Innovation in times of crisis

The world has in many ways been turned on its head. Rather than borderless mobility, abundance of alternatives, and extensive cultural sharing that we are accustomed to in the 21st century, individuals and organizations across the globe are faced with physical restrictions, political turmoil and governmental interventions. As a marketing professor interested in innovation, consumer behaviour and digitalization, it has been exciting to observe how we humans are able to adjust and flourish in times of crisis. Instead of giving in to the circumstances accelerated by the COVID-19 pandemic, I believe that we are doing what human beings do best; we adapt and evolve.

In my recent research together with the Dutch consumer insight company TrendWatching and its sister organization Business of Purpose, we investigated how organizations are innovating to overcome the challenges of the COVID-19 pandemic. Thousands of innovations were identified in a very short time in this crowdsourced platform. Similar ventures have been developed, such as the OECD’s Observatory of Public Sector Innovation (OPSI) platform designed to gather innovations in the public sector and governments. Their objective is to inspire and coordinate innovation efforts to mitigate the unprecedented and rapid disruption of society.

What I can observe is that these turbulent times have also had a positive effect on the creativity level of private, public, governmental and civilian actors. While some of the characterizing issues of these innovations are clearly related to the ongoing pandemic, other issues have more long-term consequences for how innovations are developed and designed. So, what can we learn from innovation in times of crisis?

Extensive reflection and sensemaking. In normal business circumstances we tend to build on linear thinking, relying on the relevance and viability of existing capabilities and resources. But in times of heightened turbulence, less can be taken for granted. Innovation as a driver for development requires more consideration about one’s activities, alternatives, and the broader surrounding environment. Innovation is thus a sensemaking process around not only what is, but also about what could be.

How willing and able are we to stretch our current capabilities and resources to become something new?

How willing and able are we to stretch our current capabilities and resources to become something new? How can we ensure relevance of and envision a future market for our current capabilities? In times of crisis, it is easy to become paralyzed and merely ride out the storm, but research shows that the ability to step out of the comfort zone of the current scope and making a case for new activities is clearly an opportunity for radical growth. An example of stretching boundaries is beauty brands’ recent initiatives to educate consumers, provide virtual consultation and online coaching and thus marking a path away from merely selling the brand in physical stores to providing additional intangible value for consumers in their own space. 

Networks and widespread collaboration. Our research shows that it is challenging to extend beyond the current business environment, especially when under pressure. A crisis can nurture an intensified interest in collaboration and cooperation with new actors to accelerate creativity. The pandemic has brought on new service delivery systems, especially in the tourism and hospitality sectors to mitigate the physical restrictions and change in buying behaviour.

However, collaboration extends beyond the strategies around production and delivery and involves challenging the over-confidence in individual approaches and single data-sets. Data and practice sharing is a necessity for innovation. Real-time data collection among a broad set of public and private actors has been accelerating, opening up previously hidden datasources, cross-fertilizing and linking diverse methods and evidence from different domains to gain a more holistic understanding of issues in the surrounding environment.

Customer is (still) king. Consumer behaviour will never be constant and cannot be taken for granted. Consider for example the demand for homeleisure wear and stay-in apparel that emerged as a new category in retailing. This face of quarantine fits has fuelled also the consumption of interior design pieces, ambiance fragrances, and other spirit-boosting objects for the home. The stay-in trend may persist if consumers are permanently nudged to favouring in-home experiences and multi-purpose loungewear. What a crisis can teach business managers is that while ecosystem collaboration is essential, the customer is and will remain the main stakeholder of the business and should be the key actor of innovation.

This is reflected in the management guru Peter Drucker’s classic statement: Without customers there is no purpose of the business. And similarly, an innovation is successful only if there is a customer who sees value in it. Customer as a notion involves all types of actors, irrespective of the label: user, buyer, consumer, citizen, patient, etc. Public and private organizations must thus take an outside-in approach and not get caught in the internal visions only but be thoughtful of issues happening in the surrounding environment that are not linked directly to the organizations’ business areas.

Individual and collective well-being. It is not surprising that in times of turbulence we try to balance and even out the aftermath. A commonality of innovations pouring out of the pandemic is the focus on collective and individual well-being. The health and humanitarian emergency aside, to mitigate the growing uncertainties in society, governments and organizations alike pursue social bricolage entrepreneurial thinking to foster collective and individual well-being. Examples include philanthropic and altruistic innovations, such as free online consultation, and safety innovations, such as schedulable store opening hours for vulnerable customers. What they have in common is the emergent and shared focus on societal well-being.

In times of crisis, markets are created and transformed. Innovation becomes a question of resilience, not only differentiation and growth. I believe that the key takeaway of the COVID-19 pandemic is that creativity and innovation don’t have to stall during a crisis. In fact, they should accelerate. If handled well, innovation is an opportunity to nurture profound organisational renewal and enhance the viability of companies in the eyes of consumers, policy makers, and other market actors. A crisis at any magnitude can and should be used to improve the resilience and sustainability of the business and the surrounding environment. In that sense it seems that in times of crisis, public and commercial innovation initiatives align, geared toward societal welfare at large.

Kristina Heinonen
Professor of service and relationship marketing, Director of CERS

Heinonen, K. and Strandvik, T. (2020), “Reframing service innovation: COVID-19 as a catalyst for imposed service innovation”, Journal of Service Management, Vol. ahead-of-print No. ahead-of-print.

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