RIDING THE BLACK SWAN
The title might be misleading as, well, technically COVID-19 and the current crisis is not really a black swan event, but more of a grey rhino. The reason being is that black swan events are technically events that are unpredictable and beyond what is normally expected. However, proponents to call COVID-19 a Grey Rhino argue that a global pandemic has been on the cards for quite a while so that even Hollywood made movies about it. In other words: we should have been prepared for it. But we were not.
No matter how you label it, COVID-19 hit us severely, unexpectedly, and we were unprepared. Very. In short, it triggered a massive global crisis which consequences we still cannot grasp entirely.
This article tries to shed some light on how to deal with this crisis in innovation terms andexplain why and how innovation efforts should be driven now forcefully.
CRISES ARE THE FRIEND OF INNOVATION
Innovation seems to be the number one business buzzword from the Late Noughties till today. According to studies by LinkedIn, creativity and innovative thinking are not only the most sought-after leadership qualities, but international studies from the World Economic Forum also have found that innovation is the most important growth engine for companies.
Companies need to innovate to stay on edge. But should we really invest in innovations in times of a global crisis like this? When the roof is on fire, and many companies are preoccupied with ensuring their bare economic survival?
The answer is: Yes, especially in times of crisis, should we invest in innovation.
When used properly, crises can be an efficient catalyst and even accelerator for innovation and future success. Because different rules apply in times of crises; “normal” business processes and products are replaced by new ones overnight. Often, essential changes are put on hold, and unpleasant decisions are postponed. But crises force us to act and give us a good reason to finally and drastically create those long-needed changes.
Smart companies use the crisis to drive decisive changes and foster innovations. They use the crisis as an opportunity to transform their business to make it a better fit for the future — if we have to change anyway, do it properly now.
Also, an economic crisis is an excellent opportunity to get an edge over the competition.
Just think of an analogy from cycling; the winners are identified during the race’s most challenging part: the mountain. Everyone can be fast on the downhill part, but when the uphill is long and steep, this is when the wheat is separated from the chaff.
In economic terms, we are currently climbing what is perhaps the steepest mountain in decades. The motto should be: innovate and attack!
Think of another sports analogy from football: If you put all your resources in your defence, the most you can get is a draw; you will also need some attackers on the pitch to score and win.
If you’re waiting to see what all of your competition and those around you are doing, it may be too late.
A recent study by McKinsey confirms this notion: companies that invested in innovation during the financial crisis of 2009 not only emerged stronger from the crisis but also outgrewtheir competition by an impressive 30% over the following years.
However, many companies might shy away from innovation in crises because they think they do not have any resources available. All too often, innovation is regarded as a fair-weather discipline. Companies only want to invest in innovation when the sun is shining, and there is some extra cash to be spent.
INNOVATION LIKES SCARCITY
The beauty of innovation, though, is that “less is more”; if you want your innovation to fail, just pour a lot of money and resources over it. (RIP Quibi)
Innovation needs scarcity, restrictions, and even imbalances. Or, as they say, “Necessity is the mother of invention”.
Think about it; small teams are more agile than large teams. Small budgets force you to make faster decisions, and tight deadlines ensure that critical assumptions are examined more carefully and rigorously early in the process.
There are some early indicators that this crisis has already spurred a lot of innovation: thousands of companies were forced to switch to a digital-first working model overnight. Although most companies were technically equipped with the right tools to work from home, only a few companies really made a full switch to what is, arguably, a more efficient way of working — until COVID-19 came along and changed this game. Now that we really have to switch, the, formerly moderate success rate of digital transformation programs went miraculously up to new heights.
Instead of asking, “Is there a reason to do this online?” companies will be asking from now on, “Is there any good reason to do this in person?”
Stable times are the friend of the status quo; a crisis is the friend of inventiveness.
HOW TO INNOVATE IN CRISIS
CREATE SPACE. First, create room for innovation. Now is a good time for a proper clean-up and question projects that seem to be so deeply ingrained in the company’s DNA that nobody doubts them anymore. Scrutinize previously protected statuses of various departments. Ask yourself if long-standing budgets for ongoing projects are really necessary. The mantra “we’ve always done it that way” should be thrown out the window. Create a controlled bush fire to remove all the deadwood and tangled brush that might hamper the growth of small saplings for years to come; create the space new initiatives need to prosper
ACTION. Don’t sit back and wait how the competition deals with this crisis but start acting and trying new things immediately. One of the essential prerequisites for innovation is: action. Act quickly and often. In other words: experiment. Especially in a crisis, we have nothing to lose, and it is far better to make mistakes than to do nothing at all. Every great innovation starts with a not-so-brilliant idea that is put into action. The idea then gets tinkered with and pivoted so often in the process that it eventually becomes something big and beautiful. Act, act, act… It’s easier to act your way into a new way of thinking than to think your way into a new way of acting. If we only learn purely through observation and theory, we miss plenty of opportunities and forget even more. In short: experiments and iterations with real-time feedback are innovations’ best friends.
LEAD WITH A NON-LINEAR STORY. Be aware that change and innovation is not a linear process. It tends to be a very irrational and messy process. Crises are most often over-managed and under-led. Thus, navigate those rough waters firmly; energize, and inspire your organisation. Storytelling helps. Share with your employees a visionary story of where you want to be in the future. Positive stories not only have something soothing these days butmotivate and inspire to act.
RE-THINK CHANNELS AND ASSETS. Now is an excellent time to think about re-buildingyour channels; on both the procurement and the sales side. Perhaps there are unused resources in your company that can now be used profitably or even converted for other purposes? A recent Bain and Company study said that 90% of companies who successfully renewed themselves find solutions by mining assets within the company. So, go down the dusty staircase and look for the old Van Gogh in your basement. Then, go and listen to the crazy ones in your company. Now is a good time.
NEW ECOSYSTEMS. A crisis is also a good time to build unusual partnerships that not only minimize the financial risk but can also bring unexpected synergy effects. Manage and diversify your risks. If creativity and innovation are the engines of the modern economy, diversity is their fuel. Cultivate external relationships with unusual partners that do something completely different than you. Remember that relationships extending beyond the company’s ordinary boundaries can be invaluable in acquiring and distributing new ideas and knowledge. There are many theories and opinions about how creative thinking and innovation works best. Still, there is one thing all views seem to have in common: innovation often happens when we connect seemingly unconnected ideas. So, start connecting the impossible.
DO THE IMPORTANT STUFF. In times when the day-to-day business is a bit slower, it might be a good time to finally tackle the things that are important but not urgent and have been put on the long bench all the time. Do these important things now. Refocusing some energy and resources on these initiatives could be one way to deploy underutilized resources and set up the business for success in the future.
MANTRAS
I shy away from formulas as these days are too complex and chaotic to be approached formulaic, and, of course, every company and industry is in a different situation. There is no “one-fit-for” all. But there are a couple of mantras I do believe you should embrace these days.
BE BOLD. The term innovation has been so dramatically overused that speaking trash binsand Trump-dolls for dogs have been called innovative. No, they are not innovative; they aremere gimmicks. Let’s leave the word innovation to initiatives that could be genuinely game-changing. Use COVID-19 as a catalyst for big change; there is not much you can lose in a crisis. Be bold and ask yourself what the next moon-shot for your company could be… and then do the first step.
BE QUICK. Speed can be a business advantage not to be underestimated, especially these days when many companies seem paralysed and rather preoccupied with picking up the pieces. Don’t strategize too much about the future, but swiftly act your way into something bigger. Remember that the really big ideas in innovation processes are typically found later in the game. Trust that you find gold on your journey; but start that journey now.
BE MEANINGFUL For many individuals, the lockdown has been a perfect time for introspection. The same should apply to companies. Now is a good time to break your business down to the core and find out what’s really important for you. What is your purpose, your raison d’etre, your reason to exist? Research proves that employees are more motivated when they know the company’s clear purpose and that purpose-led innovation has higher success rates. Listen to Epictetus himself: Ask yourself what you would be, then do what you have to do.
CRISES CAN BE A GIFT
Whatever you do, don’t let this crisis go to waste. Welcome the current situation as a gift and ride this black swan! If we only take advantage of the easy opportunities that arise in life, we might fall short of getting where we really want to be. We must also take advantage of adversities and turn them into positives.
The word crisis comes from the ancient Greek “crisis” which means: a critical point at which a change must come. The emphasis is on change. So, do change and do innovate. Now is a good time.
