Why innovation is the key to economic recovery - Fergus Bailie

Even the most aspirational and transformational leaders were rocked by the events of 2020
Covid-19 came as a complete shock – shifting supply, demand, operating models and revenue streams, practically overnight.Covid-19 came as a complete shock – shifting supply, demand, operating models and revenue streams, practically overnight.
Covid-19 came as a complete shock – shifting supply, demand, operating models and revenue streams, practically overnight.

Covid-19 came as a complete shock – shifting supply, demand, operating models and revenue streams, practically overnight.

Many landscapes evolved faster in weeks than they had in decades, particularly in terms of remote working, public transport usage and high street footfall.

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In fact, everything – how we work, save, socialise, shop and spend – changed. And survival instinct kicked in.

Most business leaders reverted to the basics of ‘cash is king’, with a large number also battling to become as lean and efficient as possible. Some no doubt made ‘needs must’ decisions they may ultimately regret.

But this short-term focus was commonplace and – on the whole – understandable. Businesses can’t innovate unless they have a solid base on which to grow, after all. However, another key component of survival – among humans and organisations – is adaptability.

So, the overwhelmingly suppressed appetite for innovation, symptomatic of Covid-19, is dangerous.

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Yes, we saw great examples of firms pivoting when the pandemic hit – many extremely successfully.

And the efforts of these agile businesses – large and small – must be applauded. But do enough companies have their eye on the long game? Are they being bold? Are they thinking about ‘what could be’? Worryingly, no.

History is littered with examples of brands that stood still, and they disappeared as a result. Kodak, anyone? But traditionally, individual markets have changed. This time, the whole world has.

So where does the answer lie?

Waiting for the certainty of a ‘new normal’, is risky. Incubating some innovative ideas now, is savvy.

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Innovation means different things to different organisations, of course – influenced, not least, by the scale of the problem faced and the ease with which a solution can be defined. But Harvard defines innovation as existing in four categories – and it is imperative that one exists within the fabric of any business.

Sustaining innovation sees organisations improving their existing capabilities in a familiar market, and is therefore most common. Road mapping, R&D and acquisitions all aid progress here.

Disruptive innovation, on the other hand, requires businesses to deliver what people want with less, which requires not just product innovation, but business model evolution too.

Then there is breakthrough innovation, which surfaces when the problem is well defined but hard to solve. This requires the exploration of unconventional skill domains. It is high risk, but high reward, if successful. And lastly basic research, which is used when the problem and solutions are not well defined.

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Naturally, partnering with areas of knowledge such as academic research or tech hubs, helps turn a concept into a potentially profitable venture, but again the risk is high.

Some brands will only need to adapt a little, whereas for others, a seismic shift is required. The advice here cannot therefore be prescriptive. However, the danger of only piecemeal change is that it may not be enough, where markets have shifted so dramatically.

There is no magic answer, but business leaders cannot innovate alone. What they can do, is create an environment conducive to innovation – a mechanism to create and contribute ideas, without hierarchy, and crucially, implement them.

The aim of all of this is to heighten the strategic agility of any business. And it’s more imperative now than ever.

By Fergus Bailie - CEO of Bailie Group

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