Nowadays, many companies are suffering from the crisis. According to the economists of Euler Hermes, a credit insurance company, the number of bankruptcies will increase to 26% in 2021 vs 2019. The prognosis worldwide is even +35%.
On the other hand, we have seen some great examples of companies who have changed their business model or strategy as a response to the coronavirus pandemic. In this article, you will learn how innovation helped companies to cope with the COVID-19 challenge.
Innovation in times of a crisis: a call to take action
We have already talked about the difficulties to successfully innovate in an organisation. But let’s take a step back: how much time and resources do organisations invest in innovation related initiatives? How much do you? This is already a first important step that is often forgotten. It all starts with a common understanding of the challenges and a joint ambition. The so called Big Hairy Audacious Goal. When that’s clear and the ambitions are aligned, it’s time to decide and to take action!
Most people overestimate what they can do in one year and underestimate what they can do in 10 yearsBill Gates
STEP 1: BUILD UNDERSTANDING
Many organisations have a short-term focus. Which is completely normal. Daily operations require the most attention which sometimes prevents people to reflect on what can happen within a decade. Or to think about what could be different and maybe even help your organisation to grow.
Let’s take a recent example: florists. You might ask yourself the question: how on earth can a florist innovate and grow by changing their business model? It’s possible! COVID-19 was an accelerator in their sector. This year’s Mother’s day, statistics showed a higher revenue relative to the previous years. The answer is simple: many florists started a web shop and because of this, they appealed to a new segment. Teenagers, young people who don’t like to go to a physical shop and who spend their time online. They surprised their mum with a flower bouquet, ordered online. In this case, COVID helped to build understanding. But never wait for a crisis to make the decision to change.
Unfortunately, there are numerous examples of companies who didn’t take the time to listen to the signals from outside. One of them was Blockbuster, thé video provider of home movie and video game rental services in the US. Probably you know that they have been declared bankrupt 2010. But did you know that Reed Hastings, CEO of Netflix, tried to convince them – repeatedly – to become the streaming service of Blockbuster? Hastings was convinced at that time that it was more user-friendly and cheaper for the customer to hire movies by streaming them via the internet.
He was right, Blockbuster was too late. Today Netflix is a 25 billion USD company and has more than 203 million paying customers. But that doesn’t mean they can sit back and relax. What will be our ‘television’ behaviour within 5-10 years?
Some tips on how to build understanding:
- Listen to the voice of your customers, but also of non-customers to understand what’s happening around your business.
- Embrace the insights of new employees: let them talk.
- Take time for strategic conversations with management and with your teams, even if the daily operations is requiring a lot of attention. The Business Model Canvas by Alexander Osterwalder is a useful tool to evaluate the different components of your organization.
- Google’s 20% policy: it is a bottom-up innovation approach where employees can spend 20% of their time on innovation days.
- Stimulate knowledge-sharing between different teams: do not only focus on numbers during a team gathering, but also on best practices and market insights.
In a next blog, we will address an important second step, namely how you can shape choices.