In the light of Corona – Part 1: An ongoing disruption

In medicine, doctors use coloured marker substances injected into the blood stream to better visualize the intricate vein systems in seeking out clots and other abnormalities. The current corona virus epidemic functions in a similar manner in illustrating the intricate connections and complexities of our contemporary global village.

By now it’s abundantly clear to everyone that the systemic effects of both the corona virus and the actions taken to diminish its impacts on human lives are immensely disruptive. Therefore, we at the Laboratory of Business Disruption Research are launching a blog series where we are trying to make sense of the unfolding crises, also documenting our personal reflections as individuals caught up in the torrent of uncontrollable events.

The anatomy of a disruption

The way we see a disruption, it consists, very simply put, of three elements:

  • Trajectories. This means the everyday inching forward, the incremental developments we are so used to that we take them as stability. There are both macrolevel trajectories like globalization or digitalization, and meso and micro level trajectories like adoption of specific technologies or the diffusion of socio-political ideas and trends.
  • Trigger. Like in a gun, a triggering event, novelty or action puts things in motion. It makes it impossible for the trajectories to continue their inching forward, creating a discontinuity, a momentum of change
  • Response(s). Where the trigger makes change inevitable, it is the reactions to the mandatory change that shape the new direction of the trajectories. Sometimes they speed up exponentially, sometimes ground to a halt or vanish altogether, and sometimes they veer to unprecedented directions.

The trajectories need to be in a certain position for the trigger to have a triggering effect. Often the triggers also emerge as certain trajectories converge – it is rare for them to materialize from thin air, no matter how unexpected they may at first glance seem. But ultimately it is the responses to the enforced change that ultimately mold anew the trajectories in a way where the ones dependent on the previous shape of the trajectories are disrupted.

Corona virus is a trigger that both builds on a set of underlying trajectories, and changes their direction exponentially. Few of the evident trajectories on the very macro level that have facilitated the corona disruption are globalization, technological advances that facilitate the flow of immaterial and material stuff (including people), and increasing (urban) human population that keeps conquering surface from other species. The corona disruption will affect all of these trajectories – but towards what direction, and how, is still unclear.

Two example trajectories

The interconnectedness of international business is an evident trajectory. Known as globalization, it refers to the amount of material, human, monetary and data flows that cross the globe in a constellation which is assumed to provide the most (cost-)efficient way of producing the offerings of a firm. This trajectory was taken for granted a mere decade ago, but the dark sides of it have been increasingly discussed and currently there are notable political viewpoints that question its desirability: take Trump, Brexit or the True Finns as an example. The position of the globalization trajectory is at the same time strong (everything is connected), but its desirability is increasingly being questioned.

It is possible that the corona virus outbreak acts as a trigger that has a notable impact in strengthening the voices that call for dismantling the global interconnectedness. It is also possible that the very opposite movement occurs. Corona merely triggered disruptive change. The way we now act when change is mandatory will determine the future direction of globalization, the winners and losers of this disruption.

A lower level trajectory being positioned in a way that enables the corona virus trigger to potentially change itself is the adoption of algorithmic intelligence in the highly interconnected financial markets. A lot of trading in stock markets is undertaken by AI solutions programmed to maximize the short-term profits. AI excels in these types of trades as it can react faster than humans to the changes in the preprogrammed signals that mandate selling or buying. As we now see in the stock market movements, these algorithms are incapable of assessing the long-term performance of a given firm, but actually cause a snowball-type reactions in the markets in reacting to imminent scares instead of being able to reflect the long-term prospects of the firms the shares of which they sell. This of course has the potential to becoming a self-fulfilling prophecy: even if the firm would in itself have no problems in recovering the actual impacts of the corona virus, due to the unwarranted drop in its stock market value, it may well end up suffering seriously.

Firstly, this reminds about the vulnerabilities a company succumbs to when becoming listed as regardless of the genuine performance of the firm the very survival of the firm may be threatened – in other words, it points out the problems ensuing from decoupling the financial markets and the real economy. Secondly, it highlights the fundamental limits of artificial intelligence: even the most sophisticated machine learning algorithms can do only what they are told to do, and they continue doing it unless explicitly programmed to stop or change. The more AI, governed by different actors there is within a specific field, the more complicated it is to enact the requisite changes.

Again, we only know that something here will change. But what and where-to are dependent on the choices we now make.

Some take-aways (the future is what we make of it)

While the benefits of increasing interconnectedness and developing technologies have been welcomed with glee, the simultaneously increasing vulnerability due to loss of control has garnered less attention. We humans like to ground our actions on the perceptions of stability, and find security in the thought that it’s never me who gets hit by a car. We feel uncomfortable in envisioning apocalyptic scenarios of any scale, and instead enjoy consuming them as entertainment, safe in the assumption that nothing like that could never happen to me. Our actions are primarily aimed at maximizing the good and staving off the bad – which, of course, is healthy.

However, there are no free lunches. When we want to benefit from the increased interconnectedness or the advances of technology, we would also need to understand the potential problems they may evoke – and prepare for the moment when the pelican hits the fan.

Yes, when, like now, we are undergoing a very real crisis, thinking about what should have been done to prepare for it does little but irritate. However, as we are all now involved in the process of disentangling the pelican from the fan, there are two ways of going about it: we can either just tackle the incident as a freak accident, never to be repeated in our lifetime, and focus all our efforts into just getting rid of the morsels flying around. Or we can approach the situation as a learning opportunity, reflect our actions as we take them in a way that makes it easier in the future to deal with other crises, be they smaller or larger in scale and scope.

For now, it is time for ensuring survival, individual and collective health and well-being – primarily of human beings, and when that necessitates the survival and health of an organization, then also ensuring that. But as we are doing it, we are simultaneously taking the first steps towards our next normal, as we reassess our priorities and change our routines. What we do today to get us through to the other side has an impact on how the other side will then look like.

We all know that the ongoing disruption will change a lot – but the changes are not preordained. What we do today has an impact on the new direction of the trajectories. What we do today shapes the wake of corona disruption we will soon enough be retrospectively viewing.

Milla

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