Why (and How) to Innovate in a Crisis
Mid-crisis innovators outperform their peers by 30%. Here’s what companies should think about as they innovate during COVID-19.
To contend with the ongoing challenges of COVID-19, most companies zeroed in on their core business, putting innovation measures on the backburner (according to research from McKinsey). Understandably, the global shock of a pandemic sent many companies in survival mode, devoting more resources to shoring up their foundations than to branching into new territory.
From a psychological perspective, this choice makes sense. Crises — particularly those that engulf the world — inspire fear, and fear inspires careful action. When our fight-or-flight impulses awaken, innovation may seem downright impossible, let alone the less desirable course of action.
But McKinsey’s research also determined that companies who innovate through a crisis come out stronger. During crises, they outperform their peers by an average of 10%. Then after the crisis, when external conditions begin to stabilize, they outperform their peers by an average of 30%. Crisis innovations pay dividends, in the short term and even more pronouncedly in the long term, when those innovations have prepared organizations for a changed world.
At the very of beginning of the COVID-19 pandemic, many experts speculated that unlike pandemics of the past, which have come and gone without making much of a dent, COVID-19 would change our world for good. As we approach the two-year mark, it becomes increasingly clear that many of their predictions were right. Office work, telehealth, and digital retail have seen particularly significant changes that appear long-lasting, if not permanent.
Innovation is the only way for organisations to keep pace with a world in flux. Economic instability might intimidate many into battening down the hatches and focusing on core business, but the companies set up for long-term competitiveness will be those who embraced innovation through the crisis.
Though some experts believe its worst effects may soon “fizzle out,” COVID-19 is still with us, and is still warping the fabric of our global society. As it carries out its impact, it is incumbent upon companies to innovate toward a changed world, preparing themselves for post-pandemic circumstances. In this article, we explore the nature of innovation, and how companies can foreground it in the context of a crisis.
Many in the corporate world may have a working definition of “innovation,” perhaps unspoken, roughly definable as “the creation of new value.” While this definition is certainly accurate enough, and serviceable in most contexts, we believe extraordinary circumstances call for a slight modification to this definition.
Indeed, innovation is about adding new value to a base of customers. But when the fundamental assumptions of the world undergo a seismic shift, innovation is equally about changing internal functions to adapt to a new set of external conditions. Going one step further, innovation is about anticipating future conditions — assuming that they won’t be identical to present-day conditions — and developing processes which anticipate, or even help create, the world of tomorrow.
The most dramatic, headline-grabbing instances of innovation involve introducing a brand new product that reshapes the world — jumping from flip phones to smartphones, for example. Other innovations are less newsworthy but just as necessary. For instance, Gartner found that the Chinese companies which demonstrated the best business model resilience during the pandemic were those who most nimbly shifted to digital processes.
By now, it’s a well-established truism that COVID-19 has accelerated the world’s shift to digital. Especially for legacy companies like Walmart, whose business formerly relied almost entirely on in-person interactions, this shift constitutes a major innovation.
Innovation doesn’t always refer to a quantum leap in your products or services. It occurs at the intersection of new customer needs and burgeoning technologies.
Here’s how to prime your organization for mid-crisis innovation.
Invest in Tomorrow — Not Yesterday
At some level, innovating toward future conditions means placing bets. We can never predict the future with 100% accuracy — just take a look at all the articles published in late 2019 predicting pandemic-free conditions in 2020.
But despite the future’s fundamental unpredictability, it’s always possible to gather data from customers and employees which provide a roadmap to a handful of most likely situations. In fact, a crisis is the perfect time to harvest this data; in stabler periods, more people are more satisfied, and therefore have less to say about how the future should differ from today. During crises, everyone from the mailroom to the C-suite is trying to imagine how to forge a future that’s more stable and satisfying for all.
Expect (and Plan for) the Unexpected
At the beginning of the pandemic, organisations of all types, sizes, and specialties were forced to adapt to remote operations. The remote work dynamic has always been fraught with challenges, and the COVID-19 shift was no exception. But as organisations made the transition, many relished the reduced office costs, commute times, and greenhouse gas emissions that remote work enabled.
Remote work likely won’t always be a necessity, but that doesn’t mean businesses should instantly revert to the norms of old. Instead, they should view this as a cautionary tale, whose moral is that unpredictable conditions will call for flexibility. As they envision innovation methods, organizations should incorporate systems and processes that empower them to adapt to shifting work dynamics. Doing so will ensure that whether or not COVID-era conditions become permanent boundaries on commerce, companies will be equipped to function at peak levels.
Beware the Perils of Risk Aversion
The larger and more prominent organisations become, the more they feel the need to preserve the processes that got them there, rather than a) refining those processes by incorporating new insights and technologies or b) developing new processes which are driven by the world’s altered state. It’s a tendency toward aversion and a “business-as-usual” mindset — both enemies of innovation.
A crisis is the perfect time to conduct a thorough audit of existing processes, identify where you can grow leaner and nimbler, and reallocate excess resources to forward-thinking endeavors. Customer expectations have changed dramatically since the beginning of COVID-19. Companies now face an existential necessity to develop new processes which delight post-pandemic customers, not pre-pandemic customers.
Innovating toward a changed future starts with a mindset — that no company succeeds across generations without constantly innovating, and that innovation is therefore integral to both surviving and thriving. Innovation begins on a granular human level: identifying what today’s customers and employees expect and need. Following that, organizations must eliminate “business-as-usual” from their corporate vocabulary, developing new processes that adapt to the new present and anticipate a further changed future.
The Strategy Group is dedicated to helping companies ensure they stay innovative and at the leading-edge of their industry. We have partnered with a broad range of companies to develop powerful innovation capabilities and establish clear strategies with innovation at the forefront.
For more on how The Strategy Group can help you innovate and disrupt to stay relevant amid and beyond the impact of COVID-19, contact us today.
- Webinar: Enabling innovation for growth - October 13, 2021
- WHY (AND HOW) to Innovate in a crisis - September 28, 2021
- How to Centralize Customer Experience During COVID-19 - September 2, 2021
- 6 Steps to Optimize Your Customer Experience (CX) - June 11, 2021
- The Hybrid Workplace Model: How the Employee Experience is Being Overlooked - June 11, 2021
- What Organisations Should Focus on When Re-inventing or Transforming their Business Models - May 31, 2021
- Employee Experience and Embracing the Future of work - May 14, 2021
- Webinar: An Effective Framework for Digital Transformation - March 18, 2021
- Digital Strategy Toolkit - February 24, 2021
- Developing a Go-to-Market Customer Strategy for Shirohato’s Australian Expansion - February 4, 2021
Managing Director, The Strategy Group
Dr Tobias is an accomplished innovation consultant and entrepreneurship strategist, drawing expertise from the academic, entrepreneurial and corporate worlds. Jeffrey’s commercial and business experience is particularly focussed on lean startup, design thinking and leadership. Prior to The Strategy Group, Jeffrey was Cisco’s Global Lead for Innovation in the Internet Business Solutions Group helping Fortune Global 500 companies improve customer experience and grow revenue by transforming how they do business.
Jeffrey is a professor of innovation and entrepreneurship teaching MBA students at the Australian Graduate School of Business at the University of New South Wales. An active angel investor, Jeffrey is on the board of various well known startups. Jeffrey’s corporate background includes leading global innovation strategy at Cisco, working with large corporates such as Adobe, Westpac, Telstra, Woolworths, and Perpetual.
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