Innovators, are you feeling a bit lonely at the moment? Don't take it personal. During turbulent economic times, companies naturally tend to focus on what's familiar. Talking about the core business is like eating comfort food. Friendly discussions with loyal clients ease the anxiety generated by the media about the state of the broader market. Releasing incremental enhancements to existing offerings provides low-risk reasons to celebrate accomplishments at a time when so much seems out of control.
These prevailing sentiments have the effect of alienating those focused on the "new and different." Whereas just a few short months ago your programs were the lifeblood of the corporate strategy, suddenly you find yourself on the outside looking in. This is a lonely place and prolonged isolation can lead to rash, unproductive behavior. However, a more thoughtful response during such times can actually accelerate and expand returns on innovation initiatives.
To help you make the right decisions, we offer a brief list of actions that innovators should and should not be taking in today's skittish climate. We focus on the two main areas most likely to provoke the wrong behavior: your relationship with an increasingly nervous core business and the efficient allocation of scarce funds.
In terms of working with colleagues and leaders in the core business, innovators SHOULD accept the realities of the marketplace and lend their help to the cause. Innosight's research has shown that innovation can only succeed when the core business is stable. Without this foundation, management's time and attention will be overwhelmed by the need to appease stakeholders such as clients and partners. Their ability to think constructively about any concept more than three months out will be impaired.
Our advice: Don't fight this. Instead, innovators should look for ways their teams can help right the ship:
--Offer to temporarily suspend your market trials and reallocate those resources to research efforts within the core client base
--Develop a jobs-to-be-done analysis for current consumers that highlights changes in their evaluation criteria and consideration of competitive offers in light of the economy
--Conduct a disruptive threat assessment to analyze and counteract the actions of emerging competitors who may see your current weakness as an opportunity to advance
--Provide input on marketing and messaging tactics to better align your value proposition to consumers' changing needs and circumstances
--Outline ways to de-feature the existing offerings to better meet the basic needs of consumers at a lower price point
Innovators SHOULD NOT react to leadership's focus on core offerings by trying to cram their new offerings into the core. There are reasons why new concepts are kept outside the core--it was the right choice in a booming economy and it is still the right choice. Trying to push new technology or service offerings through the traditional business model will fail on two fronts.
One is that the new concept will not be given the time and freedom it needs to evolve naturally based on market input through early stage releases. The other is that the existing channel and consumer base will be confused by the new offering at a time when they too are seeking familiarity and stability. In short, offer your help and expertise but don't offer to assimilate.
A large part of the internal discussions will likely center around near-term budgets as capital tightens and revenues are less predictable. Many across the organization will turn defensive and try to hoard their share. Innovators SHOULD embrace this scarcity. Entrepreneurs operating outside your company are feeling the credit squeeze and reinventing their business models accordingly--so should you.
Rather than passively waiting (and actively praying) to see how your budget fares in the latest round of reviews, why not pre-empt the discussion and voluntarily scale back your line items? Leadership will appreciate having one less hard negotiation to walk through and you will likely find that a sharper focus increases your time and freedom to experiment properly. Ways you can consider "giving back" include:
--Release any part-time team members back to their "day jobs" in the core business--in reality, two or three dedicated people will accomplish far more than 30 people assigned to spend 10% of their time on a program anyway.
--Prune your portfolio--revisit the concepts in your portfolio, prioritize them based on anticipated time to profit and temporarily shelve the bottom half of the list or any idea that will not be profitable within six months.
--De-feature your concepts--look for performance areas where you may be overshooting the needs of the customer and eliminate them. Remember, consumers are in this economy with you and they will not be paying for performance they don't need. Be ruthless here.
--Revisit your research approaches and expenses--entrepreneurs make do with small sample sizes, social media input and low-cost interviews to get directional information with which to develop their concepts. Since markets that don't yet exist can't be accurately measured, why not scale back your pursuit of perfect data in favor of quick insights?
--Reduce the cost of your field trials--if you focus on testing one or two assumptions at a time, you will soon realize you do not need a fully functioning prototype or a three-month in-market pilot release to learn new things about your offering and the target market. Use a 3-D illustration instead of a prototype. Launch a Web site describing your new service and solicit comments instead of staffing a sales person to gauge the market.
Innovators SHOULD NOT respond to the threat of budget cuts by inflating the business case for their ideas. In times of economic scarcity and budget reviews, it is tempting to want to present compelling data to justify continued investment in your new concept. You goose the size of the target market by 15%, reduce production costs by 20%, bring the release date ahead nine weeks and presto! you are suddenly helping the bottom line! Innovation is heralded as a hero and your offerings are back at the center of attention.
Leadership is not immune to emotional responses at times like these. If you present them a business case that appears to make their challenges go away without hard decisions around funding and staffing cuts, they will cling to it. It is your job as the good innovator to resist this siren song. The core business must respond diligently to the economic challenges and your new concepts must be allowed to evolve and react at the pace of their market. Attempts to "go big" quickly to save a company rarely, if ever, succeed.
Finally, innovators SHOULD be sensible when it comes to managing their own careers. Depending on how long this current crisis lasts, and its resulting impact on basic business models in some industries, it is inevitable that certain companies will not survive. As signs of their impending failure emerge, the first and deepest cuts will come in non-revenue-producing areas including innovation and R&D.
Do your part to shore up the core business, but recognize the signs when you have become irrevocably disrupted and plan accordingly. Perhaps your idea won't survive inside a legacy company but would thrive as a start-up. Even in downturns, there is always a market for truly disruptive ideas and the people who drive them.
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