How COVID-19 accelerated the rise of a new kind of company

COVID-19 accelerated corporate transformation processes. Today, any company that wants to succeed must transform and improve its digital environment and core.

Marco Iansiti and Karim Lakhani, professors at Harvard Business School, discuss how the pandemic created major opportunities for this new kind of company to emerge and evolve.

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Marco Iansiti: Okay, who is going to start this?

Karim R. Lakhani: You kick it off.

Marco Iansiti: The age of AI is really defined by the emergence of a different kind of company. That is a big deal, because it does not happen very often in business. Traditionally, we have built companies around individual, siloed units. You have a silo around marketing, another around product development, and another around manufacturing.

Silos are necessary to optimize people's work. But as a company starts incorporating digital technology, it gradually needs to be built differently.

Modern organizations are really built around a data-centered architecture that integrates data from different parts wherever possible. They then efficiently deploy technology based on that data to drive as many different processes as possible.

Karim R. Lakhani: Can I add something here?

Marco Iansiti: Yes, yes.

Karim R. Lakhani: What I would say is that the age of AI is not something distant that will happen in the future. It is happening now. It is happening to us today.

Even right now, if you are watching us on a website or on your mobile phone, this has been enabled by companies innovating directly in the age of AI.

The challenge for the rest of us is: how do we adapt? How do we change so that we can also compete with both the giants and the startups trying to make a difference?

We thought we had time. We thought many industries had time to adjust. Of course, now that is no longer an option.

Marco Iansiti: So the COVID pandemic changed pretty much everything. Suddenly, every company had to deal with this.

Overnight, to survive, all these restaurants went digital. They started working with Uber and every delivery service they could to get their products delivered. The entire restaurant experience became digital overnight.

Marco Iansiti: You know what, Karim? QR codes are everywhere in the United States.

Karim R. Lakhani: Exactly.

Marco Iansiti: Because nobody wants to go into restaurants. If you want to find out what is on the menu, you scan the QR code on the door and go to the website.

Karim R. Lakhani: I was so amazed by how quickly it happened. I think it was survival—a survival instinct. For us, this is the great accelerator.

Marco Iansiti: Look, it is very simple. If you walk down the street and see your local Chinese restaurant using QR codes for its menu, a multibillion-dollar company should be able to do it too.

People transformed. Literally overnight.

They integrated their data into this large data lake.

Essentially, this infrastructure would allow them to create predictive models very quickly around how many ventilators they might need and how many masks they needed or might need. All of that had to be predicted.

Karim R. Lakhani: This requires a degree of centralization around data.

You cannot have the cardiology unit's data separate from nephrology and disconnected from the emergency department.

You do not just want all the data. You want to be able to see it all and then predict where capacity will be needed. Where are patients expected to go?

Providing this organization-wide view, with data integration, analytics, and software at the core, is the big change.

Marco Iansiti: It is almost as though the pandemic was an accelerator for things people had wanted to do before. It required deploying certain systems that, along the way, redesigned how the organization actually worked.

Karim R. Lakhani: Another really great example we featured in the book is a company called Moderna.

The big “aha” moment for CEO Stéphane Bancel, around artificial intelligence and digitization, came when he walked into one of his scientists' offices.

The scientist was doing a complicated series of calculations, moving genes from one side to another. He had five screens around him and was essentially copying and pasting things from one Excel cell to another.

Bancel saw that as a nightmare, because in biotechnology, a copying-and-pasting error can set you back six or nine months if something is accidentally transposed or there is a careless mistake.

All of those processes had to be digitized and brought together.

This transformation also helped during the COVID pandemic. Within 42 days of the virus being sequenced, they were able to submit a vaccine application to the FDA.

They were still a startup with 1,200 employees, right? Competing to create a vaccine against large organizations in the pharmaceutical world.

Think about the scale of what they were able to achieve, the differences in processes, and the changes you can implement when digital data and analytics are at the center of your operations.