For decades, innovation has largely been linked to growth and growth initiatives. Top line revenues, bottom line profitability and market share growth were the desired outcomes of innovation efforts. Typically, R&D has led innovation efforts with the introduction of new products and services but, with the advent of Innovation Management in the ‘90s this functional area gained prominence and assumed a wider range of activities. But with the advent of the global pandemic, innovation, and more specifically corporate innovation management, is once again taking on new meanings.
As we’ve discussed previously in this column, corporate innovation today is where strategy was in the ‘90s. A new and burgeoning functional area with an all-encompassing mission to facilitate growth across all departments of the organization. This has largely been the case for 20+ years but the pandemic is testing this thesis. Revenue, profitability and market share growth remain crucial and important metrics for any organization yet other concerns have risen in importance.
In a recent survey conducted by McKinsey & Co. fewer than 30% of executives admitted not being prepared to face the challenges of rapidly changing customer needs. This means their organizations face eminent threats to their operations, customers, employees and vendors.
In this unique moment corporate innovation leaders need to adapt their missions to meet the moment. They’ll be required to expand their mission to include new practices such as adaptability, experimentation and iteration in order to survive first, and then grow.
In the same McKinsey survey, it was found that investing into innovation during a downturn produces greater than 10% market capitalization increases versus those who don’t. The data was compiled from the Great Financial Crisis and assessed across the Fast Company Most Innovative Companies List. History suggests that companies that invest during the downturn outperform peers during the recovery.
We’re already seeing evidence of organizations that are meeting the moment. Restaurants, education, health care, grocery and retail have experienced massive dislocations to their business because of the pandemic and the associated downturn. Some early indications are that over half of all restaurants globally will be shuttered within the next year. For those that do survive, new regulations, requirements and procedures will be the norm not to mention the need to address rapidly shifting customer preferences. Delivery and to-go have witnessed surge demand while in-person service has adapted to accommodate a contactless ordering experience. We’re sure to see more changes in the weeks and months ahead.
Education is also seeing rapid change. Students we’re told to go home last spring and as the fall semester dawns it’s expected that online and distance learning will take on a prominent role. Sporting events, conferences and all large gatherings have been completely shut down with no indication of when they’ll resume normal operations. More examples are available from retail, e-commerce, work-from-home, grocery, digital and software.
Corporate innovation has been built for this moment and can provide the leadership necessary to adapt to the ever-changing circumstances and lead the way forward. The tools, frameworks, data, research and models are available.
Thomas Knoll is the founder and CEO of Innovators CoLab (www.innovatorsco.com). He can be reached at email@example.com.