Innovation in Times of Crisis: Q&A with Economist & Author Joshua Gans

Digital Transformation - October 22 2020

Joshua Gans is a Professor of Strategic Management and the Jeffrey S. Skoll Chair of Technical Innovation and Entrepreneurship at the Rotman School of Management, University of Toronto. He is also Chief Economist of the University of Toronto's Creative Destruction Lab. Gans is the author of numerous books on digitization, disruption, artificial intelligence, innovation, and even parenting. His most recent book is The Pandemic Information Gap: The Brutal Economics of COVID-19 set to be published next month. We caught up with Joshua Gans to ask a few questions about the ongoing economic impacts of COVID-19 and how technology and innovation may hold the key to protecting ourselves from future pandemics.

Joshua, in your book Economics in the Age of COVID-19 (MIT Press, 2020), you argue that once the coronavirus is contained, we will need to innovate together to protect ourselves from future pandemics. Can you talk a bit about the correlation between innovation and resiliency?

Innovation is needed in order to find solutions hopefully prior to pandemics actually occurring. This is why I think innovation is a key part of what will drive resiliency and our ability, when future crises occur, to deal with them quickly and economically. What we failed to do this time is any of that. We weren’t sufficiently prepared. And we didn’t engage in the sort of international coordination that was needed to manage this entire crisis. This is because the solutions scale, but up until this point we haven’t taken advantage of that.

There’s a lot of speculation about the return to some kind of normalcy in the economy, and when and what that new normal might look like. So much remains uncertain, but can I ask you to look beyond the short-term chaos, and venture a guess as to what the economy might look like in, say, 12 to 18 months from now?

This is an impossible question to answer. Put simply, we just don't know what the next 12 to 18 months will look like. It could be that we get our act together and we’re able to suppress the virus. There’s some hope in that – some countries have actually achieved this. But it is also equally likely that we would be in a situation where the virus is continuing. We just do not know if a vaccine is possible and whether we can deliver it in any reasonable time. This means that we have to prepare for a long outcome and continued management of this virus.

In your book Prediction Machines, which we reviewed here, you wrote about the simple economics of artificial intelligence. Given the current economic climate and the coronavirus, do you think the adoption of AI will be delayed or will it proceed full speed ahead?

I don't actually think that the current crisis will have much of an impact on artificial intelligence one way or the other. This is because this is a major and radical innovation with so many applications that we’ve only just started to explore. There has been talk that the crisis, because it makes people more expensive to be workers, might stimulate automation and things like that. However, that is still just speculation. I think there are many artificial intelligence applications still to be done, and I think it will proceed full speed ahead, the current crisis notwithstanding.

Large, established organizations have certain advantages when it comes to weathering economic crises, and it doesn’t get more established than the insurance industry. Do established organizations have much to fear from the pandemic, or will they survive this crisis just as they have many others before? Put another way, is the pandemic truly an “unprecedented” economic event as we hear time and time again?

The pandemic has been great for large businesses. This is because those businesses have had the resources to be able to undertake some of the actions needed in order to get back to work quickly. Smaller businesses, and start-ups in particular, don’t necessarily have that advantage, depending on where they are in their lifecycle. So, the pandemic is an unprecedented economic event – it is the sort of thing that will be talked about in textbooks and history textbooks for many years to come. But, when you are living history, it is very hard to see what the outcome of that history will be. So, we just don't know.

In the insurance industry, we’ve increasingly seen established insurance companies partnering with small, nimble technology start-ups. The Insurtech movement has been a driver of digital transformation and innovation in insurance. You work with and advise start-ups in your role as Chief Economist at the Creative Destruction Lab. How has COVID-19 impacted the Start-up ecosystem, and innovation more broadly?

The pandemic has had different impacts on different parts of the start-up arena. On the one hand, we’ve actually seen unprecedented innovation through CDL Recovery in trying to find solutions for people right now. On the other hand, any economic recession or depression, as we've had, tends to put a tight rein on financing. I’m still hopeful that it will be temporary. But for many start-ups, especially ones that are just a couple of years into their cycle and have some established customers, the pause that might have been driven by the pandemic is an opportunity to do some of the things that were previously off the table because, in the start-up life, you just didn’t have time for it. So, there is this optimistic hypothesis that some start-ups will come out of the crisis more resilient, having explored new options for their own products that are more viable for the long term than some of the short-sighted actions that need to be taken in the hurly-burly of start-up life.


 

JoshgansJoshua Gans is a Professor of Strategic Management and the Jeffrey S. Skoll Chair of Technical Innovation and Entrepreneurship at the Rotman School of Management, University of Toronto. He is also Chief Economist of the University of Toronto's Creative Destruction LabJoshua is the author of numerous books on digitization, disruption, artificial intelligence, innovation, and even parenting. His most recent book is Economics in the Age of COVID-19 (MIT Press 2020). A second expanded edition titled The Pandemic Information Gap: The Brutal Economics for COVID-19 is forthcoming in November 2020. Joshua is co-author of Innovation + Equality (MIT Press 2019) and Prediction Machines (Harvard Business Review Press 2018). He holds a Ph.D. from Stanford University and an honors degree in economics from the University of Queensland.

Browse different topics

Recent Posts