Friday, June 04, 2021

The best time to innovate is in the aftermath of a crisis

 I've spoken recently with a number of people employed by companies, large and small, and to a number of consultants.  The list of challenges most businesses face in the aftermath of COVID is rather significant.  Many businesses are finding it difficult to find the workers they need, and those that do have the workers are struggling with remote or in person work issues.  In the middle of 2021, it seems that inflation is almost inevitable, meaning that prices on a number of goods and services will increase.  This expected surge in costs will force changes to existing plans.

Supply chains are clogged, unable to rapidly restart as the economy improves, causing shortages and disrupting normally smooth operations and just in time systems.

With all of these (and many more challenges) you can imagine that management teams are planning to maintain the status quo.  With so many unknowns and uncertainties, they are unlikely to try to unleash any really risky or uncertain projects, and innovation projects almost always qualify as uncertain and risky.

Yet, as we've seen before, the period of change and growth during the recovery from a crisis is almost always a fertile opportunity for innovation.  You've seen the stories about the birth of Uber and Airbnb coming out of the last recession.  There are game changing opportunities right now, in the midst of 2021, and companies of all sizes and in all industries should be poised to innovate to take advantage of the opportunity.  But too many will see too many problems, uncertainties and barriers.

Why now?

There are several reasons for doing innovation now.

First, everyone is fighting the same issues - people don't want to return to the office, or materials are difficult to obtain.  You can innovate by solving these challenges in new ways, or through rethinking your processes or business models.  Rather than try to fix an old or outdated model or process, rethink and re-engineer what is causing your biggest challenges.  Don't let the excuse that there are issues or roadblocks stop you from innovating.  Everyone faces the same challenges.  Those that find interesting or creative solutions will win.

Second, the core business can operate on its own.  If you have a medium or large size business and the core of the business needs constant management attention, you are doing something wrong.  Many businesses should be able to operate without constant oversight and should be able to do more than one thing at a time.  I would suggest that many management teams should push more responsibility down the hierarchy and devote more time to thinking about what's new and what's next.  Now is a great time to do that.

Third, your customers and consumers are interested in doing new things, getting new experiences, trying new products after the COVID crisis. This is not to say that "everything" will change, because it won't.  But, some things will change, and new needs and wants are emerging and will continue to emerge.  The sooner you can define what those wants and needs are, and serve them in a new and interesting way, the better for your future growth.

Fourth, we are still in a COVID year, and the financials and returns will be a bit squirrelly anyway.  Good managers know to bury as much cost in what is accepted as a bad year, to show better outcomes in a future year.  Since 2021 is still a recovery year, spending some capital and resources on new and untried activities won't stand out so prominently like it might in an otherwise "normal" year.  If your financial team is concerned about the spending, remind them that plenty of unusual spending has occurred in most organizations during the pandemic, and some of that spending will be attributed to the needs of the organization in uncertain times.

Finally, there's no better time to implement change.  Everyone, shareholders, employees, and management, recognize we've been through change and even now we are still in a relatively unsettled state.  Will we all go back to offices?  Will work be performed in the same way?  What new technologies or digital transformation will change how we do things?  Will automation take the jobs that aren't getting filled?  While we are in an unsettled state, while corporate inertia isn't quite so powerful, this is the time to do something really interesting.

The Next Big Thing

The next big innovation will emerge from this crisis.  I don't know what it will be or what form it will take.  In the last crisis, we saw a shift from product ownership to "as a service" models.  I cannot accurately predict what the outcomes will be from this crisis, but there will be significant new innovations that emerge, and those seeds are being conceived and planted now.

As Rahm Emmanuel, Obama's chief of staff was fond of saying - never let a good crisis go to waste.  For companies of all sizes, in all industries, now is an excellent time to innovate.  If you aren't familiar with his quote, you've heard the sentiment before.  What's more telling is the second part of the quote:  "...there is an opportunity to do things you think you could not do before".

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posted by Jeffrey Phillips at 6:53 AM


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