Why Organizations Should Invest in Innovation During a Crisis
The business decisions we make during a crisis are often more important than the decisions we make when no market threats exist at all. During a crisis, many leaders may be less inclined to invest in critical business areas such as marketing, consumer research, or professional development.
I recently read an illuminating report from McKinsey & Company about innovation in a crisis, and why it is more critical than ever. Looking back on my career, COVID-19 is the third major crisis that has significantly influenced the business leaders’ priorities and the global economy. The first crisis I witnessed was the World Trade Center attacks on September 11, 2001. The second crisis was the Great Recession, which began in March 2008 and cost the US economy $22.8 trillion. How critical is innovation for sustaining growth and competitive advantage when an unexpected crisis unfolds?
According to McKinsey’s research, approximately 70% of executives surveyed believed COVID-19 to be one of the biggest opportunities for growth in their industries. Yet, only 30% of those same executives felt confident that they are prepared to address those changes they see coming.
Given these staggering statistics, I spoke with Amy Radin about the importance of investing in innovation during a crisis. Amy was Citi’s first Chief Innovation Officer and held executive marketing positions with American Express and AXA. She now works with leaders facing the imperative to innovate to help them pursue new sources of growth and value while reducing inevitable risks.
AJ: Thank you for taking the time to discuss why innovation is critical during a crisis. What concerns you about the data from this McKinsey study and why?
Amy: Innovators always face curveballs, but the events of the past year are a test of everyone’s capacity to demonstrate how they anticipate and adapt to rapidly-changing conditions, heightened unpredictability and uncertainty, and, in some cases, a sudden need to pivot to capture new opportunities.
The McKinsey study contained a number of concerning statistics emphasizing that the COVID-19 crisis presents an opportunity that few executives feel equipped to pursue: 90% responded that “the crisis will fundamentally change the way they do business over the next five years,” only 21% reported that they feel they “have the expertise, resources, and commitment to pursue new growth successfully,” and a full two-thirds believe that “this will be the most challenging moment in their executive career.”
Of particular concern is that, in the face of acknowledging the magnitude of change occurring, the study also reports a 32 percentage-point drop in the share of executives listing innovation as #1 or #2 priority pre-crisis vs. at the time of the study, Spring of 2020.
AJ: The pandemic changed the way we work overnight. Based on your previous experience as a Chief Innovation Officer, what characteristics do you think companies need to adopt to drive sustainable growth in this unprecedented era?
Amy: I don’t think the answers are mysterious and probably won’t be terribly surprising to your readers. All require leadership, hard work, and sensitivity to others – customers, employees, and a brand’s other stakeholders. I am constantly reminded that there are lessons hiding in plain sight. It’s easy to look beyond the obvious, but we don’t have the luxury of missing those lessons now. There is too much at stake for our employees, society, and the economy.
Here are six actions to which company leaders and their teams must commit to thrive through and beyond this crisis:
AJ: Can you give us an example of a company that is doing a great job navigating these unprecedented circumstances? How is innovation fueling their winning strategy?
Amy: I haven’t been inside a company that has gotten it all right, but I see examples every day from local shops in my town that have created great customer experiences incorporating remote shopping, home delivery and takeout and enabling their businesses to operate successfully, and in some cases open up new sources of revenue that won’t go away post-pandemic. In terms of preparing for the future, I have spoken to people in the architecture and construction services industry anticipating and preparing their roles to help homeowners and commercial real estate managers reimagine their physical spaces as our living space and work space are both being redefined. In between, I see examples of employers showing empathy and providing tangible support and tools to employees thrust into work-from-home environments while juggling extremely-demanding childcare, eldercare, and other personal responsibilities.
AJ: From your perspective, how do you go about separating good ideas from bad ideas?
Amy: “Good” ideas are:
AJ: Why should business leaders invest in innovation during a crisis?
Amy: The Chinese character for crisis is a combination of the symbols for danger and opportunity. With that in mind, business leaders must invest in innovation in times of crisis to address dangers, seize opportunities, and build momentum to accelerate changes as market forces advance. You cannot win a race from a standing start. Innovation must be “always-on” to have real power.
For more information on how Five to Flow can support your efforts to manage change during a crisis, learn more about our Process Solutions by visiting our website. You can also learn more about Amy's “Seek Seed Scale” framework and how to work with her by visiting her website. Her book, The Change Maker’s Playbook: How to Seek, Seed and Scale Innovation In Any Company, is also available for purchase on Amazon and other online booksellers.
What are your thoughts on investing in innovation in 2021? We welcome your comments below.
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