Necessity – The Mother of Invention

Friday Reflection | November 20, 2020

Necessity – the Mother of Invention

Words like “new normal” and “social distancing” have been thrust into our daily lexicon as people worldwide acclimate to the adaptations this pandemic has provoked. Wearing a mask in public or meeting via Zoom is now common and universal, despite being foreign to many Americans only a few months ago. While we retain optimism that next year’s holiday season will allow safer communal gatherings, the reality is that many newly adapted behaviors and social norms are unlikely to disappear even if we vanquish the virus. As these norms become incorporated into daily routines, businesses commit more capital to adapt their processes and products, further reinforcing new consumer behaviors.

This week the US stock market was relatively unchanged as it digested positive vaccine news from Pfizer and Moderna that contrasted with news of rapidly rising coronavirus cases in all corners of the country. This Thursday, the US reported its highest ever daily total of 192,186 new cases, surpassing last Friday’s total of 188,099.¹ Hospitalizations hit another record high, unemployment claims continue to be filed at historically high levels, and Treasury Secretary Mnuchin is letting multiple emergency lending programs expire on December 31 without a new stimulus package to offer in their place.² The vaccine provides hope for the resumption of robust economic activity, but the market and the country will need to navigate a hard winter before the distribution process is functionally underway.

Both personal and business adaptation has already begun. Schools may continue remote capability for students in immunocompromised households, and businesses will seek to improve the experience of virtual meetings and presentations. As a result, we expect significant innovation and improvement to video conferencing in the coming years. Surprisingly, it isn’t always the incumbent who ultimately succeeds – Skype had over a decade head start on video conferencing, and yet it was newer services Zoom, GoToMeeting, and Google Meet that leapt forward when the pandemic hit.

As schools, businesses, and social gatherings keep one foot in the virtual realm, new providers or add-on tools will emerge. Schools are strained for instructional resources after allocating more to safety and sanitation logistics, not to mention the seesaw of openings and closings, so the demand for private tutoring services has skyrocketed. This is a boon for digital education companies that provide infrastructure to support homeschooling and supplemental remote learning. This change is likely to accelerate in the coming years as more families embrace remote learning after being forced to test drive it this year.

Possibly the most significant innovation of the year has been the advancement in vaccine development. The approximately nine-month timeline from the pandemic onset to the development of two separate 95% successful vaccines is a remarkable accomplishment. Both current vaccines utilize a novel messenger RNA approach, which has been studied for years but never before used for large-scale vaccines. This advancement could save millions of lives, but it also introduces new challenges – and business opportunities. These vaccines require extra cold storage. The Pfizer vaccine requires -94 degrees Fahrenheit, well below the average 36 degrees required for most vaccines, and far colder than a regular freezer temperature of 0 degrees.³ States and hospital systems across the US have started panic-buying ultra-low temperature freezers capable of storing Pfizer’s coronavirus vaccine. More companies will form or pivot to support cold storage, transportation, and delivery logistics in the coming months, creating new jobs to meet demand. Necessity has accelerated innovation, and thus expanded the space for growth in the economy.

At a smaller scale than vaccine research, individuals are reinventing their own careers – often as sole proprietors. Census Bureau data shows that applications by solo entrepreneurs surged 32% in the first nine months of 2020 from a year earlier.⁴ Many of these are setting up tiny businesses to work as traveling hair stylists, in-home personal trainers, boutique mask designers, and chefs. The adaptation will be temporary for some, a bridge until steady full-time work returns, but for others, this will be a permanent shift.

The same is true for our individual lives: some adaptations will evaporate post-pandemic, but others will remain. People are drawing on skills built in the first half of the year to handle the sudden return of stay at home directives; it is less stressful than the first time around when it was completely new. We have gotten our older generations onto Zoom. We know how to get groceries delivered, how to get work accomplished in a corner of our home, and how to support kids who need to log on for remote schooling.

Progress is being made by necessity, and what was the “new normal” for businesses and individuals is gradually becoming, well, normal.

We will not be publishing our regular Friday Reflection next week in recognition of the Thanksgiving holiday. Enjoy whatever your version of Thanksgiving looks like this year – have some fun, and stay safe!

¹ Worldometers coronavirus tracking.

³ Mnuchin Declines to Extend Several Fed Emergency Lending Programs. By Nick Timiraos and Kate Davidson. WSJ

³ Hospitals around the US are panic buying hyper-cold freezers in anticipation of Pfizer’s coronavirus vaccine. By Bethany Biron. Business Insider

⁴ In the Covid Economy, Laid-Off Employees Become New Entrepreneurs. By Kim Mackrael WSJ