Updated: Apr 2
Crises like natural disasters, pandemics or epidemics, conflicts, and wars can affect people in horrible ways. I wrote about this in "Crisis: Time to Innovate" before. After overcoming the initial shock, it turns more and more into a choice, how to react to the new situation. Innovation, in its various forms, from improvised to sophisticated solutions, is a key to mitigate and eliminate the numerous problems that occur in such a scenario. Everyone can become an innovator!
Due to our highly interdependent world, a crisis of any type often also affects the economy. Without prior warning, entrepreneurs and business leaders face new challenges that can turn into existential threats.
"Turn crisis into opportunity" is a familiar saying. I am aware that people in horrific pain who lost loved ones in tragic incidents or are otherwise affected by a crisis, most probably are not interested in such slogans.
For those of us who believe that business means more than making money, a crisis offers plenty of opportunities to help people by solving real and sever problems. Solving problems and enriching people's lives is the essential purpose of innovation.
Disruption and Discontinuity
Under normal conditions, well-established companies are prone to the threat of "disruption," Christensen famously explained. They follow or create trends and innovate in incremental steps until they nearly overshoot the market expectations. They can get disrupted by an innovative competitor with a significantly different approach that is more attractive to customers. These disruptions are often predictable. The core of the problem lies in the unwillingness or inability to see and act on upcoming disruptions.
Crisis differs from disruption in several aspects. Disruption usually approaches companies in the dimensions of markets and competition, for example, triggered by a novel technology. Crisis, in contrast, affects companies often in multiple ways by altering the environment.
Tidd & Bessant explained the so-called "unthinkable events" as part of the broader term "discontinuous conditions". They mention "shocks to the system" and "accidents" as significant sources of innovation.
Everything outside and inside a company changes overnight: For instants, the staff is affected by health issues and uncertainty, markets break down or disappear, supply chains get interrupted, and financial stress occurs.
A few companies manage to come out of a crisis more robust than ever before due to there countercyclical actions. When businesses navigate successfully through a crisis but dismiss the opportunity to innovate, they can get disrupted in the aftermath by those who seized the chance of innovation. Out of pure necessity, some firms dive into new fields and shake a market up. While established market players look back on a legacy with immense expertise, others act free from history and paradigms and turn that into advantages.
What can you do?
Crisis is a phase where leadership is required. As an entrepreneur or business leader, it's your opportunity to prove your leadership qualities and take action. People might face and suffer from severe problems that demand rapid useful solutions. You can mitigate shortages of essential products and services.
Assess the novel situation and the magnitude of the shifts. Check whether your products and services address at least one of these problems.
If yes, go for it. Help people. Act with an ethical sense of responsibility. Don't waste time. Adjust and optimize if it makes sense.
Anticipate future scenarios and start innovating. Be aware that if you only try to cope with the apparent shifts by merely adjusting your pre-crisis offerings and the way you produce them, you might get outpaced by the dynamics of the crisis.
If none of your products and services address any issue of the crisis, or your markets broke down or disappeared overnight, you need to take action immediately.
Stop thinking about traditional markets and market segments, as they may never come back as you knew them. Instead, set up a team and get directly to the level of problems. Try to describe the issues that occurred during the crisis in brief and meaningful sentences, sketches, and add relevant facts and data. Prioritize and start your considerations with the most severe challenges and issues people are facing. Estimate how many people are affected and need solutions. Start thinking about the functions and relevant characteristics that address these problems.
Identify Competencies and Resources
As your current product and service offerings appear to be worthless under the new conditions, go directly to the level of your competencies and resources: Create an overview of all your competencies and resources you and your team(s) have available. Use simple ways to assess them and categorize them, for example, as strong, medium, or weak, or as large, medium, or small. You should also consider the competencies and resources of your company's network, as well as private networks, and beyond.
Create Awareness and Prepare People
Before you launch the creative process, you have to create awareness! While there might be no doubt among the workforce that something extraordinary happened, the reactions probably differ. People can react with the entire spectrum to a crisis, including shock, panic, denial, desperation, hysteria, or depression. That's human. As an entrepreneur and business leader, you should approach the people with empathy. You also have to create awareness and a shared understanding of the crisis and recent incidents. Initiate an open discussion about the effects on life and the business.
From time to time, the world experiences exceptional incidents and phases that cause significant changes. Consider and discuss openly the magnitude of the shifts taking place. Some areas of life remain relatively unaffected. Others are changed dramatically and sometimes forever.
Without a doubt, emergency responses by authorities are essential factors for the survival of people and companies. But particularly businesses need to be aware that every financial aid package will end one day. And resources in companies are always limited. Therefore, the amount of time for the adoption regarding the new situation is limited and often shorter than expected. Everyone in your organization must understand this.
Try to assess the magnitude of the changes and their impact on your business. Share your insights with your workforce and form a team that gets the gravity of the challenge and grasps it as opportunity.
Don't delude yourself and ensure that also others don't mislead themselves by hoping for a comeback of the familiar pre-crisis situation. The world has been changing anyways, and some developments are irreversible by their nature. People just don't take much notice when changes take place in small steps at a convenient speed.
Remember how technology has altered our private and business lives in the last one or two decades. (See: "Coronavirus: What if this had happened in 2005?" by Rory Cellan-Jones)
It's most probably wishful thinking and a dangerous illusion to assume that the world, your life, or your business will ever turn back to the pre-crisis situation.
As I explained in "Crisis: Time to Innovate," when you have managed to overcome the shock, it turns into a choice of how to deal with the new situation. When the world changes dramatically, take action courageously. It is crucial for the success of the subsequent steps that you convince, prepare, and encourage the people in your organization!
Shocking incidents can also help to overcome hurdles and resistance. When people understand the severity of a situation, many of them are more than willing to help, to change, and to innovate. Problems turn into opportunities.
Get Creative and Make a Giant Leap in Innovation
Describe and re-describe concisely the problems you want to address. Do this in teams, and do not hesitate to integrate persons affected by the issues into your creative efforts. Add also persons from partner companies or experts to the groups. Use methods and tools to inspire people and to foster the stream of ideas. Try to find functions and characteristics that would solve or at least mitigate the problems you are addressing. Combine and re-combine these elements and document the approaches.
Try to get ahead of the current developments. Sometimes, a crisis accelerates trends and developments that have already been taking place for some time. For example, think about the long-term trends of electrification and digitalization. They are interrelated and affect many different sectors, as I already explained in "Trends and Innovations."
Depending on what your business is and could become through innovation, you should consider the integration of various modern technologies. You might want to think about communication and collaboration technologies, Artificial Intelligence or machine learning, virtual reality, autonomous systems and robotics, 3D printing, or DNA sequencing and genetic engineering, to name just a few topics.
Innovate! Take the results of your assessments and considerations as input and motivation to the creative process. Share the information with your workforce. Let creativity and ideas flow. As mentioned many times before: Innovation means change. Use the momentum.
Define scopes and create ideas for solutions to the problems you address. Engage in co-creation with those who are directly affected by the problems you want to solve.
Competencies and resources are limiting factors of your innovation capacity. Acquire new skills where necessary and possible within a limited amount of time. Furthermore, consider collaborations with partners who have complementary competencies. It is particularly helpful when you want to integrate emerging technologies where specialists can be rare.
Select the most promising ideas. Critical criteria for this selection process can be: Solving or mitigating a relevant problem, time to realization, feasibility, competencies, resources, and economic viability.
Focus your development efforts on one or a few ideas and approaches. Aim for a "Minimum Viable Product" proposed by the "Lean Startup "philosophy. Always be aware that time for development is minimal.
Once again: Ensure that the ideas and innovations you aim for really go far enough in comparison to the shifts caused by the crisis. You have to take into account that others will probably also innovate during this extraordinary phases. You want to take a giant leap and get ahead of the game!
Transform the Organization
In long periods of stability with business success, organizations also accumulate non-essential activities. Sometimes these activities and related structures seem to live a life of their own. The shockwave of a crisis can function as a wake-up call. It provides people an opportunity to refocus on essentials or get out of a state of monotony and lethargy. Change becomes possible, as paradigms and frozen structures are shaken-up.
Supported by competent and visionary leadership, it can become the start of a successful transformation of a company and its business. A crisis is an excellent opportunity to refocus the entire workforce on what matters. Everyone gets the chance to grasp a new kind of purpose and contribute to innovation that makes a difference in people's lives.
Ideally, people will put aside all the little conflicts, reasons for unhappiness, and tactical games at least for a while. Hopefully, everyone will do what he or she can to develop the innovations and bring them to the customers. If you, as an entrepreneur or business leader, take this opportunity for transforming your company, a positive outcome can be that people commit to a new purpose, and the whole organization realigns itself to the novel goals.
In times of a crisis, discontinuity and disruption pose significant risks to businesses. After overcoming the initial shock, people must avoid falling into the trap of delusion that things will return to normal. It's a situation where leaders show and can prove their qualities. Entrepreneurs and business leaders should take these steps:
Identify competencies and resources
Create awareness and prepare people
Get creative and make a giant leap in innovation
Transform the organization
Always be aware that some companies manage to emerge from a crisis in a better shape than ever before.
Do you have any questions? Let's talk and find out how I can help you. Schedule Your Free Discovery Call Now.
Sources and Recommendations
Cellan-Jones, Rory (March 28, 2020). Coronavirus: What if this had happened in 2005? [BBC News]. Retrieved from https://www.bbc.com/news/technology-52052502
Christensen, Clayton M. (2016). The innovator's dilemma: When new technologies cause great firms to fail (The management of innovation and change series). Boston, Massachusetts: Harvard Business Review Press.
Ries, Eric. (2011). The Lean Startup: How constant innovation creates radically successful businesses. Retrieved from https://itunes.apple.com/us/book/the-lean-startup/id422540072?mt=11
Tidd, J., & Bessant, J. (2009). Managing innovation: Integrating technological, market and organizational change (4th ed.). Chichester: Wiley
Thiebus, Sven (March 19, 2020). Crisis: Time to Innovate. Retrieved from https://www.thiebus.com/post/crisis-time-to-innovate
Thiebus, Sven (March 11, 2020). Trends and Innovations. Retrieved from https://www.thiebus.com/post/trends-and-innovations