Innovating During a Crisis

We are living in interesting times. There is probably nobody out there whose personal and business life has not been impacted at least to some degree by the current COVID-19 pandemic. Indeed, in the time between writing this and it publishing, I suspect a lot will have changed.  

To that point, it remains to be seen how big a crises this will become.  But it has already resulted in major suffering for large numbers of people around the globe.  Obviously we all hope the situation can be brought under control with a minimum of additional loss of life and disruption, but even if it were to go away tomorrow, it has already had a significant impact on the world’s economy, psychology, and hence innovation and business in general  

Pace of Change:  As a result, in the short-term, businesses are being forced to behave in extraordinary ways.  One of the most important of these is expedited decision making.  Most companies, especially large ones, normally control the speed of decision making, at least to some extent, via internal processes and hierarchies.  That is a luxury that largely disappears in a rapidly evolving crisis. Decision making in a situation like this is dictated far more by the rate of change of external factors. To keep up with a rapidly changing world, internal processes need to be streamlined, command and control relaxed, and autonomy given to those who are making decisions on the ground. Guidelines need to be developed that allow people on the front line to make smart, but flexible decisions.  Likewise, decision making at the top also needs to be accelerated to match rapidly changing external developments, and communication lines shortened and expedited. For example, if someone in an organization tests positive for COVID-19, the decision to protect the rest of the workforce shouldn’t need to go up and down the chain of command, but requires action immediately.  This all requires walking a delicate line between panic and speed, but also giving up some of the buffers and safety values built into day to day business practice that usually mitigate or correct errors.  

Crises Accelerate Evolution:  Every cloud has a silver lining, and while this is a horrible situation in many ways, it will also present positives and opportunities.  Change is of itself, a friend of innovation. New situations and new problems require new, innovative solutions.  Organizations will find themselves on steep learning curves, and will be presented with unique learning opportunities as they by necessity become more agile and adopt new habits.  For example, people will grow.  Often the biggest barrier to personal growth is lack of opportunity to shine. In extraordinary situations, natural leaders and non ‘traditional’ thinkers will have a unique chance to step up and show their potential.  Extraordinary people will emerge, just as weak links in organizations will become apparent.   Crises inevitably accelerate evolution, as well as pulling sometimes surprisingly obvious solutions in from the margins.    

New Habits and behaviors will also emerge, and with them, new opportunities. Many people will be forced to explore virtual meetings, work from home and to embrace more flexible working conditions. Habitual behaviors, such as travel wlll be challenged, business processes will be expedited, and I suspect a lot of meetings and face to face interactions will be cancelled.  In some cases these changes will be detrimental, but in other cases, we may well discover that we can be far more agile and succinct than we realized. And perhaps we’ll learn to be a little less process and CYA driven, and to make good enough, if not perfect decisions faster, and with less data.  When the dust settles, we’ll have missed the value added by some processes, but I suspect that if we can avoid the default of going back to business as usual, we’ll have learnt some really useful lessons.  And it’s not just in business process where opportunities will emerge, there will also be some inevitable changes in consumer behavior and psychology that will open doors for innovation.  

New Consumer Needs and Behaviors. We don’t know our future selves very well, and are often pretty poor at anticipating our future behaviors.  One of the biggest reasons for this is that we anticipate our future decisions through our current emotional lens.   If we feel unhappy, or afraid today, we tend to assume our future decisions will be those of a version of us who is equally unhappy or afraid at that time.  One problem this generates is that today’s emotions can have a disproportionate impact on future actions, especially if today’s emotions are strong.  That means that the fear associated with COVID-19 will influence behavior long after the threat of the virus has gone. Consumer behavior will change. We’ll likely see habit changes, changes in short and mid-term spending power and mobility.  We’ll also probably see an increase in behaviors such as ‘flight to the familiar’ ‘loss aversion’ and ‘risk aversion’, which are typical responses to risk, fear and uncertainty.  This won’t last forever, but it may mean there will be short and medium term opportunities if we can reframe innovation pipelines towards value, risk reduction, familiarity, psychological safety, and even nostalgia.    

Keep Your Eye on the Prize:  As I write this, I have no idea how low the stock market will go, or how long it will take to recover.  But even if we come out of this without long-term damage to the broad global economy, recovery will take time, and funds will be tighter than they have been, if only in the short-term.  While on the surface, this sounds bad, it actually represents a huge innovation opportunity.  If competition shifts resources away from long-term innovation, we can create a meaningful advantage if we can find ways to continue to innovate behind the scenes, even if we do so at a reduced rate. That doesn’t mean we should dig our heels in, or stick rigidly to our plans.  As the world changes, so do opportunity spaces and consumer needs, and still being here tomorrow may require us to shift some resources to solve immediate, pressing issues.  But it’s crucial not to look at tomorrow through today’s eyes.  In a year or so, what was a really cool idea before we were hit with the current storm will still quite likely still be a cool idea once the storm has passed, and we are no longer focused on short-term damage limitation.   Our innovators brains are subject to the same biases of the consumers we serve, so be cautious of allowing today’s unusual situations and hence emotional context disproportionately impacting our long-term strategy.  

Don’t throw the baby out with the bathwater. A couple of years ago, I wrote a blog for Innovation Excellence suggesting ways to prepare for a major drop in markets. 

https://www.disruptorleague.com/blog/2018/02/16/innovators-what-is-your-strategy-if-the-market-crashes/At some point, some form of crisis was inevitable, and hopefully you already have a plan, or at least a framework in place to deal with it.  But even if you do, it can be hard to stay true to a strategy in the face of immediate economic instability.  Investment in innovation is often one of the first places to get hit when money gets tight, as money and resources are switched to cost savings, supply chain management, and general fire fighting. And as mentioned above, consumer needs often shift following a socio-economic crisis, requiring at least some course correction.  That course correction is always a vulnerable time for any nascent innovation. But while agility and flexibility is key, it’s also important not to throw the baby out with the bathwater.  As the dust settles, there will be new and evolving opportunities.  For example, to connect with consumers who are searching for value, safety (physical and psychological), to grab market share in a more value orientated market, or to simply get ahead of close competitors if they get overly focused on short-term goals, and pull too much resource from innovation. But innovation is a long game, and so bringing game changing ideas to market usually involves taking a long view.  Tightening budgets and the short-term focus that inevitably comes with crisis creates shorter time horizons, reduces tolerance for productive failure, and so almost always precipitates an increase in smaller, faster initiatives at the expense of big, slower burning, but potentially game changing ideas. This can not only impact long-term company growth, but also how much fun it is to be an innovator. The bigger this crisis turns out the be, and the longer it goes on, the more we’ll all end up working ‘emergency’ cost saving projects.  But while some change is both inevitable and essential, it’s often much harder to restart an innovation program than it is to keep an established one on life support while we weather a storm.  

Those of us who can keep the innovation pipeline moving, and focus on big, stable long-term goals,  while still attending to pressing, immediate short-term needs will be more likely to win the innovation race in the long-term.