Innovation and the willingness to experiment has always been important in business. With market and operating environments more volatile than at any point in recent history it is now even more important.
Innovation evangelists have a tendency to set the bar pretty high for what constitutes innovation excellence, but an aspirational benchmark is for 75% of current revenues to be derived from business activities which began in the last three years. It’s not surprising that the majority of organisations fail to meet it.
So, given the turbulence of recent weeks and months why would now be a realistic time to try new things? Surely there are sufficient challenges in day to day business operations. Actually, it’s pretty simple and the rule applies at any time of significant market disruption. Because if there is such a thing as a ‘new’ or ‘next normal’ businesses can either sit back and watch or they can actively prepare for and help to shape it.
What we are observing in recent months are the emergence of new consumer attitudes and behaviours. It is not yet clear which ones will remain.
- new domestic routines and changes in living and working patterns
- greater reliability on digital purchasing
- new constraints and attitudes to travel and transport
- an even greater awareness of environmental fragility
Experience from previous seismic economic or market shifts tell us it is a mistake to wait for a completely clear picture to emerge.
Already the restrictions arising from the Coronavirus pandemic are forcing the pace and scale of workplace innovation. Business leaders are encouraged by the ability of their teams to adapt to fundamentally new ways of working and their apparently seamless adoption of previously unfamiliar technology to perform their duties.
Experimentation is the engine that drives innovation and with the likelihood of new businesses and business models emerging from this crisis there has seldom been a better time for new ideas.
Businesses thrive when they have confidence about the future. Trying new things to see what works can bring some degree of certainty in times of rapid change. According to a recent Widerfunnel survey, a significant number (41%) of decision makers view experimentation as the most important driver of business growth in the next three years – more than analytics, artificial intelligence or automation.
Experimentation and business agility in all its forms is now common among start-up companies but less so in mid-sized and ‘scale-up’ businesses who can benefit greatly from this approach. The most innovative companies run thousands of experiments in a year – P&G 7-10,000, Intuit 1,300, Netflix 1,000 and Amazon 1,900. Amazon’s primary post-launch innovations including Amazon Web Services, Prime and Echo all started as experiments. Jeff Bezos states:
“Our success at Amazon is a function of how many experiments we do per year, per month, per week, per day.”
In marked contrast nearly half of mid-sized businesses conducted only between 1 and 20 experiments in the past 12 months. Only 17% had conducted more than 100.
Board and executive buy-in is essential if experimentation is to become part of an organisation’s core strategy and ultimately achieving positive outcomes. At high-growth companies 56% of executives are not only supportive but actively encourage experimentation.
There is a proliferation of tools available to businesses for stimulating ideas for experimentation. They range from customer journey analysis, web analytics, online user surveys, customer personas or even competitive analysis. Larger enterprises are more likely to have access to these tools, but mid-sized companies have a tendency to rely on ‘gut feeling’ for new ideas rather than more evidence-based, empirical approaches – 60% stated they did so.
Whatever assumptions a business holds about the future, a willingness to experiment and learn brings a greater level of assurance around that view. Apart from the very real possibility that one experiment will lead to a significant win, there are other considerable benefits along the way including:
- a better understanding of its market and how it reacts
- the ability to set direction with greater confidence
- more confident decision-making
Mid-sized businesses who have limited experience of innovation practices to date should not be daunted. Starting something small-scale with one or two idea generation workshops can be the catalyst for a successful, high-value experimentation strategy. Now is the time to prepare for what may be a fundamentally different trading environment.
Established in 2012, Whitecap Consulting is a regional strategy consultancy headquartered in Leeds, with offices in Manchester, Milton Keynes, Birmingham, Bristol and Newcastle. We typically work with boards, executives and investors of predominantly mid-sized organisations with a turnover of c£10m-£300m, helping clients analyse, develop and implement growth strategies. Also, we work with clients across a range of sectors including Financial Services, Technology, FinTech, Outsourcing, Consumer and Retail, Property, Healthcare, Higher Education, Manufacturing and Professional Services, including Corporate Finance and PE.