Saying this is business as usual would be the understatement of the year. Yet this season of change might result in the biggest surge of innovation in generations! We are currently reevaluating everything. What does it mean to educate our children? What does work look like? How do we survive and maybe even thrive in this uncertain environment?

We need entrepreneurship today more than ever. According to the French economist Jean-Baptiste Say, “The entrepreneur shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.”[1] After all, the decisions we make today could not only mean the survival of our companies but also the life or death of ourselves, our friends, our family, and our community. Hopefully the fear and panic will subside, and we’ll begin to work together to lift each other up.

In general, people are resistant to change. However, entrepreneurs often see things differently. They resist the status quo. They thrive in looking into the future and seeing things others do not. As Peter F. Drucker wisely said, “Entrepreneurship rests on a theory of economy and society. The theory sees change as normal and indeed healthy.”[2] Yet the change that we are currently experiencing no one would consider healthy. The catalyst is a deadly virus that is changing the rhythm of our lives and for some it has mortal impacts. Don’t get me wrong, I am not happy for this disruption. In fact, I have many people in my life who are on the front lines fighting it to protect the weakest among us. However, not all of us have the skills or abilities to be a first responder or heath care worker. Instead, some of us focus on innovation and entrepreneurship.

In my opinion, COVID-19 represents both significant danger and significant opportunity. I am not an expert in the pathology of a pandemic (I’ll leave that to the medical experts) instead my focus is on the economic impacts. While not specifically on this topic I think the words of Dr. DePamphilis explain it best. He said, “Those who focus on the short-term are likely to believe that uncertainty is greater today than ever before. Those who focus on the longer-term are more likely to recognize the bigger picture and to identify significant emerging trends. While focus on the longer-term does not ensure success it does increase the chances of realizing one’s goals.”[3] What can we do to in both the short and long term to accomplish our goals? Drucker said, “the entrepreneur always searches for change, responds to it, and exploits it as an opportunity”.[4] Today, we don’t need to search for change. It has been forced upon us. So how do we respond? Do we try to maintain as closely as we can to business as usual or should we use it as an opportunity to adapt, innovate, and grow in the midst of crisis? I believe this is the time to innovate!

Once again back to Drucker. He wrote, “Systematic innovation means monitoring the seven sources of innovative opportunity. The first four lie within the enterprise, whether business or public service institutions, or within an industry or service sector. They are therefore visible primarily to people within the industry or service sector. They are basically symptoms. But they are highly reliable indicators of change that have already happened or can be made to happen with little effort. These four sources are:

The unexpected – The unexpected success. The unexpected failure. The unexpected outside event.
The incongruity – between the reality as it actually is and the reality as it is assumed to be or as it “out to be”.
Innovation based on process need
Changes in industry structure or market structure that catch everyone unaware.

The second set of sources for innovative opportunity, a set of three, involves the changes outside the enterprise or industry.

Demographics (population changes)
Changes in perception, mood, and meaning.
New knowledge, both scientific and nonscientific.”[5]

How many of these apply today? I believe all seven are relevant. If you think about your business with these sources of innovation how many ideas can you come up with today that you never would have thought of two months ago? That’s all well and good but how do we pay for it? Do we have the resources to implement these strategies? Yes, I think those ideas that have merit will continue to get funding. In fact, we may actually see an increase in velocity in VC and M&A transactions based on the catalyst of COVID-19. New ideas will be funded. Additionally, for better or worse, weak companies will become acquisition targets for the stronger among us.

I recently asked Mike Brown, a partner at DLA Piper, about the potential change in VC velocity. Mike said, “There is a lot of money on the sidelines as it is. I think those investing capital will be more patient. I think they will also preserve capital to support their portfolio companies that may find it harder to find new investors. I am hopeful that this is short lived (e.g. 6 months or less) and we are back to the races, but it is wise for companies to plan conservatively from a cash/financing perspective.”[6] Depending on the length and breadth of this crisis we’ll likely see an increase in deals, but they’ll be of different types than what was expected for 2020. For example, we could see a decrease in IPOs but an increase in M&A if consolidation occurs. New companies might have a hard time getting funding, but established companies might receive resources to pivot and/or extend their runways beyond the period of crisis.

How can we be innovative in practical ways that are focused on empathy not exploitation? Two recent examples come to mind. One from a multi-billion-dollar tech company and the other at a small consulting firm focused on AV solutions.

The best response I’ve seen from any tech company CEO was from Jack Dangermond of ESRI. He quickly reached out to his customers and provided resources such as, “Five Steps to Understanding the Potential COVID-19 Impact on Your Organization or Community”[7] Additionally, he offered no cost resources and free six-month licenses for COVID-19 use cases. Jack saw an innovative way to use their existing technology and offered it to the world for free. It didn’t hurt that they had already spent time building hubs and cultivating communities with the help of former team members such as Kurt Daradics (Co-Founder of CitySourced).

Another example is from Kung Pow Productions who quickly published a resource titled, “Live Streaming, Virtual Gatherings and You”[8]. Darrell Smith saw major change in the process needs of organizations that previously would connect only using in person gatherings. Today, these same people are now scrambling to find ways to maintain connection to their displaced communities. This impacts entertainment, trade shows, governmental, and religious entities who depend on in person events. His response was not to pitch his services but rather to provide an educational resource, with empathy, teaching them how to easily do live streaming (at all levels) from a bootstrap budget to professional quality scalable broadcasts.

Many times, the sources of change are difficult to see. However, it might become more obvious in this season of COVID-19. How can you use your creativity to benefit not only yourselves but the greater good? Let’s go innovate!

[1] Hindle, T. (2012). Economist guide to management ideas and gurus. Profile Books Ltd.

[2] Drucker, P. F. (1985, p. 26). Innovation and Entrepreneurship. Holanda: Butterworth-Heinemann.

[3] DePamphilis, D. (2019). Mergers, Acquisitions, and Other Restructuring Activities: An Integrated Approach to Process, Tools, Cases, and Solutions. Netherlands: Elsevier Science.

[4] Drucker, P. F. (1985, p. 28). Innovation and Entrepreneurship. Holanda: Butterworth-Heinemann.

[5] Drucker, P. F. (1985, p. 35). Innovation and Entrepreneurship. Holanda: Butterworth-Heinemann.

[6] Brown, Michael. Comment on post about the CrunchBase article “Here’s What One VC is Warning His Portfolio Companies About as Coronavirus Spreads” LinkedIn, March 2020, https://www.linkedin.com/posts/mobley_heres-what-one-vc-is-warning-his-portfolio-activity-6643959480608526337-aN4l. Accessed 18 March 2020.

[7] Jack Dangermond (2020), COVID-19 Resources for Esri Customers, https://go.esri.com/webmail/82202/734090412/69d9adc8038f326983795bf89f537fec54fab9512a36f695aa2071b40d17c50e

[8] Darrell Smith (2020), Live Streaming 101 – Getting Online, https://www.kungpowpro.com/live-streaming-101-getting-online/