Thoughts About the Road to Success through the Economic Recovery from Covid-19 in Growth Stage Technology Businesses

1. THOUGHTS ABOUT THE ROAD TO
SUCCESS THROUGH THE ECONOMIC
RECOVERY FROM COVID-19
IN GROWTH STAGE
TECHNOLOGY BUSINESSES
APRIL 14, 2020
DAVE LITWILLER

2. INTRODUCTION
• Historically, the onset of recovery from deep recessions
spurs a significant increase in technological risk taking by
producers and consumers to drive growth, profitability and
productivity
• Contrast this with the late stages of a long bull market for
technology, where we were until recently:
• Much imitative technology, designed and able to scale fast,
but often of little lasting differentiation or impact
• Many minor innovations trumped up to sound major, when
there are fewer major innovations to debunk the imposters
• And at the onset of recession, where we are now:
• Many players needing to be defensive and focused more on
survival and right sizing

3. RECOVERY ENABLERS
• Availability of talent and capital willing to take the chance
to depart from the status quo
• More basic, fundamental innovation and even invention
• Broader potential reach and optionality for the ensuing
technology and products
• Some beneficial spill-over effects from increased
movement of people through the economy’s transition
• Ability to connect new ideas and skills in ways that the
dogmas and entrenched interests of the recent good times
would have made much more difficult

4. TACTICAL
CONSIDERATION #1
• Many technology producers will see their rate of creative
collaboration slow for much of 2020 because of shelter-in-
place, social isolation, customer slowdowns, supply chain
and travel disruptions
• Working virtually for a while is OK for execution
• It is even a boon for some kinds of individualistic work
• It is sub-optimal though for high output, rapid,
collaborative, team-based creative work at scale
• As a result, there will be less innovation hitting the market
in 2021
• This is an opportunity for those who have the means and
the desire to springboard ahead of competitors next year

5. TACTICAL
CONSIDERATION #2
• The incipient recession will take out weaker competitors,
but also weaker customers and suppliers
• Inbound debt levels will often be a dividing line between
the businesses that survive and those that do not
• Shifting orientation now to the stronger portions of the
consumer and business ecosystem will position
companies to have more options through the downturn,
and better participation in the early stages of the upturn
• Green shoots of more basic new opportunities will come,
but often take a long time to turn into significant business
volume as a recovery takes hold

6. TACTICAL
CONSIDERATION #3
• The economy in developed nations will likely be unbraked
in stages, perhaps with some temporary regressions
along the way, with greater opening upon availability of
faster, widespread PCR-based testing and contact tracing,
effective treatments and ultimately a vaccine

7. TACTICAL
CONSIDERATION #3
• A scenario to consider for how to best position your firm:
• There is a pretty strong case to be made that the best
economic impact from selective reduction in social
distancing would come from governments allowing
relatively early resumption of construction, manufacturing,
and education
• If construction, manufacturing and education are among
the sectors of the economy that move back to more normal
operations sooner than other sectors, how should strategy
and products adapt to best perform in that environment?

8. TACTICAL
CONSIDERATION #3
• At the other end of the spectrum of reopenings, it is
harder to envision on economic grounds that large
gatherings for leisure and entertainment will be permitted
soon
• Those relying on these sectors should plan for a longer
return to anything resembling normal
• Travel will remain risky even after reductions in social
distancing and border reopenings because of the potential
for local flare-ups of the virus and reinstatement of
temporary quarantine and movement restrictions
• Travel risk will only fully abate once there is a vaccine

9. TACTICAL
CONSIDERATION #3
An alternative scenario to consider for how to steer the ship:
• For the coming few months, the earliest unbraked parts of
the economy will be at risk of isolated infection flare-ups
and localized subsequent restrictions until there is
sufficient, fast turnaround PCR-based infection testing
and contact tracing widely available
• Assume it will take 3-6 months until there will be wide
availability of treatments to lessen the hospitalizations
and significantly reduce mortality rates from Covid-19
• Further assume it will be 12-18 months until there is a
readily available vaccine, which will be the earliest point
that the whole economy as we knew it can largely revert to
normal

10. BIG PICTURE
INFORMATION AND
COMMUNICATION TECH

11. CREATIVE
DESTRUCTION
• The outsized impact of a handful of communications and
tech leviathans has had landscape shaping impacts on the
rest of ICT-based technology and the economy for years
• Tech oligopolies (like all other oligopolies) put most of
their R&D and M&A firepower into projects to defend
market share
• They are agile, to do so successfully at scale in tech
• They are innovative, to maintain growth at scale
• They have the scale to be effective at certain types of R&D
that smaller players really can’t do well
• But, there is also a significant path dependency to
oligopoly behaviour

12. CREATIVE
DESTRUCTION
• Fischer’s Fundamental Theorem of Natural Selection
• “The better adapted a system is to a particular
environment, the less adaptable it is to new environments.”

13. CREATIVE
DESTRUCTION
• Evidence the economic performance of the major
technology platforms vs. more typical profitability among
large companies across the economy
• People can debate means and methods of the major
technology platforms to achieve such economic and social
power, but not the results
• They have enormous market power today, but there are
also deeply embedded assumptions, some explicit and
some tacit, for their success to continue
• Post-pandemic change in broader society may challenge
some of these assumptions
• If changes become significant, the way that much of ICT
has built up around the major platforms could undergo
significant structural change

14. CREATIVE
DESTRUCTION
• At some point, there will be innovation significant enough
to disrupt even some of the ICT hegemons today
• Remember Bill Gates’s arguments during the antitrust trial
and appeal in U.S. v. Microsoft Corp.

15. WHAT POWERED THE ICT
RECOVERY FROM THE
2008-9 DOWNTURN?
• An abbreviated list:
• AWS and other cloud services, lowering the cost of SaaS
entrepreneurship
• App stores, lowering the cost of distributing and marketing
many kinds of software
• The rise of social media, driving awareness, users and
engagement
• The rise to near ubiquity of smartphones through much of the
developed world and increasingly the developing world too
• Because of maturity and saturation, the same drivers are
unlikely to provide as much power to the next wave of tech
expansion

16. SOCIAL CHANGES
• Most severe periods of economic turmoil impart some
lasting social changes. What might they be this time?
• Will we see an increased value placed on:
• Physical sciences, health sciences, logistics, and
advanced manufacturing given their central roles in the
pandemic response?
• The need to have closer proximity to more of the supply
chain?
• The value or rapid, flexible manufacturing, and at least
some manufacturing engineering skill that isn’t half a world
away?

17. SOCIAL CHANGES
• Will there be:
• A boom or at least a boomlet in medical tech and biotech
because of the prominence of the heroes from those fields
who will have spared us from much worse pandemic
outcomes and prolongation?
• Seeing the appreciation for frontline workers now
• And to come, the enormous regard for the teams and
institutions that develop a vaccine, scale production,
distribute and administer billions of doses globally

18. SOCIAL CHANGES
• Significant spill-over effects from the technologies and
tools being rapidly developed and deployed for pandemic
response?
• Heightened concern for continuity, resilience of
operations, and disaster recovery for businesses,
institutions and government agencies?

19. PRODUCTIVITY AND DEBT
- MACRO ISSUES -

20. PRODUCTIVITY
Innovation Economics Reality:
• Without useful technological net change, per capita
productivity growth tends toward zero
• Corollary: When per capita growth has been declining, so
has net useful technological change, overall

21. PRODUCTIVITY
Source: https://www.imf.org/external/pubs/ft/fandd/2016/06/gordon.htm
2016: An inconvenient truth about the net impact of technology of late:

22. PRODUCTIVITY
• 2018: The latest data hasn’t gotten more encouraging for
the US economy, and technology’s overall role
Source: “Why Has Economic Growth Slowed When Innovation Appears to Be Accelerating”
https://www.nber.org/papers/w24554.pdf

23. THE DECLINE OF
MOORE’S LAW
One systemic factor to consider about ICT:
• Moore’s Law has been an exceptional engine of progress
since the 1960’s, much faster than any other input to
technological advancement
• However, it is slowing down, greatly
• The human mind is generally not well conditioned to
appreciating the prospective or retrospective impact of
strong exponential effects like Moore’s Law
• Optimized chip architectures and software will help (such
as GPU->AI/ML/DL) make up for some of the decline in
Moore’s Law, but in less general purpose ways that are
not as flexible to other uses

24. THE EARLY RETURNS ON AI
TO PICK-UP WHERE MOORE’S
IS SLOWING DOWN?
“Despite the hype, AI has had very little measurable effect on the
economy. Yes, people spend a lot of time on social media and playing
ultra-realistic video games. But does that boost or diminish
productivity?”
“Technology in general and AI in particular are supposed to be creating
a new New Economy, where algorithms and robots do … work for us,
increasing productivity…. The reality has been the opposite.”
“For decades, U.S. productivity grew by about 3% a year. Then, after
1970, it slowed to 1.5% a year, then 1%, now about 0.5%. Perhaps we are
spending too much time on our smartphones.”
“AI has great potential, but we are a long way from realizing that
potential.”
• Source: March, 2020, “STANFORD’S AI INDEX REPORT”
• https://mindmatters.ai/2020/03/stanfords-ai-index-report-how-much-is-bs/

25. WHERE IT SEEMS LIKELY AI WILL
GET PLAUDITS FOR ITS ROLE IN
THE PANDEMIC RESPONSE
• Processing large amounts of data to find candidate
treatments
• Helping deduce and sort strategies to reduce spread
• Optimizing treatment regimens for ill patients
• Automatically associating the torrent of scientific and
medical data to help scientists and medical practitioners
be able to navigate and stay on top of so many fast
breaking developments

26. DEBT
The other megaforce society now will have to respond to:
• We’re all in a giant debt experiment now
Apr. 13, 2020

27. DEBT
US debt, even before the massive additions to public and
private IOUs from the Coronavirus response

28. DEBT
• MMT aside, conventional economics would suggest that
the government will need to eventually pay down public
debt through taxes
• For that to happen without sapping growth, the economy
would need to become much more productive to be able
to generate those taxes in the years to come
• Especially if interest rates were to become greater than the
inflation rate
• With technology one of the big levers for productivity
growth, more of the same of what the technology industry
in aggregate has been doing for the past fifteen years
likely won’t get us there

29. DEBT
A decisive era may well be at hand between debt and
productivity:
• Technology and policy are big levers for the right kinds of
social and economic change
• The structural reality is that as a major engine of growth
and advancement, the technology sector needs to shift to
applications that lift productivity and sustainable
consumption for much wider swaths of society

30. TACTICAL
CONSIDERATION #4
• Background:
• The portions of the economy more heavily stabilized by
government intervention during the pandemic are expected
to undergo less technological and structural change in the
early recovery period

31. TACTICAL
CONSIDERATION #4
• Opportunity: More disrupted sectors are likely to undergo
more significant technological and social change as the
recovery takes hold
• The more transformed areas will be relatively receptive to
fundamental discoveries, insights, inventions and innovations
• Working definition of a true invention:
• One that astounds even experts in the field
• And for useful change:
• As much about getting cost down, reliability and resiliency up,
as creating net new functionality
• There will be significant assets mothballed and underutilized
as a result of the recession which will create opportunities for
new business ideas to get a fast, low cost start

32. ROBOTICS AND
AUTONOMY
• History suggests a periods of labor market disruption like
we’re undergoing now, plus the impact and heightened
consciousness about social distancing, will drive rapid,
sustained increases in robotics, automation and
autonomous agents
• There should be (and there are strong early signals
portending) a significant increase in demand for robotics
and automation in many sectors as a result of the
pandemic
• Businesses and governments seeking greater capacity to
operate through difficult public health and workforce
restriction circumstances
• Using robotics and autonomous agents to re-shore
activities cost-competitively that had gone abroad

33. ROBOTICS AND
AUTONOMY
• What typically gets partially forgotten during major surges
in automation adoption:
• Facilitating the human and technical shift of the remaining
work, which becomes higher value if done right, but can
easily end up more like a race to the bottom of lower value
dross for humans if done poorly, leading to worker
backlash

34. ROBOTICS AND
AUTONOMY
• System-level adaptations to achieve full impact and
sustained value from the introduction of automation are
different between the early onset of adoption and the
mainstream
• Backing the engine of progress up to the legacy train of
cars is the way to get early adoption
• But, to go mainstream, getting full potential from far
reaching robotics and automation requires system- and
network-level optimizations of layouts, workflows, and HMI
• Judicious human-in-the-loop and human-on-the-loop
strategies provide a lot of flexibility to adjust to
circumstances, while still maximizing the penetration and
output of robotics and autonomy

35. ROBOTICS AND
AUTONOMY
• These lessons about automation adoption have gone
through several cycles of discovery, partial forgetting an
rediscovery since they were first authoritatively captured
in the late 1940’s and early 1950’s

36. ROBOTICS AND
AUTONOMY
Today:
“Recent history shows that key advances in workplace robotics –
those that radically increase productivity – depend on breakthroughs
in work design that often take years or even decades to achieve.
Using robots effectively will require redesigning how work is
accomplished to harness the strengths of the new technologies while
circumventing their current limitations.”
– David Autor et al, MIT, “The Work of the Future” Fall, 2019

37. TACTICAL
CONSIDERATION #5
• There will be enhanced opportunities ahead for
technologies, products and services to help the transition
and adaptation at scale of legacy workforces, commerce
and industry to prosperously co-exist with widespread,
sustained deployment of robotics and autonomous agents

38. TACTICAL
CONSIDERATION #6
• At both a micro and macro level, pandemic preparedness
is likely to stay a high priority
• Company governance
• Public leadership
• Individuals
• Public awareness that pandemics are more like a 1-in-20
year probability event, rather than the prior perception for
many that they were more like once a century
occurrences, will likely stay with people for a long time to
come
• Planning, priorities, spending and investment decisions will
shift to ongoing pandemic and public health incident
readiness

39. TACTICAL
CONSIDERATION #7
• The tangibility and severity of the consequences of the
pandemic as an erstwhile background threat may give
society a heightened sense of vulnerability and
willingness to better work to forestall or prepare for other
long known but either slowly changing potentialities, or
those perceived as lower probability
• Environmental protection
• Global warming
• + others

40. TACTICAL
OPPORTUNITY #8
• The economy in developed nations avoided even more
severe consequences from the pandemic because of the
ability to disburse much white collar work to virtual
interaction
• With ever greater reliance on rich communication and
information exchange at a distance, the importance of
high bandwith, high reliability networks as well as
cybersecurity will continue to go up and up, with no end in
sight

41. AUGMENTED REALITY
• The ability to collaborate and remotely engage co-workers
and experts immersively will be further catalyzed for
enterprise applications for AR and XR
• Set aside some of the early turmoil and false starts in AR
• Microsoft had likely shipped close to 400,000 Hololens AR
headsets by end of Q1/CY’20
• Even a start-up like RealWear had likely shipped close to
50,000 units of its headsets by the same point
• Add Google, Vuzix, Epson, and others among the
enterprise headset producers, and this industry is getting
very real

42. AUGMENTED REALITY
• The ecosystem opportunities around these and similar AR
products will be a significant growth engine, and likely for
a sustained period of time
Image Credits: RealWear, Honeywell, Microsoft

43. POSSIBLE SOCIAL AND
ECONOMIC CHANGES
• Will some of the lustre come off of the trend toward
urbanization, after large numbers of people have had to
shelter-in-place in small dwellings?
• Will the forced screen time of work, play and socialization
during the pandemic get some people to lastingly bend
back the curve of screen time growth once social
distancing can be relaxed?
• Will the financial and public health trauma of the pandemic
in the developing world cause a lasting shift in the
willingness to place increased importance on more
inclusive growth and development?

44. POSSIBLE SOCIAL AND
ECONOMIC CHANGES
• In helping meet the challenge of the pandemic, will the
positive impact of healthcare tech, biotechnology, remote
work, and logistics sustain new prominence for these
fields, the technologies and research that drive them
forward?
• Greater movement on the ability to improve quality while
lowering cost of some types of healthcare through remote
diagnosis, monitoring and telehealth?
• Creating more flexibility and certain types of capacity in
healthcare?

45. POSSIBLE SOCIAL AND
ECONOMIC CHANGES
• Permanent shifts in aspects of education?
• Ditto for e-commerce and retail?
• Will there be an appetite for a new grand bargain between
production, consumption, transportation, health, and
technology reflecting changed societal values and mores?

46. POSSIBLE SOCIAL AND
ECONOMIC CHANGES
• A renewed appreciation from the speed and scale of this
global crisis for responsible, accurate, edited, fact-
checked news, journalism, and the 5th Estate overall?
• Shifting societal values about personal data as contact
tracing becomes widely implemented to control follow-on
infections as the economy reopens, prior to having a
vaccine?

47. POSSIBLE SOCIAL AND
ECONOMIC CHANGES
• New thinking about lean value in design and regulation,
given the commendable rapid response demonstration
proof in industry, biotech and medicine brought on by the
manifold demands of the pandemic?
• The value of flexibility and agility in platforms, processes,
workflows, supply and demand chains?
• Rather than relying as much on optimization under a
narrower set of business and global conditions

48. • The importance of science to move our
society forward, and the imperative of
doing science well with a transparent
contest of ideas when we need it most?
• A return to appreciation for fundamental
research to open up new tools and
avenues to meet the needs of the global
community?
POSSIBLE SOCIAL AND
ECONOMIC CHANGES

49. REVERSION TO INCLUSIVE,
WIDESPREAD PROSPERITY AND
GROWTH?
Possible endeavors to get back to more widespread growth
drivers through technology and industry:
• Grid scale energy storage, to further renewable energy
sources
• Safer, carbon-free base load energy
• Cleaner, faster, more reliable transportation

50. REVERSION TO INCLUSIVE,
WIDESPREAD PROSPERITY AND
GROWTH?
• Carbon sequestration, curbing carbon emissions, and
other means of reducing global warming
• Other forms of environmental protection and remediation
• Institutions and technologies to help meet the needs of
the developing world
• Technologies and business models that don’t rely on user
and consumer manipulation, ever thinner slices of
attention, and even overtones of addiction
• Global public health preparedness and fast reaction
capacity at scale

51. RAPID ACTION
VALUE DELIVERY AND
PRODUCT PLANNING
TECHNIQUES

52. OLD VS. NEW
• Blueprint the main use paths and use cases of your
technology, platform and service delivery
• Compare the pre-pandemic ways users interacted, vs.
some of the more likely ways they may want to interact to
achieve maximum value and utility in plausible future
economic and social settings

53. OLD VS. NEW
• Alternatively, look at your high frequency use cases and
high value corner cases, and understand how they may
best adapt under likely future usage scenarios
• The flow of users in, steady state usage, and movement
out of product will all undergo change, and each mode will
serve as a source of evolving insight to the best form of
product and companion services in the future

54. • Even if aspects of your technology stack isn’t
perfectly suited to some future likelihoods in a
period of high speed change, competing on
information, decision speed, and execution
within the business counts for a lot
• This comes down to furthering organizational
capability:
• Competitively superior external and internal
situational awareness
• The ability to contextualize what is happening
• Rapid decision making
• Crisp execution
• Faster ongoing iterative cycles of action than
competitors through this cycle can overcome a
great deal over time
COMPETING ON TIME

55. CATALYTIC QUESTION
• Ask:
• What systemic embedded assumptions about society,
technology and innovation during the boom years likely
neglected or delayed more significant and impactful
technology and applications within your business’
technological and managerial reach that will now come to
the fore as superior opportunities?
“You wanted flying cars, you got 140 characters.” – Peter Thiel, 2013

56. WHAT MAY NEED TO
CHANGE
• Some vested interests, reciprocity networks and partners
• Obsolete ideologies and deeply held beliefs, despite their
contribution to past success
• Routines, habits and organizational models
• Management and staff skills, tools, training and practices
• In some cases, even culture, mission and values
The hardest things to change are the ones that contributed to
past success, but are now of diminished significance,
obsolete or even counterproductive in the new
circumstances to which the business now needs to adapt in
order to rapidly continue moving ahead

57. FOLLOW-UP
To further discuss charting the road ahead through the
economic recovery in rapidly scaling technology businesses:
dave.litwiller@communitech.ca