Leaning into Crisis Innovation

Recognizing Crisis Innovation Potential

Business and innovation strategy is more crucial than ever during a crisis, whether it be short-term or long-term. Often in times of uncertainty, or crisis, this is when a gap in products or services might be identified, or a new opportunity might be uncovered for the first time, or some other solution is needed. Capitalizing on this opportunity might be key to preparing for the future, when the crisis is long past, but the initiatives started during that time might bear fruit.

So why does innovation seem more possible during a crisis, at least to those enterprises that stay nimble, flexible and agile enough to identify the need? According to “What a Crisis Teaches Us About Innovation,” from MIT Sloan Management Review, it is key to understanding how a crisis boosts innovation so that an organization can stay prepared and recognize the need to identify and create solutions during that time, anticipating and fostering a culture of change. The authors of the article, Elsbeth Johnson and Fiona Murray, identified five interdependent conditions that characterize a crisis and boost innovation:

1. A crisis provides a sudden and real sense of urgency. Proximity to a grave problem creates a critical sense of urgency, focusing attention and galvanizing action, and pushing people beyond the status quo.
2. This urgency enables organizations to drop all other priorities and focus on a single challenge, reallocating resources as needed. In a non-crisis environment, there may be many initiatives and decisions at play. But in a crisis, the first-order decision is effectively made for you: The crisis tells you where you need to focus with a high degree of precision.
3. With this singular focus and reallocated resources, it’s now everybody’s job to come together to solve the problem, bringing a new diversity of viewpoints and perspectives. With the reprioritization that a crisis enables, and the resulting reallocation of resources, the problem at hand is now subject to the insights, expertise, and experience of many more people than would typically come together on a project.
4. This urgency and singular focus legitimize what would otherwise constitute “waste,” allowing for more experimentation and learning. Because of the severity of a crisis and the sense of urgency that it creates, and because organizations understand that it is now the No. 1 problem, leaders become much less concerned about the possibility that some, or even many, attempts at solving it will fail.
5. Because the crisis is only temporary, the organization can commit to a highly intense effort over a short period of time. Crises aren’t normal, and leaders ought not to think that they are. Nevertheless, it’s tempting to see the massive effort that is possible during a crisis and wonder how an organization might be able to sustain it. The quick answer is, it can’t, and it shouldn’t try.

The authors further add that the popularity and longevity of the idea of sprints—now common in agile methodology and design thinking—also show the importance of constraining not only the scope of innovation but also the time spent on it in each iteration.

Looking Through the Lens of Uncertainty

In All Things Innovation’s “Certain Uncertainty,” Seth Adler explored the concept of uncertain times and how it impacts innovation. In interviewing trends forecaster Magnus Lindvkist, Adler looks to understand how unexpected things happen and how they affect us as individuals, groups, and societies. Based on research and interviews with people whose lives have been “attacked” and deeply changed by the unexpected, Lindvkist’s book tries to help you get over your fear of the unknown by teaching you to embrace it and use it to your advantage. It does this by walking you through the “uncertainty reframe” process, which involves rethinking your perspective and attitude toward uncertainty.

All Things Insights also looked at this topic in “Balancing Insights with Uncertainty.” Uncertainty abounds, from inflation and layoffs to bank failures and talk of recession, to robust job reports, financial resilience, and the strength of the economy. Oh, did we mention wars, the pandemic and climate change? There’s bound to be some anxiety among consumers and corporations during this topsy-turvy time period. And one thing is for certain: Everything is uncertain.

Driving Innovation Through Crisis

Innovation during times of crisis offers numerous benefits that can help organizations not only survive but thrive in challenging circumstances. We asked ChatGPT to outline some key advantages:

1. Increased Agility and Flexibility: Crises force organizations to adapt quickly to changing conditions. Innovative approaches enable companies to pivot their strategies, operations, and product offerings more rapidly, increasing their ability to respond effectively to unexpected challenges.
2. Problem-Solving Under Pressure: Crises often present unique and pressing problems that require immediate solutions. Innovation encourages creative problem-solving, allowing organizations to find novel and effective ways to address urgent issues, whether through new technologies, processes, or business models.
3. Improved Efficiency and Cost Savings: Innovative solutions can lead to greater efficiency by streamlining processes, reducing waste, and optimizing resources. During a crisis, these improvements can result in significant cost savings, helping organizations to maintain financial stability.
4. Enhanced Customer Engagement: Crises often lead to shifts in customer needs and behaviors. Innovation allows companies to develop new products or services that better meet these changing demands, improving customer satisfaction and loyalty. For instance, the rapid development of online services and contactless solutions during the COVID-19 pandemic helped businesses stay connected with their customers.
5. Resilience and Competitive Advantage: Organizations that innovate during crises are more likely to emerge stronger and more resilient. By continuously improving and adapting, they can gain a competitive advantage over less agile competitors. This resilience is crucial for long-term success in an unpredictable market environment.
6. Opportunity for Market Expansion: Crises can disrupt traditional markets and create opportunities for new ones. Innovative companies can seize these opportunities to expand into new areas, diversify their offerings, and reach new customer segments.
7. Employee Engagement and Morale: Encouraging innovation during a crisis can boost employee morale and engagement. When employees see their ideas being implemented and contributing to the organization’s survival and growth, it fosters a sense of ownership and motivation. This positive culture can lead to increased productivity and a stronger commitment to the organization.
8. Building a Culture of Continuous Improvement: Crises highlight the importance of continuous improvement and adaptability. Organizations that prioritize innovation during tough times can cultivate a culture that values ongoing learning, experimentation, and improvement. This culture is beneficial not only during crises but also in stable times, driving sustained growth and success.
9. Long-Term Sustainability: Innovation during crises can lead to the development of more sustainable business practices. Companies may discover more efficient ways to use resources, reduce environmental impact, or create products that align with evolving consumer values around sustainability.
10. Enhanced Stakeholder Relationships: Demonstrating a proactive and innovative approach during crises can strengthen relationships with stakeholders, including customers, employees, investors, and partners. It shows a commitment to overcoming challenges and can build trust and loyalty that lasts beyond the crisis period.

Creating Impactful Change Through Innovation

Innovation during times of crisis is not just about survival; it’s about leveraging the opportunity to improve, adapt, and position the organization for future success. By embracing change and encouraging creative solutions, organizations can navigate crises more effectively and emerge stronger and more competitive.

As we all experienced during the pandemic, innovation can happen at a scale and pace that might seem impossible under normal circumstances. But it’s still important to learn the dynamics of this type of innovation, post-crisis. As the authors of the MIT Sloan Management article attest, “We believe that by understanding the conditions that crises foster, leaders can create some proxies for crisis that make innovation easier and more likely—even in the absence of an emergency.”

Video courtesy of Jeremy Gutsche: Innovation Keynote Speaker