In the future, historians studying the years 2020-2021 will most probably determine that these years were a turning point for humanity because such a large number of powerful technological, economic, and social innovations occurred simultaneously in a short time. The current period is reminiscent of the Industrial Revolution, the electronic miniaturization revolution, and the dot.com revolution, all of which also changed humanity.
There is no doubt that we are now living in a transformative time that profoundly changes the reality of our lives. Think back to the past year – to the hundreds of millions of people who started working from home, to the tens of millions of students who studied from home, to the accelerated transition to online commerce, and to all the public services that became accessible in the digital sphere. And these are just some of the changes we experienced.
Concentration of scientific and human efforts
Extreme situations, such as epidemics and wars, accelerate technological advances, which would usually take years. The development of a vaccine against the coronavirus in less than a year is an example of how an acute human need can elicit dramatic change in a short time.
This process happens thanks to capabilities that only exist in particular situations of national emergency, which induce intense scientific and human efforts, massive government budgetary support, unusual collaboration among companies and research institutions (such as between AstraZeneca and Oxford), and public cooperation in general. The result is a blossoming of innovative technologies which, in addition to meeting immediate needs, remain with us for a long time afterward and leave an imprint on history.
Distance medicine, online commerce, and digital learning
The most notable change that occurred during Covid-19 is the digitalization of processes, systems and businesses. Of course, this transformation did not begin with the coronavirus, but there is no doubt that the pandemic accelerated it. Here too, processes happened within a year that ordinarily would have taken several years. It is estimated that around $9 trillion was spent globally in 2020 on technologies that enabled the digital revolution.
This is especially evident in the healthcare sector. Distance medicine technologies, some of which are entirely autonomous and robotic, as well as digital medicine and home hospitalization, became essential during this time of social distancing.
The same is true of medical consultations from afar, the use of big data for identifying diseases, and the prevalence of apps for diagnosing, monitoring, and treating patients from a distance.
The same thing happened in other fields, such as online commerce. During the pandemic, we saw a massive surge in online orders from websites, which required retail chains to upgrade their online purchasing technologies and adopt automation and robotic processes in their warehouses to overcome the logistic hurdles of so much demand.
This process trickled down from the leading chains to neighborhood stores. Similar processes happened when schools quickly set up the technological infrastructure to enable online learning.
Another area that is changing is customer experience. Here too, it began before the pandemic but accelerated in the past year. Every day, chatbots operated by AI and machine learning provide immediate assistance to customers.
The Internet of Things lowers operational costs and improves productivity, as was proven during the lockdowns.
Reducing the gap between the Center and the periphery
We also experienced dramatic changes in the labor market, including paying workers according to output rather than according to hours and moving to hybrid work models – changes that are expected to remain. Workplaces are already switching to models that combine working from home with a physical presence in the office, thereby enabling them to cut back on expensive office space and recruit workers from all over the country.
Indeed, the gap between the Center of Israel and the peripheral areas diminished during the pandemic. Previously, it was difficult for people who live far from the Center to find a job in high-tech, since most of the workplaces were in the Tel Aviv area, but now, many of the psychological and physical barriers have been removed, and it is acceptable to hire people who live far away. They can come to the office once or twice a week. The opposite is also true. Tech workers who live in the Center can work for companies and start-ups located in the periphery without moving there. This is a significant change that can positively affect the decentralization of Israeli high-tech, which is currently concentrated almost entirely in Tel Aviv and surrounding areas.
Another positive outcome is reducing the gap between men and women in the tech professions. Switching to a hybrid work model and compensating according to output can help women, especially young mothers, overcome the hurdles in the demanding world of high-tech and find a routine that suits their lives.
Increase in patents
Intellectual property is the mirror of innovation, and therefore technological progress is expressed through the number of patent registrations. Usually, those who initiate and develop new technologies want to protect their activities through patents, trademarks, and designs.
During periods such as the Spanish Flu of 1918-1920 and World War Two, there were significant escalations in new technologies. Even before the current pandemic, Israel was already considered a patent superpower – we are in fifth place in the number of patents per capita and ranked high among countries with similar GDPs per capita. The types of Israeli innovations reflect global tech trends. Still, in some fields – such as information and communications technology (ICT) – growth is relatively faster in Israel than in other places.
According to the Israel Patent Office, an increasing number of patents has been registered in recent years. In 2018, 7,363 patent application were submitted, 8% more than in 2017, and growth reached nearly 20% over five years. In 2019, 7,738 patent application were submitted. We expect that there will be an even more significant increase next year since IP follows in the footsteps of R&D. But the clearest index of innovation can be seen in the international patent applications. In the past 20 years, Israel has been one of the leading countries relative to its population’s size in submitting patents to the Patent Cooperation Treaty (PCT).
The success of Israeli high-tech
So, will Israel know how to leverage the acceleration generated by Covid-19 to carry out another quantum leap in high-tech and innovation? Preliminary data indicate that the answer may be yes. Data from 2020 show that Israel preserved its leading edge in R&D investments (as a percent of GDP). In 2020, Israel invested 4.94% in R&D – the highest globally (the average for OECD countries is 2.38%). 85% of the investment is from the private sector.
High-tech fields that did exceptionally well during the pandemic include cleantech, AI, cyber, medical devices, and foodtech. An IVC report shows a 30% jump in capital raised by Israeli high-tech during the past year. In 2020, there were 607 capital raisings totaling $10.1 billion. In the past three years, the amount of capital raised doubled; 28 Israeli companies raised over $100 million, compared to 21 in 2019 and only five in 2018. There was also a large wave of IPOs on the Tel Aviv Stock Exchange, most of which were tech companies. In 2021, it is expected that records will be broken with 15 IPOs of tech companies valued at around $35 billion.
Israel’s high-tech sector is turning Israel into a very attractive investment arena, as proven by multinationals operating 370 R&D centers here. Amdocs recently announced that it is negotiating with the Tax Authority to transfer all of its IP to Israel in exchange for tax benefits. This news hints at the possibility that other international companies will follow in Amdocs’ footsteps, thereby bolstering the local tech ecosystem even more.
Global crises as opportunities
According to these data, Israel is well prepared to take advantage of the digital acceleration instigated by the pandemic to cement its standing as a leader in technological innovation, but this should not be taken for granted. All the stakeholders in Israel’s business, public, and government sectors must collaborate to make the most of the opportunity that has been created. Hopefully, the incoming government will lead this process, especially in fields such as AI, digital medicine, and quantum computing. Moreover, it is time to consider naming a Minister for High-Tech, Innovation and Digital Affairs, as in other countries.
The processes that were jumpstarted and accelerated during Covid-19 will stay with us, and the digital revolution will continue to change the world. We have no choice but to adapt to the new reality.
Luzzatto & Luzzatto wins prestigious prize
Luzzatto & Luzzatto is the winner of the Israeli Patent Prosecution Firm of the Year Award. The award was presented to L&L as part of the annual ceremony of the Managing IP Awards, which has been held in London for 16 years. This year it was a virtual event.
This important and prestigious award was presented to L&L to recognize its work as leaders in Patent Prosecution in Israel. Luzzatto & Luzzatto, part of The Luzzatto Group, is the oldest patent law firm in Israel and has been helping companies, inventors, and entrepreneurs protect their patents, trademarks, and designs since its founding in 1869 in Milan, Italy.
Dr. Esther Luzzatto is a partner and CEO of the Luzzatto Group, one of Israel’s leading intellectual property groups. Adv. Tamar Luzzatto Ben Yaakov is the Group’s Head of Business Development, Marketing, and Innovation.
Courtesy of the Haaretz-TheMarker “Innovation Technology” commercial supplement (in Hebrew), March 2021