self-sovereign identities are all areas that deserve further exploration.
The Multiverse Economy
Our world is no longer tied to our physical identity. We live in multiple worlds simultaneously and juggle a number of personas in parallel. From work to social and family to entertainment, there are 3 billion social media users worldwide (yes, the same amount as under Covid-19 lock-down currently) with each of us walking around with an average of 7 social media accounts.
With virtual and augmented reality maturing, the extended reality (XR) is expanding from gaming to medical simulations and industrial design to esports joining the 2024 Olympics. Spaces that enable ‘virtual living’ (Second Life, Animal Crossing etc.) shape social behavior as well as new consumption patterns inside the digital realm.
As an industry that is expected to see a worldwide spending of nearly US$19 billion this year, AR/VR is forecasted to achieve a five-year annual growth rate of 77% by 2023. With this, each new industry, function, persona and demand opens up countless opportunities for businesses that understand the multilayered nature of such an economy.
The Smart Economy
Smart cities, smart energy, smart production and of course, Smart Companies. What all of these have in common is their ability to self-execute given tasks and workflows without any human input. Whereas smart contracts can self-govern and self-enforce a set of actions without third parties, AI and machine learning have the ability to monitor, optimize and use cognitive/predictive analysis to go beyond historic data.
Computer scientist Andrew Ng compares adding AI to electricity.
Just as electricity transformed almost everything in the 19th century, adding ‘smartness’ to existing products and services will transform today’s industries in the next several years.
Being in the space we are today, it’s indeed hard to argue against this.
One of the more serious hits during this pandemic and border restrictions has been taken by our global supply chains. With 94% of Fortune 1000 companies experiencing disruptions on their supply chains due to Covid-19, this serves as a reminder of our interdependency, and vulnerability, in our globalized economy. While quarantines have slowed down the growth of coronavirus, market disruptions from agriculture to manufacturing have shocked our economies, leading to a humanitarian and societal emergency.
In times of crisis, resource distribution is rarely spread even. While many industries such as aviation and hospitality are completely frozen, others are experiencing such a surge in demand they’re struggling to meet the needs. Adding a smart layer on our existing infrastructure and workflows could ease unexpected disruptions in many ways. Continuous cycles of risk monitoring and sensing through AI/ML will build greater responsiveness and resilience into supply chains. End-to-end visibility along with traceability and trackability are additional value-adds along with real-time pricing, optimized inventories and predictive distribution.
The Circular Economy
Challenging our current make-use-dispose linear economy, enters the circular economy. Mimicking biological ecosystems where waste doesn’t exist, all resources used are designed out of operations through reducing, reusing, recycling and finally repurposing into new life. This is also known as the closed-loop economy, used by NASA astronauts in space stations as well as scientists studying future life on Mars.
In circularity, traditional ownership models will disappear as businesses will shift into new ways of creating value: from co-sharing to leasing and collecting to regenerating.
In this estimated US$4.5 trillion industry, circular businesses are naturally incentivized to check the boxes of environmentally conscious consumption, intelligent technological application as well as cost reduction.
With our Covid-19 response being increasingly more linked with climate change, calls for a more systemic change have been on a steady rise. But here’s my favorite part: circularity rides on the back of what some might call the Climate Economy, a larger shift including everything from energy transitions to publicly traded green assets and a radical reorientation in the way we build and invest in companies.
The Decentralized Economy
Imagine a world where businesses could operate 24h a day doing whatever their pre-programmed rules have determined — with no employees, no bosses and no owners. A modern economy where each and every touch point of an item or workflow is recorded on a peer-to-peer ledger, removing the need for third parties or more fundamentally, trust.
Enabled by blockchain, technological decentralization inevitably leads to a flatter society where tokens set the basis for a new kind of system: contribution economy.
In a complex world, this represents a more emergent strategy where collective decision making is based on testing numerous possibilities, even contradictory ones, and then adapting these into action towards shared goals.
To many of you reading this, this may sound like a utopian daydream, but a decentralized economy, in many ways, already exists today. For instance, the way open source developers community contributes, builds and recognizes one another is very different compared to a centralized system, where it is up to the leader to decide the direction and therefore shoulder its consequences. Similar to the science community, quality is determined by the collective values (robustness, confidence, validity, replicability etc.), not by a top-down hierarchy.
The Rise of Decentralized Autonomous Organizations (DAO)
It’s hard to talk about decentralization without touching DAOs. This is a type of an organization that governs itself by code. Its rules and protocols are maintained on the blockchain. Because it can issue tokens, it can create a variety of incentive models from external funding to motivating its community to plant trees or spot transaction inefficiencies. This is DAO in theory.
In reality, DAOs have no legal personality. Not yet. Meaning, they are not legally recognized as compliant entities to do business today. This is why we at Korporatio created the Smart Company, a legal (yes, legal) DAO in a number of jurisdictions that recognizes tokenized corporate shares within the asset class of securities. Learn more about this here.
The Collaboration Economy
One of my favorite things about the Covid-19 lock-down has to be the creativity and collaboration of individuals and artists. From collective singing on balconies to viral initiatives such as #TogetherAtHome, artists from Steve Aoki to John Legend have come together to lift up the spirit. In many ways, the distance between you sitting at home and your favorite musician performing in their own home suddenly disappears.
Singer-songwriter Jordan Rakei would live stream how he makes music from the scratch and call for collaboration with anyone willing to work on the tune. The New York Philharmonic would play an entire symphony online, entrepreneurs would offer their time to listen to pitches and award-winning actress Laura Benanti would invite performers whose concerts had been cancelled to send their shows directly to her. Museums, street artists, photographers and writers all weighed in collaborating with their own craft…
You get the point.
As the world is in crisis, the collaboration economy has just gained new meaning. In the vacuum of global leadership, people rely on each other to meet their needs from face masks to entertainment. Sharing, swapping, trading and co-creating, everything is coordinated between networks.
This begs to ask what if we had a better system of rewarding one another?
So this leads me to the tokenized economy: a model where individuals can share their craft directly with their communities. Tokenizing assets is one thing but this would be tokenizing yourself, your talent, your concepts, anything value-based. Imagine a model where the previously mentioned New York Philharmonic would allow you to ‘own’ a slice of the symphony. Your contribution to them could be a small amount of money, or perhaps just attention (as the browser I’m using to write this already does). And your reward would manifest as your support, the music itself or its future earning potential.
Final Thoughts
Regardless of what happens next, 2020 will be remembered as a turning point in the mass adoption of technology. From AI to automation and blockchain to virtual reality. While none of these technologies are necessarily new, locking down nearly 40% of our world population certainly accelerates the growth trajectories they were already on.
Technological advancement has never happened this fast before, and it will never be this slow again.
Almost every company and citizen from kids to elderly are now given the opportunity to change, adapt and create a virtual presence — and thrive in it. The growing importance of resilient systems, ability to verify ‘truth’ from misinformation, local self-sufficiency as well as intergovernmental collaboration have unquestionably left their mark on our global economy.
If this is not the time to rethink the way we live, work and create, it never will be. Our past has shown us that some of the greatest inventions emerge from times like these. And as we’re facing unprecedented challenges ahead with no ability to even calculate risk, this is the era for the agile, curious and open-minded.
Finally, if there’s something we’ve learned about change during this pandemic, it might just be that even with the hardest resistance, when the circumstances are urgent enough, people adapt. Even faster than we thought.
And I truly hope that it’s change for the better, for a future we all want to see.