By Fergus Bailie, CEO of Bailie Group
Even the most aspirational and transformational leaders were rocked by the events of 2020. Covid-19 came as a complete shock – shifting supply, demand, operating models and revenue streams, practically overnight. Many landscapes evolved faster in weeks than they had in decades, particularly in terms of remote working, public transport usage and high street footfall.
In fact, everything – how we work, save, socialise, shop and spend – changed. And survival instinct kicked in.
Most business leaders reverted to the basics of ‘cash is king’, with a large number also battling to become as lean and efficient as possible. Some no doubt made ‘needs must’ decisions they may ultimately regret.
But this short-term focus was commonplace and – on the whole – understandable. Businesses can’t innovate unless they have a solid base on which to grow, after all.
However, another key component of survival – among humans and organisations – is adaptability. So, the overwhelmingly suppressed appetite for innovation, symptomatic of Covid-19, is dangerous.
Yes, we saw great examples of firms pivoting when the pandemic hit – many extremely successfully. And the efforts of these agile businesses – large and small – must be applauded. But do enough companies have their eye on the long game? Are they being bold? Are they thinking about ‘what could be’?
History is littered with examples of brands that stood still, and they disappeared as a result. Kodak, anyone? But traditionally, individual markets have changed. This time, the whole world has.
So where can we go from here?
An interesting Ernst & Young article pointed out a couple of months ago that the economic recovery is likely to be slow and uneven. It will be painful for many. But organisations with fast reflexes can be resilient here. Those who adapt well, won’t just survive – they’ll thrive.
The report stated: “The pandemic has presented us with a chance as much as a challenge: a chance to segue from a growth economy to a value-based economy, marked by prioritizing long-term value and the needs of multiple stakeholders over short-term growth.”
So where does the answer lie?
Waiting for the certainty of a ‘new normal’ is risky. Incubating innovative ideas now is savvy.
Innovation means different things to different organisations, of course – influenced, not least, by the scale of the problem faced and the ease with which a solution can be defined. But Harvard defines innovation as existing in four categories – and it is imperative that one exists within the fabric of any business.
Sustaining innovation sees organisations improving their existing capabilities in a familiar market, and is, therefore, most common. Roadmapping, R&D and acquisitions all aid progress here.
Disruptive innovation, on the other hand, requires businesses to deliver what people want with less, which requires not just product innovation, but business model evolution too. Pubs and restaurants switching to a takeaway service is a good example of this.
Then there is breakthrough innovation, which surfaces when the problem is well defined but hard to solve. This requires the exploration of unconventional skill domains and is often typified by Skunk Works and mavericks. It is high risk, but high reward, if successful.
And lastly, basic research, which is used when the problem and solutions are not well defined. Naturally, partnering with areas of knowledge such as academic research or tech hubs helps turn a concept into a potentially profitable venture, but again the risk is high.
Some brands will only need to adapt a little, whereas, for others, a seismic shift is required. The advice here cannot, therefore, be prescriptive. However, the danger of only piecemeal change is that it may not be enough, where markets have shifted so dramatically.
There is no magic answer, but business leaders cannot innovate alone. What they can do, is create an environment conducive to innovation – a mechanism to create and contribute ideas, without hierarchy, and crucially, implement them. Surveys, challenges and partnerships could all help in this respect.
The aim of all of this is to heighten the strategic agility of any business. And it’s more imperative now than ever.