COVID-19: The Digital Economy Change Agent ?

In the short term, we will solve COVID-19 from a healthcare point-of-view, but what will be the ultimate impact of COVID-19 in the longer term ?    

The concept of social distancing is forcibly driving significant change in very fundamental ways in many key areas of our lives. The places for disruption include education, work, shopping, health care, and entertainment. If this same event would have occurred 20 years ago,  there would have been no alternative to the baseline physical interaction model. However, today, each of these activities has a digital twin which offers a viable alternative. In most of these sectors, the digital model existed as a secular disruptive driver facing off against the entrenched status quo. 

Could this massive experiment in social distancing actually accelerate change towards a more productive economy ?   What will be the implications for infrastructure such as transportation ? Let’s take a look.

For education, COVID-19 enters in a time of transition and conflict between traditional classroom style education and online/blended education.  Of course, there is a big difference between fully produced online classes and a zoom meeting. As Michal Horne points out in  “COVID-19 Boost to Online Learning May Backfire,”  there is a danger in the premature, hasty, and unplanned move to online from a customer experience point-of-view.  However, the existence proof is that online education is happening. Twenty years ago, a forced closure of the physical school would have meant students not receiving an education. However, today, the vast majority of the US student population has been pushed online. It is amazing that this is even possible.

After transitioning from this current situation,  millions of students and parents who had never known any other model are now exposed to an alternative. For many, the alternative which provides more flexibility in terms of location and with concepts such as self-paced learning is going to be attractive. Also, even the most traditional school administrator must now account for “emergency” online operations.  Will snow days to shift to online in the future ?

In terms of work, there are certain jobs which require a physical presence. However, there are many professions where a remote or blended model of interaction is actually more efficient for the employee and lowers expenses for the employer. The usage of blended/remote models has been limited by the social inertia of the physical office model. The general expectation of work has always been you transition to an office.  From a management point-of-view, the tools, capabilities, and processes for managing a remote workforce are new and must be learned. In an instant, COVID-19 has forced a move to the remote model and a social glass barrier has been broken. After this crisis, some percentage of these situations will likely be more accepting of remote/blended work patterns, and some percentage of managers will have made the transition to a new skill set.

In terms of healthcare, telemedicine has been an emerging trend with positive characteristics in terms of access and efficiency. However, since it is a new paradigm, the reimbursement systems and patient interaction models have been lagging. COVID-19 has forced the reality of this move, so greatly increasing the pressure to break through these cobwebs.  Finally, entertainment and shopping were already moving towards a digitally sourced solution, and COVID-19 has accelerated these trends. 

Based on the above changes, transportation will be impacted as well. Some of the implications are:

1. Reduced Commuter Trips: With any reasonable reduction of school and work commuter traffic, the demand for transportation resources drops significantly. There is less need to own a car and less need to build more road capacity.
2. Increased Variable Trips:  Without commuter trips, on-demand variable capacity for transportation rises, so on-demand shared services models (Uber) become more valuable. They may also be favored relative to public transportation because of social distancing concerns, and the ability to deliver point-to-point. Interestingly, the demand for autonomous capability also rises in this context because it is a scalable way to deliver point-to-point without the concerns of social distancing.  
3. Reduced Real Estate:  Today, facing empty buildings, school administrators and corporate managers must be asking the question whether they are really required for their core missions. After all, buildings cannot teach, but are very expensive to build and maintain. Are office complexes and school campuses headed the way of malls ?
4. Increased Logistics Capacity: With the increasing shift to ecommerce, the need for point-to-point fast delivery logistics capacity rises. Interestingly, the efficiency of the system may rise because of reduced traffic from other sources. According to a report from the American Transportation Research Institute, the logistics system is showing unprecedented performance during this lock-down period. Also, the increased usage by commercial traffic increases the ability to use disruptive market based models such as mentioned in “Could Micro-tolling Be The Answer To The Gas Tax And Traffic Optimization?”

Overall, disruptive digital solutions have been the tectonic underlying secular drivers working their way through the economy. COVID-19 seems to have instantly shocked the system in a way which is likely to accelerate these trends.

Note: For those interested in learning more about disruptive education, it is worthwhile to follow Michael Horn’s Forbes Column, and there is a talk titled “Sir Ken Robinson was right about the symptom, now let’s talk” which may also be of interest.