Tough times don’t stop innovation. Unfortunately, too many managers become paralyzed by business downturns and quickly resort to cost-cutting initiatives indiscriminately. Examining organization spends and rationalizing cost structures during a recession makes sense. However, leaders do much more than that. They continue investing time and effort in innovating – by stopping ineffective initiatives, changing key business processes, and starting more productive behaviors. Outcome? Their companies usually emerge from downturns stronger than ever.
A popular view is that constraints, arising from an economic downturn, are actually a good thing for innovation. It is argued that abundance could, very well, be the reason why many corporates struggle with innovation. Too much time or money allow organizations to continue to follow strategies that lack immediate relevance or create overly complicated solutions that actually overshoot customer needs. On the other hand, constraints push organizations harder and create climates to enable innovation.
Recessions tend to be more amenable towards disruptive innovators
Instead of trying to play the innovation game better than existing competitors, the disruptor changes the game. Disruptors typically transform existing markets or create new ones by focusing on convenience, simplicity, accessibility or affordability. During the downturn between 2007-2009, entrepreneurs thought about convenience, they began eliminating inconveniences through digital forms of communication. WhatsApp, Uber, AirBnB were born during this period – all of them market disruptors.
Recessions are a great time for solutions that follow the KISS (Keep It Simple, Silly!) Principle
In an effort to be innovative, organizations will often pursue a complicated idea rather than a simple one. Complication can be a way to achieve uniqueness and make a new idea stand out. However, sometimes the best innovative idea is one that is simple — simple to execute and simple for the intended market to understand and simple to use. Thanks to the Covid-19 pandemic, limited access to banks & ATMs led to the popularization of mobile payment apps and the advent of digital wallets.
Recessions tend to be partial to the adage of “fortune favors the brave”!
The 2008 recession hit Adobe hard. Revenue dropped more than 20%. In December 2008, the San Jose-based company announced it would be laying off ~600 employees, or roughly 8% of its workforce. Something had to change. Shantanu Narayen, CEO of Adobe knew that laying a new and more durable foundation for the company would not be an easy task. Four and a half years later, Narayen stepped on stage at Adobe’s annual user conference to announce to the world that they had just completed one of the largest cloud transformations in history and would be a cloud-only company going forward. From 2009 to 2019 Adobe’s revenues tripled, and its stock price rose 29% a year, making it one of the decade’s top transformers.
When walking the path of innovation in tough times, it is important to…
- Keep the innovation pipeline lean. Trim out the laggards that have been ‘coasting’ and focus resources on areas/projects that are likely to have the greatest impact.
- Remember that even in tough times, customer-centricity has to be at the heart of all business choices – be it in the area of cost-cutting or innovation or redefining market presence.
- Not be afraid to experiment. Like a good scientist, start with a hypothesis. Design the experiment with clear objectives. Make a prediction about the outcome. Measure and assess results vis-à-vis the prediction.
- Find smart ways to collaborate
- Don’t freeze and focus on making it out of the downturn. Find the light in the tunnel, head in its direction and look for markers to turn today’s uncertainty into an opportunity in the future.
If you are an organization in the financial services sector and are looking to manage your innovation funnel, as also the process, EZDynamic would be happy to partner you in the process. We are a boutique consulting firm that caters exclusively to the Financial Services sector. We provide client-centric and innovative solutions in the areas of Business Strategy, Regulatory Implementation, Technology, Change Management and Staff Augmentation.
Schedule a call to learn how we can support your organization