How the Rules for Innovation Will Change in a Post-COVID World
By Richard Chin SK President and Head of the Global Development Group
The COVID-19 pandemic has created the single largest societal shift in decades. For businesses, the immediate changes are easy to see. Companies are adopting more flexible work practices. Digital services, from grocery delivery to telehealth, have grown exponentially.
These visible changes, though, are not isolated examples. The fact is a deeper change is happening to the entire concept of business innovation.
In a recent survey by McKinsey, more than 90 percent of executives said they expect the fallout from COVID-19 to fundamentally change the way they do business over the next five years. Markets are shifting faster than ever. Deals are being done in 30 days or less. Winners and losers are being determined in months or even weeks as consumer and business behaviors seemingly change overnight.
A Changing Mindset for Innovation
SK, like most successful global business organizations, has long championed innovation. Started as a textile company in the 1950s, SK has grown into one of the largest businesses in the world by making bold moves into energy, telecommunications and semiconductors. Now, it’s moving into sustainable energy and life sciences.
Still, for SK and other major companies, the new definition of innovation requires a different kind of expertise and resources, something most organizations - 79 percent of companies in the McKinsey survey - know they lack.
So how do major companies adjust to this new reality? Here are three keys for success in the post-pandemic world.
Don’t Overthink It
In the past, companies have focused on trying to be perfect. Succeeding in this new era requires thinking like a start-up - adopting an approach that has driven unprecedented growth in Silicon Valley. More than ever, innovation will be about learning by doing.
Zoom, the poster-child business of the pandemic, is a great example of instant innovation. The company’s easy-to-use platform and freemium model offered an attractive alternative to the costly, complicated services of established providers. It wasn’t perfect, as was evidenced by the “zoombombing” episodes, but the company adapted. It fixed bugs and moved forward. In turn, Zoom’s revenue and customer base has grown at an incredible pace.
Major global companies can learn from this approach. Don’t be afraid to make mistakes. Launch, learn and continuously improve a product or service.
Be Prepared to Pivot
Perhaps, the most important element in successful innovation is the need for companies to be more nimble and flexible. There are many examples of companies from the last several years that took bold leaps and were successful, while others stayed the course and failed.
Netflix is one of these. The company began as a successful DVD rental by mail service, but pivoted to a streaming service way ahead of competitors. As a result, Netflix has become a major force across the entertainment industry, adding nearly 16 million subscribers during the first quarter alone.
This ability to pivot quickly will become a defining characteristic of companies that succeed. The pace of change is only getting faster. Smart companies recognize key shifts and take decisive action to change their own course.
Flatten Your Organization
In order to make these quick changes, though, companies must streamline the decision-making process. They must empower those closest to the market and the business to take meaningful actions, so they can respond to new challenges and take advantage of new opportunities.
A few years ago, the Harvard Business Review posted an online tool to measure a company’s Bureaucracy Mass Index, or BMI. Researchers cited trillions of dollars lost each year in economic output due to unnecessary corporate layers. Maybe, it’s time to take a fresh look at bureaucracies and the laborious decision-making process within organizations. In the post-pandemic world, the costs will only continue to rise.
The Wake-up Call
The pandemic has served as a wake-up call for companies across industries. It’s accelerated the shift to a business model where trial and error is not just part of the process - it is the process. Years from now, we will be looking at this period as a make-or-break moment for businesses. Those that shift their mindset to the faster, more nimble approach to innovation will grow and succeed.