Conversations and media reports about the Coronavirus pandemic usually go hand-in-hand with the word ‘unprecedented’. It got me thinking about Black Swan events.
The 2nd-century Roman poet Juvenal is the first to use the phrase in his Satire, writing about something that was “as rare as a Black Swan.” It has been picked up more recently by mathematics scholar Nassim Nicholas Taleb, in his 2010 book The Black Swan: the impact of the highly improbable.
He uses the term ‘Black Swan’ to explain the disproportionate role of high-profile, hard-to-predict events. Whether the Coronavirus pandemic has been a true Black Swan event is open to debate. We’ve had virus pandemics before, and there’s some suggestion that academics and the media picked up on the virus when it first struck the city of Wuhan in 2019.
However, the rapid impact, the speed at which the virus spread across the world, global lockdowns imposed by governments, a freeze on international travel, social distancing measures, and huge economic pressures on business are things we’ve not seen much of in recent decades following a virus outbreak.
Health crisis and black swan innovation
What I am convinced of is the Black Swan nature of the response to the pandemic, by individuals and businesses alike. The innovation which followed was unexpected, giving a new meaning to businesses pivoting, driven by necessity.
Who could have predicted that firms like Dyson, Ford, Airbus, Mercedes F1, and McLaren would step forward to create much-needed ventilators for sick patients in the hospital?
Canada Goose, Ralph Lauren, Prada, Louis Vuitton, and Armani turned their skill and resources to produce face masks and gowns for healthcare staff. Fast food companies and taxi services offered services free of charge to support key workers.
We’re also now reading about how specialists in the fields of data, AI, quantum computing, and medicine are collaborating to find a vaccine for Covid-19 – not the use case anyone would have predicted.
Economic crisis and black swan innovation
The economic crisis caused by the pandemic was sudden and serious. Business revenue dropped off a cliff. Companies quickly decided to withhold or delay payment to suppliers and landlords. Millions of employees have been furloughed, and daily, we read of big businesses making huge swaths of redundancies. Bankruptcy has hit big and small businesses alike. The saying, “cash is king” has never been more real.
The economic crisis has likewise required innovation. At Sidetrade, we have 20 years’ experience in the field of B2B payments, and use big data and machine learning in our platforms, to help businesses enhance their customer relationships and optimise their cash collection.
When the pandemic hit, we too looked to innovate. Firstly, we launched a special offer called CashControl. We took our enterprise accounts receivable platform (Augmented Cash) and transformed it into a platform useful for SMEs who needed to collect invoice money, create payment plans for struggling customers, and give new tech tools to staff working from home for the first time.
The other piece of innovation came in the form of the Sidetrade Unpaid Invoice Tracker. Our R&D and data science teams based in England and France quickly created a unique tracker of B2B payment across six European countries: France, Belgium, Italy, Spain, the UK, and the Netherlands.
We took over 26 million overdue invoices from 4 million businesses, allowing us to create a weekly tracker which shows the rise and fall in late payment for each country, and across 12 business sectors.
These insights have given the worlds of government, business, and media an up-to-date, macro indicator into the economic consequences of the pandemic.
Countries and sectors are recovering at different speeds, and we might see unexpected changes again in the coming months, as government support schemes comes to an end. Individual businesses will also recover at different rates, and could look quite different post-pandemic.
The evidence from the likes of Boston Consulting Group suggests that companies who ramp up investment in innovation during a downturn – such as a financial crisis or pandemic – outperform their competitors over the long term. It might sound counter-intuitive, but strategic investment in innovation can put a business in a strong position as it emerges from a downturn, while competitors fold. The demands of the market require new products, services, speed, and delivery.
Going forward, businesses therefore need to make digitalisation a more urgent priority. SaaS providers, data, and AI are helping employees to do their jobs in the face of sudden disruption. Technology is taking on large-scale, repetitive tasks, and providing recommendations and predictions to enhance workload and customer relationships. A ‘digital first’ approach will make business processes faster, predictive, and more efficient.
A survey of CFOs carried out in May 2020 by PwC, found that 48% will accelerate automation and new ways of working. Similarly, a study by Gartner found that CFOs plan to maintain, rather than cut, investment in technologies such as AI, automation, and analytics. 24% plan to invest more in RPA, workflow automation, and cloud-based ERP technologies (20%).
The challenge now, is to harness the latest generation of urgently needed innovation to be ready for the demands and opportunities of the market. This will indeed be a deciding factor for business survival and growth.
Image credits: Hunyadi Marton/Shutterstock
Guest post by Mark Sheldon, CTO of France-based AI firm Sidetrade.