Innovation and strategy in challenging times
We can identify scenarios based on statistics and lessons learned from the past to carry out strategic designs. However, the most critical task is to install organizational capabilities to adapt quickly to the market, regardless of the circumstances that arise in the future.
I worked in an organization for many years where my responsibility was to guarantee the definition and adaptation of strategies, business models, processes, and systems to the market’s needs. In the beginning, we thought it was a strategic exercise with projections of 3-5 years with annual reviews. However, a changing environment in the face of an unstable economy demanded a greater frequency of adjustments and complexity in our scenarios to attend to the changes that we frequently observe in the infrastructure, consumer needs, restrictions on raw materials, legislation changes among others.
My recommendation is to generate organizational capabilities to maximize value for clients and the organization, regardless of how many times we have to adapt the process, technology, and organizational chart as needed.
In this environment of significant changes and conundrums, companies today need to be innovative and agile to succeed in the long term. In order for us to do so I will describe some best practices that I consider useful in these challenging times.
- Meet the changing needs of customers
- Accelerate innovation
- Design easy-to-implement processes focused on the customer
- Innovation and adaptation as part of the organizational culture
1. Meet the changing needs of customers
Same clients, different needs
Let us think for a moment as the customer about something as simple as what shoes to wear today. Many of us have different styles of shoes; heels, or flats, in several colors to go with the style of our outfit. Now, in times of pandemic, which involve spending more time at home and a good part of the population teleworking (home office), what shoes do we need? Maybe a comfortable one can be quickly removed and put on, or one that can be left out and easily sanitized.
As the pandemic is a global element that changes several paradigms simultaneously, we can think of larger customer segments on a worldwide scale. Geographical differences for some products have now decreased or ceased to exist. In some sectors, it facilitates market studies and the design of massive products and services.
For these studies, it is also essential to analyze data generated from the operations, which could represent information on consumer behavior.
For example, the analysis of the purchase tickets of a supermarket can give information about the customers’ buying habits, and you could use it for making small changes in the establishment’s layout.
Finally, be careful not to think that you already know your customers; they are always changing.
Seeks to solve the problems of your target customer, generating valuable value propositions. Let see an example in Portugal, a Toy factory answered the pandemic with the world’s first toy that teaches children to fight the new coronavirus and is currently exporting them to other countries.
What is a Value proposition?
The value proposition is the set of characteristics, advantages, and differences that one product or service has over another, making the customer choose yours.
The Value Proposition Canvas is a visual tool that focuses on understanding customer problems and producing products or services that solve them and help grow your business or optimize by offering what customers need.
The Value Proposition Canvas was developed by Alexander Osterwalder and Yves Pigneur to complement the Business Model Canvas. And it has two sides: the customer profile and the value map.
The Customer Profile, here you capture what the customer needs in three sections:
- Customer Jobs: The things that clients try to do at work or in life.
- Gains: The results and benefits your clients want to achieve.
- Pains: The draw backs and problems that customers experience before, during, or after trying to do something.
The Value Map: The hypotheses of value based on your product or service
- Products and Services: A list of your products and / or services.
- Gain Creators: How your product or service generates the results and benefits that your customers expect.
- Pain Relievers: How you eliminate the things that annoy your customers.
Some of the advantages of using it:
- Gives direction helps you avoid wasting time, money, and effort by offering products or services that aren’t relevant to your target customers. The process improves innovation outcomes and lowers and reduces the risks of failure.
- Prioritizes value: the process of developing a value proposition forces you to prioritize what’s important to the customer and select value propositions that have the potential to motivate a customer to take action.
- Creates focus: identifying the fundamental initiatives, activities, and aspects of your business that will have the most significant impact on meeting your defined target audience’s needs and left the ones that are not important.
- Improves customer engagement: products and services are design thinking in the client’s understanding, not in the company’s needs.
- Facilitates good communication: Communicate to a customer what you offer, highlighting the gains and benefits when they take the action – whether that is signing up, trying, or buying a product.
2. Accelerate innovation
Nowadays, the pandemic increases the need for faster corporate innovation.
Three strategic management professors (1) wrote about Repurposing, an ultrafast approach to innovation centered on the Repurposing of readily available resources, ideas, knowledge, and technologies.
For example, Portugal’s toy company decided to use its factory to make personal protective equipment, such as glasses. It was a transformation in a record time of the entire production line that immediately guaranteed the maintenance of jobs and also the use of raw materials.
Another example: one beer company and distillery company partnered to produce hand sanitizer gel for hospitals. The brewery supplied liters of alcohol, derived from the processes of making beer without alcohol, for the distillery to turn them into alcohol gel for hands, in a process that, according to the news, follows the guidelines of the World Health Organization.
In synthesis, we can Repurpose a product by modifying it to fit a new use or Repurposing using a machine in a new way. It’s a fast way to lunch a product in the market.
How do we Repurpose?
Make a rapid inventory of what you currently have, such as products, facilities, systems, databases, software, and, last but not least, talent and expertise.
Rapidly integrate end-users. To meet end-users’ urgent needs through ultrafast innovation, you cannot wait for long market research to tell you what these needs are. It would help if you open communication channels that make it easier for end-users to voice these needs themselves, and managers must rapidly address them in the innovation process
(1) Lessons in Rapid Innovation From the COVID-19 Pandemic by Georg von Krogh, Burcu Kucukkeles, and Shiko M. Ben-Menahem
3. Design easy-to-implement processes focused on the customer
Once you have proved that your product or service fit into the market, it is essential to develop a Business Model; we recommend CANVAS Business Model.
A business model is a simple representation of the complex reality of a business. A business model’s primary purpose is to communicate something about the company to other people: employees, customers, partners, or suppliers. Business models are useful for managing change because they facilitate understanding and help design and/or review your internal process.
Yes, I know! We often thought about reviewing our business processes and came to our minds many documents with boxes and diamonds. Sometimes operational processes documentation usually gives more importance in complying with documentation and controls and less on the client.
It happened to me, too; I was in several projects where we dedicated many hours of work and discussion to document all the processes in detail. When the project was finished, though, the market changed so much that we had to review everything again.
There is an easier way to do it
One of the best practices that I have seen is representation and documentation of the process by levels (2). It initiated identifying the core business processes that are the “key activities” in the CANVAS model.
Those core processes must start and end with the client; that is, it begins with the client’s order (product, service request, etc.) and ends as we satisfy it. This first level must be represented in a phase model with a clear identification of the responsible parties for each phase.The next level opens each phase of the process in another more detailed process, and these, in turn, in procedures and instructions.
It is a representation that guarantees compliance with the value proposition, is easy to maintain, facilitates change, and encourages the organization’s ability to act. The basic principle of this methodology is to see the operational processes like a machine. A machine has components, which, in turn, have parts. Seeing it like this, if a piece is damaged, you can easily replace it. It also applies to updating processes. Let’s say, for example, that we have ERP changes; in a complex flow diagram, you will have to update everything to make sense. With the methodology by levels, you only have to edit some instructions, but the process is more or less the same.
The updating and continuous improvement could be in the executors’ hands, who, with clear business leadership, could generate more value in an agile and fast way.
Part of the Agile philosophy originally conceived for developing software must be applied to define or adjust processes. I am going to list some of the principles that fit this context.
- Satisfy the customer: Higher priority to satisfy the customer through early and continuous delivery of value solutions.
- Welcome changes.
- Deliver solutions frequently,
- Work together, all the team for the same objectives
- Individuals and teams motivated
- Face to face conversation
- A working solution is the primary measure of progress
- Continuous attention to technical excellence and good design
- Self-organizing teams
- Reflect and Adjust
Some signs that the processes require review:
- Processes that fall under internal criteria, restrictions, and controls only and not focus on clients
- They must comply to some indicators that do not improve the service.
- Processes that only benefit one area of the company and not the general objective of the company.
- Overloading of some areas because others do not do their job.
- An activity is carried out several times
- There are not clear responsible parties.
Remember, do not fall for of the commonly used phrase “It has always been done this way.”
(2) Multilevel methodology defined by: José Farias and Americo Azevedo form Porto university (FEUP)
4. Innovation and adaptation as a part of the organizational culture
Organizations often fail to execute their strategies because they do not have the right people and skills in place.
The IV Industrial Revolution is changing the nature of work as we know it. And the current pandemic too. In this context, with more rapid technological changes, the cycles of acquired skills are shorter than ever.
The challenge is to develop the next generation of professionals who will use artificial intelligence (AI), robotics, quantum computing, genetic engineering, 3D printing, virtual reality, and others that will come into everyday life and organizational culture.
According to an article published at MIT Sloan Management Review, there are Four skills that employees will need in the future, which is now. (3)
(3) Four Skills Tomorrow’s Innovation Workforce Will Need Tucker J. Marion (Northeastern University, Boston), Sebastian K. Fixson (Babson College, Massachusetts) e Greg Brown (PTC), MIT Sloan Management Review
Omniscience: Employees must grasp critical connections: links between physical machines and digital systems, between each step of the value chain, between the company’s current and future business models. Complex business processes today require employees to have a holistic view of the business.
Entrepreneurial mindset. Companies that encourage innovation benefit by having employees who help drive their companies forward. For example, one of the KPI that I promote in my team is profitability and client satisfaction.
Bottom-line focus. Communication and collaboration encourage employee inclusion. Openly sharing information and encouraging everyone to work as a team to find opportunities enhances results. Employees who recognize the impact of their work on profitability are more motivated to innovate and empowered to contribute to the company’s bottom line. For example, explain the strategy at any level and encourage people to propose an initiative to achieve it.
Ethical intelligence. Companies must use technology responsibly. Businesses should have processes that highlight ethical considerations, encourage open discussions, and recognize the effect of their innovations with all the team. Companies must promote their workforce to be competitive.
I will add, embrace changes as a mindset for all the company.
The responsibility to encourage these competencies rests with both individuals and the organization.
Companies need to create environments where people can develop skills as part of their daily work. On the other hand, an entrepreneurial mindset, for example, can only thrive within a company if it promotes a culture that tolerates failure and openly shares lessons learned.
To promote skills in people means incorporating them into conversations, indicators, and processes.
- Focus on solving the problems of your target customer, generating valuable value propositions.
- Design an easy-to-implement and maintain processes focused on the customer
- Build an Innovative and agile organizational culture promoting skills needed for the new challenges skills as omniscience, entrepreneurial mindset, bottom-line focus, and Ethical intelligence.
- Repurposing is an option to capture market opportunities at a low cost.
The Process, Technology, and People must respond to the market and client changing needs.
To deal with operations and strategic changes at the same time, a partner with experience could help. Pinnacle will undoubtedly technically support in this journey