BlogsJust read McKenzie’s June 2020 report entitled “Innovation in crisis: Why it is more critical than ever” – https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/innovation-in-a-crisis-why-it-is-more-critical-than-ever. Must say that I thought I would find the usual hype on innovation to the point where it just became another buzz word that organizations and/or executives use. Outside viewing crisis and innovation as a choice, I found the article relevant and I would have rather said “where there is change, there is opportunity” including in a crisis.
In this report which summaries a recent survey, McKenzie concludes that in this COVID crisis, executives must focus their energies on cutting costs, keeping productivity levels up, and lead growth. It concluded in stating that executives felt they would return to innovation investments once things stabilized in their respective organizations and in the market, however only 21% felt they had the expertise and commitment to pursue growth successfully. While most executives viewed COVID crisis as an opportunity for growth, they felt ill prepared to capture these growth opportunities.
In marches the case for innovation where McKenzie points out that history as a teacher tells us that investment in innovation through a crisis better positions organizations to outperform peers during recovery. The key is to balance (a) firming up core business, exploring know growth spaces, conserving cash and minimizing risk with (b) investments in innovation. In solving this problem, McKenzie offers their Eight Essentials of Innovation methodology and a concept-generation tool. The most interesting to me was a discussion around discovery because the emphasis was is on overinvesting “in rediscovering what matters to customers now and understanding the impact those changing needs will have on their business.” McKenzie quotes Ford in stating “If I had asked people what they wanted, they would have said ‘faster horses.’
In coming up with good ideas for innovation investment, McKenzie offered the following formula where the value of a potential opportunity = (number of target customers x frequency that the solution is used x willingness to pay for solution) / level of satisfaction with current available alternates. I thought this is be a very good equation to use in evaluating innovation investments.
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