The past four months have been a trying time as businesses have had to respond to a major disruption to operations caused by COVID-19. For companies that have managed to stabilize after successfully navigating concerns regarding employee safety, liquidity and changing customer/supplier behavior, it is time to consider how to position the business to thrive during what is expected to be a gradual recovery. As many experienced leaders have said: “Don’t let a major crisis go to waste.” In other words, reframe the situation and look at the disruption as an opportunity to explore innovative ideas, such as a new product launch or channel strategy, as stakeholders are more understanding and receptive to change.
Innovation can seem daunting because it is often associated with radical new ideas dreamt up by nonconforming teenagers huddled in garages in Silicon Valley. While it is true that new companies will launch during this COVID-19 crisis, many existing businesses have a head start with the infrastructure, talent and capital to evolve successfully. Unexpected events such as pandemics and recessions often act as catalysts for innovation instead of being direct causes. Innovation does not require wholesale change; it often involves incremental adjustments or applying existing underappreciated ideas to new paradigms. Ideas that may have seemed risky a few months ago can now be acted on in this new environment.
The concept of business innovation is also not limited to technological advancements made by white coats toiling in research and development laboratories. It starts with truly understanding a company’s value proposition and pushing boundaries to serve customers better. Corporate leaders should ask themselves questions such as: Why do customers buy our products and services? What are our customers’ biggest challenges? What do we offer that is differentiated and distinctly better than our competitors? How can we deliver our products and services more easily? The pandemic has shone a bright light on what makes a company tick. The ultimate competitive advantage of virtually every organization is people and their relationships, both internal and external, that have been built over time. Constructive ideas usually arise organically when curiosity and empathy guide our interactions with the people around us. Now is the time to assess every step in the value chain from point of origin to end user and investigate what can be improved. Seek out and be genuinely responsive to customer feedback, and encourage employees to bring their best ideas forward. Where appropriate, particularly in intermediary or business-to-business relationships, it is helpful to adopt second-order thinking that considers the constraints of suppliers’ suppliers and the desires of customers’ customers. Team leaders should ask employees what they would change to make their jobs more efficient.
For instance, as revenue tumbled during COVID-19’s onset, Panera Bread, a bakery-café chain, launched Panera Grocery in under two weeks in order to serve customers eager to restock their home pantries.1 As most employees had to work from home, W.B. Mason, an office products distributor, rapidly introduced a direct-to-home delivery service.2 These two examples represent innovation out of necessity, and only time will tell if these changes are temporary pivots or permanent new business line extensions for Panera and W.B. Mason. Nonetheless, the immediate impact on revenue has been heartening, and it is clear that both companies are listening to their customers while deepening expertise in supply chain management and ecommerce delivery.
Sometimes, innovation involves anticipating what customers want before they can even articulate it themselves. For example, Apple was able to create a mass-market consumer category by redefining the tablet (a product that had been around for more than a decade) and launching the iPad in 2010. At that time, it was almost inconceivable that hundreds of millions of Apple devotees who each already owned an iPhone and a MacBook would purchase one more premium device.
Naturally, there is a practical limit to implementing new ideas, as organizations must allocate scarce resources such as capital and employee time and prioritize between conflicting demands. Alphabet Inc. (more commonly known as Google), one of the most revolutionary technology companies, is focused not just on continuing to dominate online search, but also on constantly pushing boundaries into new services that augment its core business. This approach has resulted in new offerings in email (Gmail), geolocation (Google Maps) and mobile operating systems (Android), among many others. Google employees are guided by a 70/20/10 rule: 70% of projects are dedicated to the core business, 20% of projects are related to the core business, and the final 10% of projects are unrelated to the core.3 The specific mix is less important than the mindset of being open to change – balancing 10x visionary thinking (true innovation happens when you reimagine and try to improve something by 10 times) with the humility and pragmatism of beta testing (make a small change, understand what works, and then roll it out more broadly) – while continuing to deliver your core product or service.