7 Lessons And 1 Resolution
The year 2020 has tried to teach us many lessons (though we took away some of the wrong ones); here are the seven that stuck with me, and the one resolution they suggest for 2021.
1. Technology: Give it a Go — Fighting a virus is no game
As we fought the pandemic and struggled to keep our economies alive, innovation scored some important wins: 3D printing helped accelerate the production of Personal Protective Equipment; manufacturing platforms helped companies adapt to the disruption in global supply chains; and remote working worked, for some jobs. We also discovered a Covid-19 vaccine in record time, though that owes more to the amount of financial and human resources thrown at the problem and the streamlining of regulatory approvals.
However, after AlphaGo Zero had mastered the supremely difficult game of Go in three days by itself, you might have hoped it could develop a Covid-19 vaccine in a couple of weeks, a month at most. Nope. AI was MIA (Missing In Action).
And after hearing for the last several years that the robots were taking all the jobs, you might have hoped they would keep things running while workers were forced to stay home to avoid contagion. Nope, the economy collapsed. And while reduced demand for services played a big role, manufacturers also struggled to keep production going.
Technology has delivered much less than what the hype promised.
2. The Misinformation Age
We’d been told this was The Information Age, where “information has become a commodity that is quickly and widely disseminated and easily available especially through the use of computer technology” (Merriam-Webster). They forgot to tell us it would too often be false and misleading.
2020 has brought the staggering scale of this problem to the forefront. Social media and traditional media now filter and censor information at will, “canceling” the voices they don’t want to be heard. Today I find it harder than ever to gather reliable, complete information on the issues I follow, and I don’t trust a single headline without some fact-finding research of my own.
Welcome to The Misinformation Age
3. A data-hungry, innumerate society
Rumors, conspiracy theories and fake news have always existed. But with everyone inspired by the same survival instinct to bring this pandemic under control, with the best medical experts and data scientists on the same page, you would have expected the information age to shine. Quite the opposite.
In a series of polls, Gallup and Franklin Templeton have unearthed some disheartening insights — summarized in this Brookings article. They found that a majority of Americans grossly misunderstand the most basic facts about the pandemic, such as that most Covid-19 victims are in older age brackets.
A few things were clear from the early stages of this pandemic: that the virus is very dangerous for the elderly and those with certain comorbidities, much less for the rest of us; that the number of hospitalizations and deaths matters more than the overall number of new cases.
The media instead continued to make headlines with the number of new cases — which rose as we tested more — and to highlight the relatively rare cases of young healthy people hit hard by the virus. Hey, if it gets us more clicks, we’ll use it.
We have become obsessed with numbers, hooked on apps that throw at us an avalanche of statistics on our exercise routines, our sleep quality, our diet, you name it. Yet too many of us still seem unable to grasp even basic statistics.
We’re becoming a data-hungry innumerate society.
4. Science is my religion
While the media ignored the few things we knew about the virus, journalists, medical experts and politicians insisted we knew for sure other things that we really didn’t. Cue the absurdly detailed regulations issued by so many state and local governments. A Google search of “most absurd Covid rules” returns over 4 million results, so take your pick. My personal favorite is New York City’s advice that if you really must have sex during the pandemic, you should “make it a little kinky” with “physical barriers, like walls.” (This from The New York Times, not Trump’s Twitter feed…)
Scientific research on Covid-19 has given us some important insights and many equally important questions. Some studies find that masks help stop the spread, while others find little or no effect. The evidence on the effectiveness of lockdowns is mixed. Yet those who have dared question the lockdown consensus have been belittled, silenced or even fired. That’s the way religion works, not science; the essence of science is debate.
They told us to “follow the science” when in fact they were building a new religion.
5. Economy: This time is different … isn’t it?
Never before have most major countries around the world simultaneously switched off their economies. One advantage of an unprecedented experiment is that it could give us some new insights:
Our economies have shown a surprising ability to rebound as soon as restrictions on business activities are lifted. US GDP cratered with -31% in Q2, then expanded 33% in Q3 with a strong recovery in both household spending and employment. More like an athlete coming back from a long off-season rest than one sidelined by injuries; and indeed the recession was engineered by decree, not triggered by underlying problems in the economy. This is a lot better than most analysts expected; perhaps our economies are a lot more resilient than we thought?
Part of the explanation lies in the staggering amount of policy support. Governments and central banks have pulled all stops: massive increases in spending and government debt, with creative new ways to hand out cash to households and businesses; massive renewed expansions in central bank balance sheets, with commitments to keep interest rates at zero for the foreseeable future. The extraordinary shock of the pandemic called for an extraordinary response; but the latter has also been spurred by the increasingly common view that we live in a brave new world where government debt and central bank money creation can rise without limits or consequences.
Well, this was the perfect opportunity to put the theory to the test.
My view — and concern — is simple: our economies are as resilient as they are thanks to years of investment and hard work guided by market incentives. That resilience is what makes the occasional massive policy support tenable. But if we rely on unlimited policy support for too long, the incentives will weaken and the underlying strength of our economies will evaporate. The good news is that our economies are stronger than we thought and we have more policy firepower than we hoped. But let’s not forget how we got to this point. Even the strongest athletes can get out of shape, eventually.
6. Innovation: Faster and more focused in 2021
I started this piece with some critical remarks on what technology has delivered in the 2020 crisis; but I feel a lot more optimistic on what lies ahead.
Companies and policymakers are now much more painfully aware that we need to be better prepared for disruptive shocks and to cope with ongoing protectionist pressure and trade tensions. They have a much better sense of what works and what doesn’t. Manufacturing companies found they need much greater agility, to respond faster to sudden changes in demand and supply chain shocks.
I think this will trigger a major acceleration in innovation in 2021, guided by a greater awareness of where innovation can bring the greatest value: Software systems to help quickly reconfigure operations and supply chains; labor-augmenting technologies to give manufacturing workers better information and just-in-time training; manufacturing platforms to enhance resilience and flexibility at the ecosystem level. The pandemic has exposed the weaknesses of our manufacturing sectors; the recession will leave companies and governments weakened and more indebted — the imperative to accelerate innovation will be inescapable
7. The humans are coming!
In 2020 we have rediscovered the obvious — humans are indispensable. We’ve heard for years that the robots and AI were taking all the jobs, but once people could not go to work for fear of contagion, production came to a halt. Maybe the robots were also sheltering in place.
The message is clear: companies need to better leverage the power of their human capital. We will continue to develop better robots, but not in the expectation that they will replace us any time soon. Some of the technologies that delivered the greatest value in 2020 are those that enhance human efficiency and productivity: from remote-working tools to connected-worker platforms that facilitate learning on the job and collaboration.
Expect to see a lot more investment in these technologies in the year ahead, together with much greater focus on new learning and training tools.
One simple resolution
To move forward, we need the right balance of visionary ambition and humble pragmatism. We have to aim high with innovation and technology; but keep a sober view of their current limitations. Hold on to common sense. Follow the science, but not blindly — science is a work in progress, and debate is crucial to moving forward. The biggest limitations exposed by this crisis are the age-old failings of human nature. So let’s try to be a bit smarter, and maintain a healthy skepticism of magical economic solutions.
Happy New Year!
Economics & innovation at www.AnnunziataDesai.com; Co-host, M4Edge Tech podcast; Former Chief Economist & head of business innovation strategy at GE.