Navigating opportunities for innovation and entrepreneurship under COVID-19

The outbreak and rapid spread of COVID-19 has disrupted lives, communities, and economies worldwide, with more than 6.7 million people testing positive and a death toll of nearly 400,000 globally. While COVID-19 prevails, its impact on businesses keeps increasing. Many businesses, from brick and mortar grocery stores to global corporations, were hit hard by the pandemic, and some have already been forced into insolvency.

The reality is harsh: customers stopped or postponed purchases or purchased less than before. In other cases, the supply chain simply collapsed, and it has been extremely difficult to source alternative suppliers. No demand, no supply—a huge challenge for businesses worldwide. That is why many countries in the world, including the US, China, and many European countries, are keen to reopen their economies and get the engine of business gradually running again.

However, we should see a bright side: as organizational theorist James G. March has long pointed out, crisis is one of the fundamental motivations for innovation. Under a crisis like COVID-19, a firm’s survival and success are no longer a matter of improving its effectiveness and efficiency; instead, survival rests on the firm’s ability to define strategies and develop capabilities to navigate new opportunities to innovate.

Perhaps the only way of escaping or minimizing the negative impact of COVID-19 on our businesses is to pursue innovation and entrepreneurship. Business leaders are frequently inspired by anecdotal cases in the media about how role models of innovative firms have managed to grasp new market opportunities, combined with old or new technologies.

Yet nowhere is there a comprehensive framework that can guide business leaders to navigate opportunities for innovation and entrepreneurship, develop relevant capabilities, and deploy tactics to take advantage of a situation like the COVID-19 pandemic. As a result, they often are driven only by short-sighted emerging opportunities.

In this short piece, we suggest a framework that includes four possible scenarios in which companies can explore opportunities for innovation and entrepreneurship. While examples are given for each scenario, a company can pursue multiple paths. We also make suggestions regarding the development of capabilities and tactics relevant to each scenario.