The new world disorder looks set to continue into the ’20s. And with no time to catch our breath, we must now turn our attention to a potential global economic downturn.
The weeks and months ahead will bring anxious calls to batten down the hatches and conserve resources while thrifty leaders sharpen the cost-control scythe. They will institute hiring freezes, across-the-board cuts and mobilise hit-squads to target process efficiencies and cut low-value work.
Surviving an economic downturn requires deft financial management, but it doesn’t come without its opportunities. Economists such as Schumpeter have highlighted the link between market volatility and growth. Recessions are known to bring reduced opportunity costs; as production demand drops, smart leaders will re-appropriate operating budget. Such funds can be used for innovation and reinvention to prepare for a recovering economy.
Through this lens, effective cost restructuring provides an essential source of fuel to invest in innovation and growth to secure a winning position. In short, recessions favour the prepared.
So where should leaders look invest in an upcoming downturn? Since the Great Recession, connectivity has become the fabric of the digital economy. But that fabric itself has become stretched.
The speed, latency and bandwidth limitations of mainstream communications technology hinder the advancement, and meaningful application, of so-called disruptive technologies such as artificial intelligence (AI), augmented reality (AR) and virtual reality (VR).
5G, the next generation of mobile communication technology, addresses these challenges. Qualities such as ultra-low-latency, high-speed and high-capacity offer a step-change improvement over existing technologies. They have the potential to ignite technologies that have struggled to move past the conceptual stage and live up to the hype.
Mats Granryd, Director General of the GSMA, claims that 5G forms a significant part of the world’s move towards an era of Intelligent Connectivity. He believes that, when combined with developments in the Internet of Things (IoT), big data and artificial intelligence (AI), it could be a key driver of economic growth in the coming years.
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An economic downturn will create the ideal conditions for the emergence of 5G powered businesses that innovate and extend into areas we haven’t yet imagined. Forward-looking companies will investigate how 5G can solve real-world, non-trivial problems for them and their customers. To do so, they require clear vision, smart strategy and focused investment in the exploration of new business models, services and products.
What can we expect to see with the birth of 5G enabled businesses?
Until now, missions that need intelligent, split-second responsiveness have demanded expert humans to be in close physical proximity. But the speed and latency improvements brought by 5G reduces this constraint. Real-time remote control of connected devices could increase worker safety by removing employees from hazardous environments. It could enable remote surgery via haptic feedback gloves and live video, increasing the availability of expertise and reducing the need to move critically ill patients.
The Internet of Things (IoT) promised to automate the monitoring of infrastructure, transport systems, the environment and even personal health. But today’s communication technologies cannot offer the scale needed to support this. 5G’s Massive Machine Type Communications (mMTC) will enable machine-to-machine (M2M) communication at scale, bringing efficiencies and reduced costs while catalysing new business models.
Increased device density — up to 1 million devices per square kilometre versus 60 thousand devices per square kilometre with 4G LTE — will deliver social advantages in crowded areas and reduce overload during times of emergency.
Real-time situational awareness for emergency services, homeland security and industry will become the new normal. Mission-critical and business-critical operations will recognise efficiencies, cost reductions and improved effectiveness as the high-reliability and ultra-low latency of 5G allows digital technologies to play a more significant role.
Innovations built upon 5G will render traditional products, services and business models ever less relevant spelling the end for the non-tech enterprise. Organisations must prepare to be part of the vanguard or fall behind; an economic downturn will reduce the opportunity cost of such exploration. As Thomas Friedman asks in his book, Thank You for Being Late, what happens when someone does something clever that makes you or your company look obsolete?