There is a famous quote – ‘The only thing predictable about life is its unpredictability’. The Covid 19 impact is the most interesting and relevant example of the same. Even the best of minds cannot claim to have planned for the same. Especially from the point of view of the businesses and economy!
As per the Deloitte article (https://www2.deloitte.com/in/en/pages/consumer-business/articles/following-up-on-the-immediat-economic-response.html) the rampant spread of COVID-19 across borders and geographies has severely impacted almost the whole world and triggered significant downside risks to the overall global economic outlook. Due to the lockdown announced by the Indian Government, the Indian economy has also slowed over the last few months. For most businesses, the slowdown has been in the form of supply disruptions, a fall in consumption demand, and increased stress on the banking and financial sectors. However, like the Great Depression (1929), the dot-com bubble bust (1997- 2000), and the 2008 financial crash did in the past, the Covid-19 is changing the way the world works.
Many businesses are changing gears fast and can sustain and survive better than others. They are using innovation and design thinking to adapt to unprecedented times. Organizations, especially in the e-commerce, digital education and related, entertainment, wellness, FMCG industries have adapted to the customer need, the market environment, and its challenges, and have found little green shoots.
As per the Financial Express article dated 19th May 2020, the e-commerce firms that are doing well, are those that found innovative process solutions to the disruption of supply chain due to prohibitions in terms of deliveries across various regions. Amazon and other e-commerce majors tied-up with local kiranas or neighbourhood mom-and-pop stores to fulfil the market demand. Recently launched online store JioMart by Reliance Industries, which went live on WhatsApp in select locations in Mumbai and other locations claims to have tied up with millions of kirana stores. Paytm Mall, meanwhile, announced tie-ups with over 10,000 neighbourhood stores to scale up its grocery delivery services around the country. (reference article dated 6th June in TOI). Similarly, an organization like HUL which has been operating in Indian markets for over 80 years with over 35 successful brands, chose to re-plan their innovations, adapt to the “emerging demand patterns in the short term and prepare for any lasting changes in consumer behaviour.”
New age organizations were faster to innovate due to the sheer nature of their inception and culture. For example- Cultfit, owned by the founder of Myntra, Mukesh Bansal adapted fast to the market realities. They used the market conditions to increase trials of their digital platform of Curefit, further monetizing it to create relevant revenue streams. Lenskart integrated store inventory with Google to ensure that consumers could access products even before they come to the store by just searching on Google or could fix appointments to minimize out of home time. Useful innovations provided solutions to many challenges faced by different organizations during these hard times.
Historically too, it has been observed that the changing economic environment, socio-cultural changes, technological changes, digitalization, caused a profound effect on organizations’ growth. Many world-famous companies like Yahoo, Nokia , Kodak , Xerox, and many others are a patch of what they were earlier, revenues and market share, while some companies no longer exist. Legendary companies like American Motors and AT&T, which were part of the Fortune 500 list have been replaced. In India too, many large corporate organizations have lost their market shares due to the inability to adapt and grab opportunities thrown by the changing markets. A case for example in India would be Meru Cabs. While they were one of the first companies that entered early in the organized Indian Cab Markets, entry of Ola and Uber in the cab market displaced their market share and revenue. Similarly, brands like Airtel, Hyundai, who were strong market leaders in the late nineties and early twenties are now trying to adapt to the dynamic nature of the market to sustain and grow. On the other hand, new companies like Facebook, Amazon, Netflix, Google are prominent in the list of Fortune 500 companies. India has also seen young companies becoming Unicorns – Ola, Quikr, Snapdeal, Nykaa, and 30 others in the last 10 years. A particularly important contributor to these organizations’ reasons for the growth has been their culture of innovation. All these organizations have systematically created an environment to ensure innovation – in product and processes …. Thereby equipping them to perform better even during the trough periods in the economy.
Different organizations have adopted different corporate entrepreneurship models to ensure they invigorate their growth, through innovation. There are organizations like Google, which encourages all employees to have an interest in innovation and motivate them to create new ideas and products to grow business. Employees in Google are allowed to use 20% of the time to think of new ideas, sell their ideas internally to get more team members to work on the idea, to fine-tune their concept and reach till the development of a prototype (i.e a sample model of the final product/concept to be built, created with the objective of testing the idea in the market). Employees, teams can also approach the management for funding the idea. Further, these employee/teams get financially rewarded if the innovation reaches the market and gets acceptance from the customers. At any point in time, Google supports approx. 100 projects with 70% of the projects supporting Google’s core business, 20% representing emerging businesses, and 10% focusing on experimental ideas. (Google case study – Source – MIT Sloan Business Review). This ensures a consistent flow of disruptive innovation.
On the other hand, there are organizations like Samsung, Cargill, and ITC that follow a focused approach to corporate entrepreneurship and ensure innovations continue to grow and expand the markets. For example, the ITC Research and Development Centre has played a crucial role in sustaining a competitive advantage for the company. Its mandate is to go beyond supporting its existing products and services and create innovations that not only meet but anticipate consumer needs. Many Indian Information Technology firms like TCS, Wipro, and Infosys as well as pharma companies follow this model of the innovation to create products and services that are ahead of the markets.
Each organization identifies and adopts its own model of innovation depending on the type of innovation it is targeting – be it a routine innovation versus radical innovation versus disruptive innovation versus architectural innovation. However, to be successful in its endeavour to invigorate or re-invigorate, each organization needs to build its strategy, internal systems, and the right kind of culture for innovation.
To summarize, as the speed of change and uncertainty in the business environment increases, no organization can afford to be complacent on innovation. And the words of Peter Drucker ‘Innovate or Die’ hold even truer today.
Do share any other interesting examples of process or product innovations that have been adopted recently