During an economic crisis, funding dries up, and innovation tanks.

At the same time, a crisis presents organizations with unique conditions for innovation. As long as innovation teams have a strategic approach to solving old problems with new solutions, organizations can expect to not only survive but also thrive.

Tendayi Viki, Associate Partner at Strategyzer, took the stage at Innov8rs Lisbon earlier this year, to share how we and our innovation teams can help our organizations navigate a tough economic climate, and assert our role in supporting the core business. Here’s a summary of this talk.

The Right Mindset

As innovators, we often feel a lack of power and legitimacy within our organizations. You may be constantly adapting to limited resources and pushed into a corner during a weak economic climate.

Rather than letting challenges discourage you, see them as an opportunity find innovative ways to continue driving progress within your organization. Embrace a different mindset about those obstacles, and think about the situation in three ways:

  • Acknowledge reality: Accept that everyone is struggling, even the major tech companies and big banks. Face the harsh realities of inflation, valuation declines, diminishing budgets, and low growth head-on.
  • Find strength in uncertainty: A crisis can be an opportunity in disguise. You already have the skills and methodologies to navigate uncertainty. Review your company's innovation practices, reassess your approach, and build capacity for the future.
  • Don't stop innovating: Companies that continued innovating during the 2008 crisis grew 30% more than those that cut their innovation investments. Request leaders to maintain some level of investment in innovation during tough times to see long-term benefits.

A lesson from Airbnb

With a 70% drop in bookings during the COVID-19 crisis, Airbnb could have resorted to drastic measures like laying off employees and cutting budgets. However, it took an innovative approach and launched a campaign called "Go Near." By encouraging people to explore local destinations and implementing COVID-19 safety protocols, Airbnb bounced back stronger. This shift in the business model allowed Airbnb to generate $2.9 billion in revenue in just one quarter, marking the company's most profitable period since the crisis began.

Focus on Value Creation and ROI

Innovation is not just about creating cool stuff, rather, it’s our responsibility to focus on creating value. To keep innovating during a crisis, it's essential to show that you can deliver value and ROI- and that doesn’t need to be too complicated.

It does pay off to go back to basics. Speak to your customers and draw on their knowledge to develop value-generating products and services. Then, figure out the scalable, profitable business model that will enable sustainable value creation.

Also, during uncertain times, companies move to conserve cash and want quick solutions to financial challenges. Show your leaders how you can create ROI so that they include you in conversations about optimizing the core business. This is called efficiency innovation, which focuses on immediate returns, usually within a span of 12 months, as it improves existing processes or products. On the other hand, sustaining and transformative innovations involve higher risks and longer timelines.

Lessons from Hilti and Adobe

After a sales drop during the 2008 crisis, multinational manufacturer Hilti tested a new business model where customers could subscribe and rent tools instead of purchasing them outright. The innovation allowed the company to continue generating revenue, ultimately leading to post-crisis growth.

When Adobe recognized the need for a change in its product offerings, it began experimenting with a software-as-a-service model for Photoshop, which proved successful when launched during the crisis. This decision tripled the company's revenue and increased its overall value.

Cut the Zombies

In times of crisis, it's crucial to focus on improving the core business while still investing in future projects. Although the budget may be constrained, maintaining a balanced portfolio is key.

Start with developing an innovation thesis, describing aspects such as the company's business models, emerging disruptors, technology trends, and customer needs. It will serve as an early decision point to align opportunities with strategic goals and organizational focus. Stop or avoid projects or opportunities that do not fit into the thesis so as to build a more focused and effective portfolio.

Generally, running multiple experiments for every potential opportunity can become resource-intensive, so only work on opportunities in full alignment with that thesis. The good thing is that identifying zombies is easier than ever before thanks to artificial intelligence and automation, which advances the early stage of innovation testing.

In most organizations, at least 50% of innovation projects deliver no value.

Cutting these zombies out matters more during a time of limited resources. Evaluate project performance, identify which ones are the closest to finding a workable business model, and channel resources toward those projects.

The Innovation Project Scorecard is an assessment tool that helps evaluate projects across various areas such as customer segments, value propositions, technology, revenue, and willingness to pay. Consider using the tool to provide evidence that a project can deliver positive outcomes.

Building Legitimacy: Collaboration and Discipline

No single person or group can create innovation alone. Take a collaborative approach to innovation, looking at it as a polygamous relationship in which you engage with different groups within your organization, including marketing, sales, legal, compliance, IT, and finance.

It is equally important to take a disciplined approach to innovation. One way is to follow innovation standards and use them as a guiding framework for disciplined innovation. In particular, ISO 56002 plays a key role in promoting discipline among professionals. It emphasizes the need for organizations to create a culture of improvement, where lessons learned from each innovation project inform future endeavors. This iterative approach further enhances discipline and promotes long-term success.

Innovation cannot happen without creativity. For the best results, you need to apply creativity meaningfully and ensure a structure that allow creative ideas to be refined and realized. One way is to create simple rules to guide the innovation process. For example, you could set a standard for brainstorming. A good one is to have everyone ideate by themselves quietly without sharing their thoughts. And then you can say, "Hey, why don't we first share our worst ideas? These are the ideas that we think no one would ever work on". And then people start sharing their worst ideas, unlocking new dimensions of creativity and allowing for the exploration of unconventional concepts that may be overlooked otherwise.

When you're striving to establish more disciplined innovation processes, you may encounter skepticism and labels like "innovation bureaucrat." Avoid letting such perceptions get to you and maintain a disciplined attitude because by sticking to innovation methodologies and practices, you'll have an easier time building legitimacy and driving innovation forward.

Being a disciplined innovator with legitimacy trumps being labeled a rebel without a clear direction.

Influencing the CEO: Showcase Results, Highlight the Process

Without C-Suite's support and buy-in, it is challenging to bring about successful innovation and drive organizational change. However, it's important to approach this carefully, as attempting to eliminate outdated thinking without proper influence may lead to negative consequences, including potential job loss. So, how do you influence the CEO to make the right decisions regarding innovation?

Always make sure to present tangible results from your innovation efforts. Apart from sharing the outcome, also highlight the process that led to the desired results. It will convince leaders of the efficacy of the process and make it easier to get the green light to apply the same process to other projects.

As CEOs often view experts in their disciplines as their peers, and their expertise and insights often help influence the CEO positively, consider inviting influential figures to talk to the CEO and guide their thinking in the direction you want.

If innovation management is not centralized in your organization, everyone may be doing their own thing. You may kill your zombies, but your colleagues may keep them and look more competent compared to you; especially if those projects are the CEO’s pet projects.

Yet, if you follow through diligently and consistently killing zombie projects, three or four years down the road, you will be the one delivering results- guaranteed.