Business innovationThe Pandemic Is Liberating Firms to Experiment with Radical New Ideas
The pandemic may be an unmitigated calamity, but in some quarters it is spurring innovation, as firms come up with new ways to keep making existing products despite disrupted supply chains, or, as demand collapses amid self-isolation, create new ones. Some are changing the very way they innovate.
The pandemic may be an unmitigated calamity, but in some quarters it is spurring innovation, as firms come up with new ways to keep making existing products despite disrupted supply chains, or, as demand collapses amid self-isolation, create new ones. Some are changing the very way they innovate.
The Economistwrites that the first thing about corporate innovation that the pandemic has changed is its cost. Doing anything novel at large firms typically involves oodles of capital. Right now, while companies preserve cash to stay liquid as revenues dry up, fresh investments are the last thing on most bosses’ minds. Some are discovering ways to do things differently without huge outlays.
The Economist adds:
But the defining feature of the latest innovation revolution is breakneck speed. Companies are being forced to raise their corporate metabolism and overcome “analysis paralysis,” an affliction caused by top managers having pored over the same irrelevant case studies at business school. In a recent briefing, consultants at Bain urged companies to throw out old data, test quickly and often, and assume you will be in testing mode for some time to come.
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Confronted with the sudden closures of its primary distribution channel to restaurants and institutions, Sysco, a big American food-distribution firm, built an entirely new supply chain and billing system to serve grocery stores in less than a week. Long-delayed initiatives have suddenly been rolled out at scale overnight. A global standards body converted one of its main customer offerings from in-person to online in two weeks, says a person close to it.
The crisis has emboldened managers to move faster and to try out risky new ideas on larger groups of customers.
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Weighed down by legacy assets and protected by oligopolistic profits, many big firms are not natural innovators. Most corporations that have them relegate geeky innovationistas to skunk works that besuited types steer from the c-suite.
In quiet, predictable times, a command-and-control approach to innovation works fine, says Darrell Rigby of Bain. And, adds Gary Hamel of the London Business School, “In a small crisis power moves to the center.” But, he reflects, in a big one “it moves to the periphery.”
“It may stay there for a while after the pandemic passes,” the Economist says.
