Strategy and Innovation

How does Innovation Create Value?

How to Deal with an Organizational Crisis

  • Leah Dunmore
  • August 06, 2020

Whenever your business is faced with an unforeseen challenge—a negative tweet that goes viral, a virus that wreaks havoc around the world, a new competitor eating into your market share—it’s an opportunity to innovate.

Crisis presents a unique opportunity to develop your innovation strategy and evolve your business by adapting to a new environment and landscape. A crisis can actually be a good thing for your business and team, with the potential to stimulate new sources of revenue and tap into new markets. It also creates an environment where employees act with a sense of urgency, courageously working as a force to overcome in the face of a challenge. Plato once said that, “necessity is the mother of invention”. For me, it is obvious that the relationship between crisis and innovation is that crisis brings out the best in people. Crisis encourages us to accomplish extraordinary things.

Many great leaders have been known to create a burning platform or leverage a crisis to inspire and motivate their teams to embrace or deliver innovation. “Innovation loves a crisis” is the mantra of the leader Jong-Yung Yun, the CEO of Samsung. Samsung has more patents than most technology companies and invests 9% of revenue in R&D, which is significantly higher than most companies’ 1-3% investment. Yun creates a sense of urgency by strategizing like disaster to the business is always around the corner.

REPORT: How to Deal with an Organizational Crisis

    Nokia has also accomplished impressive things in times of crisis. They have been forced to reinvent themselves and transform their innovation strategy several times over the years as technology advancements threatened their core business—from televisions to computers and most recently mobile phones. The success of Nokia and many in the technology industry is completely dependent upon the next innovation.

    As a marketing executive in the consumer-packaged-goods (CPG) industry, my success is heavily dependent upon delivering a robust pipeline of innovation to the market every year. Big customers, like Wal-Mart, Target, Whole Foods, and Kroger expect great innovation from their top suppliers because it is the best way to excite consumers, drive traffic to the stores and deliver growth to the category.

    While delivering a robust list of innovation every year is the expectation from retailers, there is always wide variation in the quality of innovation delivered across different manufacturers. The quality varies in a few critical areas:

      • The strength of the new product idea

      • The dollar size of the innovation

      • The level of incremental growth to the category

      • Execution—the quality of execution of the products to the shelves. There is often disparity in the product quality, packaging, and the ability to have enough product to meet the demand of the market.

    Finally, leadership plays a critical role in a crisis. It is essential that leaders are courageous and willing to try unconventional solutions.

    In my experience, the differentiator in the quality of the idea, product, and execution is a team willing to go beyond the call of duty to have a positive impact on their business. These teams did whatever it took to plan and execute an amazing innovation strategy. The fuel that they used to ignite their passion and commitment to winning was usually tied to a clear vision for the business combined with a crisis; a new competitor coming, capacity constraints in our supply chain, ingredient shortages or shifts in channel dynamics. There is never a shortage of crises in such a dynamic industry.

    Finally, leadership plays a critical role in a crisis. It is essential that leaders are courageous and willing to try unconventional solutions to develop their innovation strategy. They should be prepared to make unpopular choices, support their team, and they must be committed to dedicating resources and energy to execute flawlessly.

    To embrace crises and ultimately make innovation part of the DNA of the team, I always follow a few principles that have proven successful over the years.

    1. Fully Understand the Crisis and Define it for your Entire Team and Company

      • Keep the definition of the problem simple. Every person in the company should understand it. I would often tell my teammates, “I want to take this home and see that my young son will understand it.”
      • Educate the company on the changing landscape and the implications on the business and team.
      • Reframe the problem and opportunity through a broader lens, beyond how you typically define the business.

    2. Set the Tone and Give People Permission to Fail

      • Encourage trial and error.
      • Invite everyone to contribute, including outside partners.
      • Establish key team members responsible and set aggressive targets.

    3. Develop Strong Plans with Clear KPIs

      • Clearly defined objective with metrics—what does success look like?
      • Encourage speed with some quick wins that are short term along the way, as well as longer term more significant plans to win.
      • Tap into your existing pipeline of ideas and/or global pipeline.

    4. Check Brand Authenticity 

      • Check actions against the value of the company and if they are authentic to your brand.
      • If planned actions stray from brand or company values, either reject them or ben open to consider modifications to brand DNA (due to changing environment).
      • Gain alignment with key stakeholders

    5. Develop a Communications Strategy 

      • Communicate early and often—leveraging omni-channel marketing to get your message to your target expeditiously.
      • Equip every level of the organization to communicate with their target audience.
      • Be honest and transparent—even with bad news.

    In the face of crisis, even the best strategies, plans, and teams will never see success without strong leadership. You must have leaders with courage, leaders willing to try unconventional solutions, leaders who always back their team and can execute.

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