- July 6, 2020
- Posted by: Ramkumar
- Category: Strategy
Importance of Innovation in Post-COVID19 Era
The symbol crisis in Chinese constituted two characters—one depicting risk, the other opportunity. This interpretation is especially correct today. The COVID-19 pandemic has upended almost every aspect of life, from the private (how people survive and operate) to the professional (how businesses communicate with their customers, how consumers prefer and obtain services, how supply chains deliver them). How are managers reacting? As might be anticipated, they are mainly concentrating on sustaining business continuity, particularly in their core. Managers are prioritizing on lowering costs, accelerating productivity, and implementing safety norms against carrying innovation-led growth. Unsurprisingly, investments in innovation have diminished. Most firms wholeheartedly believe that they will revert to innovation-related initiatives once the business has stabilized, the core business is stable. In this article, I focus on the importance of innovation in the post-covid19 era and how companies should focus on innovation initiatives to improve their market share.
This slump in focus on innovation is apparent over every industry; the single exception is pharmaceuticals and medical products, where there is a 30% rise in the critical emphasis on innovation. Managers encounter a crucial decision around sustaining innovation-led growth in the short term, one that may have permanent outcomes for their businesses’ ability to develop in the years to come.
The argument for the importance of Innovation in Post-COVID19 Era
For the past few years, Companies are deprioritizing innovation to focus on four elements: shoring up their core business, pursuing existing opportunities, preserving cash and reducing risk, and pausing until “there is clarity.” Successful companies, on the contrary, take the following actions:
- Readjusting the core to satisfy changing customer needs
- Recognizing and immediately addressing new opportunity areas generated by the dynamic landscape
- Reevaluating the innovation initiative portfolio and assuring resources get allotted judiciously
- Establishing the basis for postcrisis growth to continue competing in the recovery period
Many companies cannot function as they have in the antiquity. What made a business prosperous historically may no longer be plausible during or after the crisis. Customers may grapple with paying. Channels may have entirely shifted to support new needs or distinct workaround constraints. The hypotheses that helped years of constant, predictable growth may no longer be valid.
Competitive advantages change dynamically as business models adjust to new market truths, and the core capabilities that made an organization unique may abruptly be less differentiating. While the emergence of digital has been mounting similar pressures for more than a decade, the prevailing crisis has significantly worsened its disruptive force. Abrupt pivots witnessed during the COVID-19 pandemic include:
- Modifications to sales models. Firms with notable field forces can no longer rely on in-person coverage to outcompete. Sales coverage got radically redefined as firms discover that virtual technology enables them to do things that were nearly impracticable earlier, such as assembling the “perfect team” of experts for each sales pitch. In this digital sales field, more small firms can frequently “match up” to even their biggest competitors.
- Demand for brand-new offerings. Food distributors that traditionally furnished restaurants set up digital direct-to-consumer channels as the crisis decimated their core restaurant sales. Even museums are devising and streaming digital content to allow people to experience their offerings from the home’s convenience and protection.
- Accelerated shifts in customer behavior. For years, videoconferencing providers experienced steady growth by concentrating on corporate customers. This market typically needed costly deployments, usually requiring the physical installation of specific equipment and training to assure high-quality connections. Now Zoom, with its easy setup and nearly viral connectivity, has become the “Kleenex” of the video conferencing world. Almost overnight, society has grown customary to “zooming” for varied goals, including the arts, fitness, and social connections with co-workers, buddies, and relatives.
- An inrush of competitors from diverse industries – Medical-device firms historically had a close competitive set and were protected by a convoluted and extremely technical regulatory approval process. These companies face competition from earlier unimagined new entrants such as home appliance manufacturers and automakers, as regulations are comfortable to meet exacting needs. Who could have prognosticated the express endorsement and success of GM and Dyson as ventilator manufacturers?
Businesses can realize long-term advantages by following such shifts and the opportunities they offer. In earlier crises, organizations that invested in innovation achieved higher growth and performance postcrisis.
Crises, particularly the one we are experiencing now, have notable financial and human losses, stranding assets, and human capital and effecting significant social and economic disturbance. Nevertheless, many of these dynamics are elements for disruption from which new business models arise. For instance, the sharing economy grew out of the 2009 financial crisis as technology-facilitated marketplaces’ creation for underutilized assets just as people were exploring much-needed supplementary sources of income, catching incumbents napping. The SARS epidemic that devastated Asia in 2002 and drove its citizens to shelter in place was the stimulus for growth and extensive approval of e-commerce in this country, earning China the epicenter of innovation encompassing social commerce. The more contemporary focus on the climate change crisis has induced meaningful growth in solar equipment and electric cars and innovation around more “earth-friendly” foods such as plant-based meat substitutes.
The formula for emerging as an innovation lead
Spot. During a crisis, the market setting is changing, with limited confidence about what will determine the world when things stabilize. Having a compelling strategy for dissecting this kind of landscape demands the capability to spot trends. Organizations must overinvest in rediscovering what values to customers now and realizing the impact those dynamic requirements will have on their business.
Gathering and integrating market insights should not be a siloed responsibility given to a dedicated function. Entire businesses, from sales and customer service to marketing and operations, can be actuated to observe change and evaluate its impact. Every customer touchpoint is a unique opportunity to discover. Having the expertise to quickly synthesize the multiple signals coming into an organization, identify new patterns of customer behavior, and take action immediately can proffer companies a head start in the innovation marathon.
Synthesizing this learning so that they can get quickly turned into new products, services, customer experiences, and business models are crucial. First, it implies having a plan to determine and prioritize essential problems to resolve for customers. To identify a relevant issue, companies need to define a clear “who” (a distinct customer record), produce a fact-based comprehension of the intense challenge this customer encounters, and blueprint the result they expect to achieve by solving it. This stringent description helps divide obscure and unhelpful questions from precise customer needs for which a solution can get estimated accurately.
Develop. Now, many firms see moving shifts in their profit pools and the economics that sustain their operations. Crises like the one we are experiencing through now are watershed moments for companies to Develop. Successfully executing a business model shift principally entails ascertaining which phases of the model have been impaired and are unlikely to yield. If a company reaped a benefit from a field sales force that can no longer call on customers or brick-and-mortar storefronts that now have decreased foot traffic, for instance, it would want to pivot to develop a digital strategy. While some of these difficulties may reduce as lockdowns get lifted, other market dynamics and working ways may get forever modified.
Eliminating constraints and investigating prior assumptions about what will create the most value are potent ways to reimagine new business and economic models.
Exercise. So, how does one finance the innovation needed to make this set of pivots? Defying the core assumptions underpinning each initiative can conclude which actions to continue, axis, or cut. The value, timing, and risk of efforts will possibly shift in the “next to normal” as market dynamics develop, and customers rethink their requirements and associated spending.
Strive. Firms may want to reframe their business and challenge doctrines that cast the earlier aspiration. For instance, the work-from-home technology platforms that previously regarded themselves as fillers to an office-based model could now envision their business as a rival(s) for WeWork other real estate firms. They could also place themselves to become the platforms of choice for older generations of customers, now savvier in the adoption of digital technology, to interact with relatives and colleagues.
Expedite and Scale. The global pandemic has significantly quickened the pace at which businesses bring new schemes to market, including massively advancing some regulatory processes and employing pressure on industry ecosystems to deliver rare products and services in distinct ways. In a matter of weeks, some organizations pivoted their current manufacturing to sustain COVID-19 response: industrial companies are manufacturing ventilators and hygienic masks, luxury labels offer hand sanitizer, and distilleries are providing disinfectant alcohol. Given the quickened pace at which products and services are launched straight into the market, it is critical to ensure that supply chains and other enablers of scale hold pace to satisfy demand.
Continue and Gather. In some instances, companies can leverage outside partnerships to Extend their organization’s influence and, in so acting, earn a higher return on innovation investment, alleviate risk, and better frame regulatory policies. One of the essential initial lessons of the COVID-19 crisis is that competitors and firms from entirely different industries can quickly become partners. We have observed this in the pharmaceutical firms that accepted to share compound libraries in the quest for a coronavirus medicine, and in the public-private partnerships forged to flatten the infection curve further and plan for the reopening of economies.
To permit such expansions, organizations will profit from injecting an agile culture and working model that help Mobilize innovation. Speed is an inherent driver of innovation success, as is the capability to endure despite the difficulties that a crisis inflicts.
The primary methods underpinning distinctive innovation have not changed in this moment of crisis, but the relative importance and urgency of businesses should concentrate have. Above all, companies need to understand that innovation, now more than ever, is a priority.