6 reasons why you should treat innovation as a survival skill in times of crises
How to take action now to be prepared for these uncertain times and capitalize on new opportunities
It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change. — Charles Darwin
Like the collapse of Lehman Brothers or other major crises, we still can’t anticipate the far-ranging consequences of COVID-19 on society and the economy, but we can already see markets in record declines not seen in over 30 years, unemployment rates are exploding and businesses are starting to go under with probably many more to follow.
It’s obvious that Corona will lead to permanent shifts in political and economic powers and will be causing novel conditions for leaders to navigate.
We will have a new world with new rules — Thierry Breton, EU’s Commissioner for Internal Market and Services
While companies must prepare for this downturn and stabilize the core of the business, innovation should not be one of the activities to cut and wait for “better times” when spotting uncertainty on the horizon. Quite the contrary.
In these times innovation becomes a survival skill.
Find out why and which steps to take now to be prepared for these uncertain times and capitalize on the new opportunities to come.
1. Disruptions thrive in times of crises and it will be you or your competitor who will take advantage of it
In the midst of every crisis lies an opportunity. — Albert Einstein
In times of crisis, consumer behavior and expectations change and people and businesses are more flexible and actively looking for more convenient, cheap, or accessible solutions. They are more open to new alternatives.
Hence, it will be easier for new market entrants or competitors to gain market share. So either you spot the opportunities and changing customer behavior first and turn them into a new business or you might lose part of your established business or even get disrupted by new players in the market.
A crisis is a terrible thing to waste.- Stanford economist Paul Romer
Necessity becomes a rather harsh mother of invention. — John Bessant, Professor of Innovation and Entrepreneurship at University of Exeter
“The COVID-19 crisis has prompted inspiring acts of innovation. Companies, governments, entrepreneurs, and citizens have proved how capable humans are of innovating during times of crisis. Responding to the acute public-health pandemic has forced rapid changes in health-care-delivery models. The social-distancing mandates have prompted complete workforces to adopt a virtual work model as well as K–12 school districts and university systems nationwide to figure out how to educate students through distance learning. The slowdown of commerce has pushed small-business owners to transform their business models overnight in an attempt to stay afloat amid economic collapse.” (Lindsey Lyman)
There are plenty of examples in history where extremely successful companies started in a recession or a major crisis:
“Sony unveiled the first shirt-pocket-sized transistor radio during the Asian flu in 1957–58, which cost 1–2 million lives. Six weeks after 9/11, Apple introduced the iPod which not only changed the way we all listen to music but changed the whole music industry. Concerning business model innovation, one should see that in the 2007–09 financial crisis, 90 unicorns were founded (among them dropbox and the industry-changing Airbnb and Uber).” — Frank Mattes
More examples can be found here:
6 Iconic Companies That Succeeded During a Recession — Anne Gherini
13 Massive Companies That Started During a Recession — Kelly Bertog
How Progressive Companies Survive and Thrive In Crises — Joost Minnaar
Also really worth reading in this context
Why a Financial Crisis Is Actually the Best Time to Start a Company — Feliks Eyser
It’s time to build — Marc Andreessen
Innovating from necessity: The business-building imperative in the current crisis — McKinsey Digital
2. A mission-critical need for efficiency, speed, and adaptability in uncertain times
COVID-19 is affecting almost every business and there were only a few moments in history in which we faced this degree of uncertainty worldwide. Foresight will be difficult and planning based on historical data close to impossible.
The nature of complex interdependent systems means that planning uncertainty quickly multiplies. For this reason, companies urgently need to improve their agility-their ability to learn and to change course quickly. — David Wood
With the spread of COVID-19 businesses faces an abundance of complex challenges. Innovators often refer to it as the VUCA world (Volatility, Uncertainty, Complexity, Ambiguity). All industries are changing rapidly and are being disrupted by 3 main sources:
- Competitive Landscape (Transformative new technologies or business models)
- Physical environment (Climate change and local disasters, events such as COVID-19, conflict over scarce resources, destroying supply chains, etc.)
- Social conditions (Changing value and opinions by stakeholders)
In these complex environments, the context is unstable and the outcomes are unpredictable. For decades, traditional management has relied on transferring the experiences and facts of the past into plans for the future. But now, steady change is the only constant you can rely on.
Therefore businesses have to find new ways to be prepared for the things to come and companies have to learn
- How to evolve and adapt and spot new opportunities in their evolving environment
- Run methodical experiments with real-user feedback to quickly adapt their product and service offering to new market demands
But unfortunately, Corona is not the only uncertainty on the horizon.
“Other big, global challenges (climate change, food for a growing world population, organizing care for aging societies, future mobility, urbanization, etc.) will still be there once COVID-19 is under control. ” — Frank Mattes
Also to add transformative new technologies such as artificial intelligence, robotics, or the Blockchain which are still not affecting all businesses but will surely do soon.
3. Unlock new growth by spotting new opportunities in the evolving market
Before COVID-19 everybody was talking about growth, but industries were maturing, products were maturing and new competitors were entering the market at high speed. The future recession will it make even harder to grow relying on the core business. So how to grow?
Leaders who are not able to effectively respond to a crisis, are probably equally unable to grasp an opportunity either — Robin Hart, Strategy Director at the National Physical Laboratory
As innovation creates new businesses based on these new demand patterns it will be a fundamental source of growth in business and industry. As new needs and perceptions spread with COVID-19 there will be a lot of challenges, but as well as a lot of opportunities for companies that are flexible enough to turn them into new value. So who will be able to rapidly adapt to these changing conditions to grow in new niche markets or adapt to new customer demand?
“Innovation will flourish. The most innovative solutions often arise in the face of the greatest constraints. Our current COVID-19 challenges create extraordinary barriers to business as usual. As a result, today’s struggles and pain are forcing new ways of thinking, better approaches and fresh perspectives on problems. Companies will learn from the requirement for greater innovation and create the conditions for expanded levels of creativity, exploration and problem-solving.” — Tracy Brower, PhD
4. Stand out from competitors
Independently of Corona, competitors are getting smarter, faster, and hitting the market with new and exciting products more rapidly. Innovation cycles are becoming shorter and everything new seems to be exciting. The upcoming economic downturn will probably lead to less buying power in some of the more affected countries and will add to the harsh competition.
Therefore companies have to find new niches, be unique, and aim beyond the competition.
This crisis is an open door for innovation, as every real crisis is. While traditional solutions are on hold, innovators will be able to establish their disruptive idea in empty playing fields. — Michael Carl (carl institute for human future)
As a company, the competitive edge lies in the ability to acquire, absorb and apply new information on changes in the needs and frustrations of customers. The right innovation approach will allow you to quickly learn, adapt, stand out with your offering, and as a consequence create additional revenue.
5. Meet increasing and ever-changing customer expectations
More personalized, more design, more convenient, and seamless user experience. Customer expectation is increasing, customer needs are constantly changing and customers are more informed than ever and options seem endless. With COVID-19 we still have no clue how customers will react, what they will expect from your company. It will be a tough job to stay relevant.
Customer-centered innovation approaches find unmet customer needs and apply a fast experimentation framework to learn as fast as you can from changing demand patterns. If you want to have the staying power, you have to be customer-centered and find ways to constantly adapt your portfolio or products and services in a structured and repeatable way.
6. Attract the best talent
Workforce demographics are changing. New generations are looking for work-life blending and are seeking to get to the highest level of the Maslow pyramid: self-actualization. Innovators are looking for new challenges and want to create something meaningful. They want to have an impact and be part of the change happening around them.
“The crisis will also accelerate the gig economy, freelancers and startups as so many firms will not want to have huge numbers of employees (and fixed costs) after this crisis, not wanting to have huge layoffs during the next pandemic. “ — Maneesh Juneja
Based on this statement we can also derive that there will be a lot more flexibility on the market and less loyal employers and employees. Companies that can attract, engage, and maintain diversity can leverage their workforce for a broader exchange of ideas and knowledge and therefore assure long-term success.
Conclusion
It’s undeniable that COVID-19 is a huge challenge for us as humans and businesses. Even though businesses have to prepare for a potential downturn and focus on the core activities, innovation should also be handled as a core discipline to spot new opportunities in the market and adapt to new market needs and customer demands for the following reasons.
- Disruptions thrive in times of crises and it will be you or your competitor who will take advantage of it
- A mission-critical need for efficiency, speed, and adaptability in uncertain times
- Unlock new growth by spotting new opportunities in the evolving market
- Stand out from competitors
- Meet increasing and ever-changing customer expectations
- Attract the best talent
So how to take action now?
Don´t get me wrong. Obviously, the priority is protecting actual revenues, stabilizing the core business, try to get down the costs, and control cash reserves. On the other hand, you should prepare for the next months of uncertainty and changing business context.
This is a conscious shutdown of our economy, trading jobs for saving hundreds of thousands of lives. It’s almost inconceivable that you can have the same business model today as you did 30-days ago— Steve Blank
Building tomorrow’s world starts today! Innovation can be leveraged for inventing a post-crisis future for your company — Nicolas Bry
1) Spot emerging white spaces and changing customer demand to adapt your offering
There are plenty of articles about the trending eCommerce products during and post lockdown and you can already prevent certain customer behavior post-Corona. This creates new growth opportunities and new potential niche markets. Review your current product and service offering to adapt to new market needs.
2) Focus on painkillers
Great ideas usually either solve a real, significant problem or make life considerably easier. Think of great startup ideas as painkillers: People need them and are willing to pay. The year 2020 will produce a whole range of “painkiller-category” problems that will translate into entrepreneurial opportunities.— Feliks Eyser
Use techniques such as qualitative customer interviews or customer journey mapping to explore potential pains/gains of your customer/consumer/user and try to leverage these insights for new offerings.
3) Develop new products/services/business models
Adapt your current offering or business models according to the previously spotted opportunities and use techniques such as the famous design sprint by Jake Knapp to rapidly ideate and validate business ideas with real user feedback.
Do you want to take action and you need help?
If this article triggered some thoughts and you feel that
- your current business model is increasingly vulnerable
- you want to balance today’s stability with inventing the future of your business
- you want to apply a more agile approach to experimentation to quickly adapt to new market conditions
- you have to reorganize the way you do business today and be in shape for tomorrow
Let’s talk
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About Me
Helping companies with effective strategies and execution for a systematic, user- and growth-centered innovation.
My name is Fabian Roschig and I am a consultant for innovation strategies and innovation management.
My mission is to drive innovation at all levels, based on the individual strengths of each organization, to enable and accelerate sustainable commercial growth. Together we make this happen by setting clear goals, focusing on the right balance between strategy and execution, and using validated, systematic methods and tools that guarantee continuous, measurable results.
For more than 12 years, I have had the privilege to successfully plan, implement or optimize new strategies, products, and services, innovation programs, structures, agile teams as well as processes for a variety of clients and employers such as The Coca-Cola Company, Condor, kicker, Dr. Oetker or TUI. In doing so, I work closely with executive boards, middle management, cross-functional teams, and external service providers.
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Originally published at http://fabianroschig.com
