The coronavirus outbreak provides a once in a lifetime opportunity for all of us to learn something that we always wonder but is too hard, too unethical or too costly to design a scientific study for: How entrepreneurship works?
- We have been closer than any other time to the “moment of truth” about entrepreneurship and innovations during the pandemic, mostly because they have never mattered so much. During normal times, the nature of entrepreneurship and innovations is, to most lay people at least, similar to a pastime — nice yet not essential to know. Now they become a matter of life and death (think of using a ventilator and face mas to save someone)! The stakes are so high that our understanding of innovations suddenly becomes a part of international competition against the deadly virus. Here is a real life example where ordinary citizens forming an unsung heroes’ parade from his residents for his innovation of a new ventilator that can serve seven patients simultaneously.
- The pandemic is essentially a natural experiment where the “treatment” vs. “control” groups /conditions are determined by nature rather than by our random assignment. More accurately, since this pandemic impacts all countries, the difference is in the time of exposures: Some countries have outbreaks earlier than others. The latter would serve as the natural control group for the former.
- Based on this still incomplete summary piece of news from InterestingEngineering.com, also this one from BBC, the leaders or winners of innovations are clearly concentrated in developed economies, which lent support to my previous idea that from a globally humanistic perspective it is fortunate for the outbreak to hit some richest countries early on. It is absolutely right to argue that given the current administration’s mindset, not all rich countries would assist the weak and small countries later on. My counter argument is that politicians do not have full control over what firms do in a mature market economy, and once firms invest heavily into developing solutions to the pandemic, they would be incentivized to apply their solutions to more markets, because doing so will bring a decreasing marginal opportunity cost.
- My favorite innovation is this one by UK researchers that actively traps and kills germs. I wish they went one step further and get rid of mask shape altogether. Let’s face it, face masks, no matter how breathable by design, are always a nuisance because they block up your face like a Halloween mask. Especially when the temperature gets higher, very few would really love to put it on. So if we could design something that does not require covering more than half of the face, like something we can put next to nose and mouth, that would be a real breakthrough!
- But I also listed China as a part of the “good news” for being the earliest one affected. Unfortunately this only has mixed supporting evidences. Although China has been conducting its own research on the vaccines, using big data and drones to send materials to the lockdown areas or places, it has been weak in other smaller, spontaneously conducted innovations.
- Worse still, some Chinese are doing what they do best: Faking innovations for quick profits. As this report (in Chinese) shows, the meltblown cloth, the most crucial material for making face masks, has had a sky high jump in price as the demand for masks hit a record. There are many underground or illegal factories located in small towns producing the cloth that can only filter less than 50% of the germ. These crooks used disqualified raw materials, made up fake quality certificates, fabricated positive testing results, and added a huge price markup downstream to the retailers. I should have foreseen these to come!
- Does the pandemic prove that Aristotle was right that “And yet the true creator is necessity, which is the mother of innovation”? Not necessarily. It oversimplified the matter and reduced innovation to the demand side only. The same holds for other proverbs like “Necessity is the mother of taking chances” by Mark Twain. Of course, if you define “necessity” as Abraham Maslow did, to include everything from “physiological” all the way to “self-actualization”, then the idea is closer to the truth.
- The problem with a strictly psychological interpretation of necessity is that it tends to be individual based when innovations often driven by social forces just as well.
- Necessity should not be brushed away of course, as proven by this piece about a small Texas hospital using a reusable elastomeric masks that save money in the long run with an even higher rate (virtually 100% versus only 95% by the N95) of killing germs. This better mask is hardly a “new to the world” innovation, as the report says it has been in existence for a long time (not sure when it was invented exactly but that Texas small hospital has been using the same type of masks since 1995, and Honeywell produces them). Without this pandemic, however, it is safe to say that these masks would not achieve a newsworthy, celebrity like status as they are today. Again, demand shifts and fluctuate over time, which should not surprise too many people. In this real life case, the same innovation just went from meeting a niche market to meeting a mass market.
- Then we come down to a big question of what entrepreneurship and innovations are. Reading the many interesting reports of real life innovations amid the pandemic has reminded me of my essay on entrepreneurship in 2018, which I have not been thinking of until now. I proposed there that all entrepreneurial projects, all innovations contain objectivity and subjectivity components, not to be marked up as pure “objective” and “subjective” like some philosophers have labeled. What has the pandemic told us on this?
- This pandemic could have a pure natural origin, in which case the objectivity component would be high. However, this does not prove that ontologically objective or subjective is determined entirely by the origin of the entity, because human subjectivity kicks in, largely controlling how fast the virus spreads among people across different countries. Otherwise we would have seen a uniform rate of contamination throughout the world.
- But if the virus was originated from human lab (or labs) as some are arguing, the subjectivity component prevails in its origin. However, once created by human, the virus has gained its own life, otherwise those who created the virus could have easily contained it and no ravage or damage would be possible.
- The other points in the essay, that constraints are intolerable limitations against entrepreneurs’ insatiable desires for positive changes; that entrepreneurship is continuous efforts to reduce/remove existing constraints; that entrepreneurs are the leaders in lifting constraints, and that entrepreneurial opportunities are constraint-lifting possibilities, still apply for this pandemic and can help us understand the latest innovations that are in front of our naked eyes.