According to a recent survey by McKinsey 1 , over 90 per cent of the executive respondents from 200 organisations across industries revealed they expect the way they do business to fundamentally change over the next five years.However, more than three-quarters were certain that while the pandemic holds great growth potential, this would be highly dependent on the industry.
Only less than 30 per cent of the respondents were confident that they were prepared with expertise, resources, and commitment to address upcoming changes. A focus on short term business continuity strategies seems to have led to poor investments in innovation and could lead to not being able to capitalize on new opportunities and finally lacking the required tools to do business under the new norms.
Leaders are faced with a clear-cut decision – to support innovation-led growth or not to – and this may leave lasting consequences for organisational continuity. According to the survey, as per historical data, there is clear evidence showing companies that invest in innovation outperform their competition during the recovery of a downhill.
What did the crisis disrupt? As businesses adapting to the new market realities, the core capabilities that used to make an organisation distinct may suddenly be less differentiating, and competitive advantages will shift dynamically. For most organisations COVID-19 has amplified the pressure on a decade-long journey in adapting businesses to digital mediums.
For example, the fundamental operations in sales and marketing have shifted to digital engagements with customers after the pandemic due to obvious reasons of mobility restrictions. Organisations are also figuring out that virtual technology allows them to do what was previously impossible, such as assembling the perfect team of experts for every sales pitch. In the sphere of digital sales, small-scale firms can now match up to their competitors. In another example, distributors in the food industry connect directly with their customers through digital channels, after the crisis devastated their core restaurant sales.
1 McKinsey, 2020
Other industries such as entertainment are also evolving to bring digital convenience and access to areas such as sports and even museums through mediums such as virtual reality. According to BAI (Bank Administration Institute), around half of consumers are using digital products more since the pandemic and a large part of that segment will continue to use them even after the pandemic.
The conventional norms in interpersonal communication was also hit, and overnight, the world has gotten accustomed to platforms such as Zoom and MS Teams for various purposes, including social connections, fitness, and even arts and religion. A few years back, setting up a videoconferencing platform was mostly limited to corporate customers, and required expensive infrastructure and extensive training. Things certainly changed in a blink of an eye.
Understanding such shifts allow businesses to gain long-term advantages. As the survey observed, companies that invested in innovation to deal with past crises have experienced exponential growth and performance, post-crisis. For example, companies that invested in innovation through the 2009 financial crisis withstood adverse market conditions and outperformed the market average by over 30 per cent, all while continuing to deliver accelerated growth over the next five years.
Capitalising on innovation Crises are a natural calling for innovation. They expedite the transformation of traditional processes – what would usually take years happens in a matter of days. To emerge as leaders in a pandemic-hit backdrop, organisations can rely on following key aspects to formulate a response roadmap for innovation:
Realise: Critically analysing the shifting landscape of business requires the ability to realise the change happening around. Organisations must invest in identifying such new trends in customer expectations and understand how these demands will impact the businesses. Evaluating and addressing the data obtained through this process will give companies a headstart in the innovation race.
Grow: Testing and comparing alternative business models is a sure-fire way to evaluate the limits of what an organisation could accomplish. Removing constraints and questioning previous assumptions about what will generate the most value are powerful ways to develop new, resilient business models.
Choose: Innovation requires a fresh look at the pipeline and reprioritisation of resourcing. Re-evaluating the innovation portfolio based on what will drive increased value creation gives leaders a window to reallocate resources and maximise presence in the right place in the new normal.
Aspire: Leaders may need to relook at their business aspirations and challenge the orthodoxies that shaped them. New aspirations should combine capabilities and strengths that would persist in the post-pandemic world.
Apart from these aspects, companies need to accelerate the pace at which they bring new ideas and offerings to the market. We see organisations globally stretching the limits of legacy processes and ecosystems, to deliver products in new ways. To enable acceleration, organisations need to create an agile culture that mobilises innovation. Additionally, speed is an important driver of innovation, as is the ability to persevere despite the hardships.
One recent example of software product innovation driven by crises is ‘DevGrade’, a candidate assessment platform to expedite the recruitment of tech talent without needing one-on-one interviews.
DevGrade is a first-of-its-kind solution created by 99x after identifying a gap in the industry in recruiting tech talent virtually. The result was a fully automated assessment platform that allows recruiters to hire the best candidates by virtually evaluating them in simulated real project environments.
The pandemic has shown corporate leaders how innovation plays a crucial role in reimagining their businesses to meet the demands of the new normal, not only to survive but to grow the business even more. Organizations need to understand that innovation, now more than ever, is a must. History has proven that it will always be a critical factor in emerging stronger from any crisis.
The writer Chatura de Silva is the Chief Product Officer at 99x where he leads the product management practices within the company. He counts over 17 years of industry experience in software product design and engineering. He is also part of the executive committee of the SLASSCOM Products and Platforms Council. Chatura holds a BSc from University College of Dublin and a MSc from Sheffield Hallam University.