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It’s not about the technology or the innovation, but how organizations are able to effectively evolve their business model to respond quickly to the changing needs of their customers, Says Chris Locke, CEO, Corporate Innovation at Rainmaking.
What should innovative teams do differently in the time of the COVID-19 crisis?
If they are a high performing team, they shouldn’t be doing anything radically different. The key activities still apply:
- Gather insights into where the market is moving to and what are the emerging opportunity spaces from COVID-19 that provide the organization with the best opportunity to drive future growth.
- Ensure you are investing into innovation activities that support the core business; this is where the focus may change, so adapt accordingly. Help expand the business model into adjacent markets or customer segments and activities that are more disruptive and transformative.
- Rigorously assess your portfolio of innovation activities and use data to slash non-viable projects faster and focus the investment on the ones that show evidence of traction and viable business models.
- Measure and track everything. You need to be able to justify the continued investment into innovation
Please tell us more about your recently launched Compass corporate innovation tool.
The question that we regularly get asked is ‘whether we should invest in innovation.’ Yet that is the wrong question to be asking; it’s not ‘whether’ but ‘where.’ However, the reason this is a difficult question for companies to answer is that many build their innovation strategy with the same approach as they apply to their core business. This usually translates into believing that driving future growth can be achieved by placing a few big bets with heavy capital investment into areas that are usually technology-driven, as opposed to the business model, e.g., Blockchain, where they have no or limited capability or the competitive advantage to succeed.
Companies need a new way of navigating this new level of uncertainty, as the old methods are no longer fit for purpose startups provide valuable signals and data points around emerging opportunity spaces that allow a corporate to understand the competitiveness and potential of an area they want to move into and what vehicles they should use in order to develop the capability.
The ability to have this data and insights from startups enables the corporate to identify where they want to play, but not how to win. How to win is the process that turns the insights into action and helps business units or areas build the investment case for strategic innovation and clearly outline the roadmap to develop the capability by building, buying, or partnering.
Do you see the next few months as an encouraging time for startups to move ahead with their plans? If they do, what should be their single sharpest focus?
Absolutely, at times of rapid disruption, there is a great opportunity for startups to be able to take advantage of changing needs of the market and respond with new innovative approaches to business models that can help them enter markets or customer segments that were previously difficult to break into.
It is no coincidence when you look back across history; some of the largest companies started during times of economic downturns. This is not just the most recent one of Uber, Airbnb, but companies such as Microsoft, Disney, and IBM were all founded during deep recessions.
The reason is that many of the current incumbents serving the market are hampered by their business model and the fact their organization is designed around making that business model work, so as they try to fight to keep their existing business model relevant it leaves the door open for startups to exploit new customer needs.
As for the single focus, it’s the same as it always has been – a relentless focus on the customer! Are you addressing a big enough pain point that they will pay to help you solve it, and are there enough of those customers to make it a scalable business!
Post-COVID world, some say, will be radically different from the current business paradigms. What sectors do you see emerging as winners in that scenario?
COVID-19 has called into question the need for offices or certainly the size and number of offices that many large corporates have. There are clear benefits for working from home, so those who can help companies migrate large parts of their workforce to function virtually should have an incredible opportunity to thrive in a post-COVID 19 world.
A second sector will focus on tackling climate change. We have seen the impact that reduced emissions from transport and industry has had in cities and its surrounding areas, so this will probably be the unexpected benefit of COVID-19. Expect to see even further investment and change in customer behavior to accelerate this.
Business transformation has been a buzzword for long enough. What will it mean now? Is it about digital technologies or about innovations in existing ones?
It’s not about the technology or the innovation, but how organizations are able to effectively evolve their business model to respond quickly to the changing needs of their customers but also the opportunities to serve new ones.
Those who are able to harness the insights of where the market is moving to and begin to run experiments to validate what a new business model looks like and then scale quickly will be the companies that will thrive in the future as opposed to surviving.
Chris Locke is Chief Executive of the U.K. and Europe at global venture builder and innovation consultancy Rainmaking. Locke also heads up the Global Solutions department. He and his team work with corporates to help them implement a systemic approach to innovation and to develop new business models and capabilities and the cultural changes needed to unlock future growth. His division recently launched Compass, a new approach that gives corporates a unique view of their market, using real-time data on where hotspots of startups are emerging across their value chain and where venture capital is being invested in the most disruptive innovations.