The COVID-19 crisis has prompted inspiring acts of innovation. Companies, governments, entrepreneurs, and citizens have proved how capable humans are of innovating during times of crisis. Responding to the acute public-health pandemic has forced rapid changes in health-care-delivery models. The social-distancing mandates have prompted complete workforces to adopt a virtual work model as well as K–12 school districts and university systems nationwide to figure out how to educate students through distance learning. The slowdown of commerce has pushed small-business owners to transform their business models overnight in an attempt to stay afloat amid economic collapse.
Necessity forces companies to innovate. However, waiting for a crisis is not a sustainable innovation strategy, and certainly no one wants a crisis for the sake of innovation. The COVID-19 pandemic provides a natural experiment that allows us to examine conditions that have prompted innovation and to observe and learn how organizations have responded. The circumstances are dire and the effectiveness of many of these innovations remains unknown. Despite this, it is worth observing what is happening and learning from it. Companies should take note of these lessons and apply them to remain innovative, whether in the midst of a crisis or in a position of strength.
Extreme examples of innovation have surfaced from the COVID-19 crisis. In one well-documented example, Wuhan’s Huoshenshan Hospital, a specialty field hospital, was built in just over a week to treat the outbreak. Although this is a great testament to human ability, it does not provide a blueprint for sustainable innovation. The financial burden and other costs—among them, structural and safety concerns and suspect labor practices—do not justify building a hospital at this speed under normal circumstances.
However, other tools used to fight the COVID-19 outbreak can and should become a replicable part of corporate innovation practices. Here are four of them:
Orthodoxies are widely held and unchallenged assumptions that companies hold about their business models, products, customers, markets, and competitors. They often start as truths that hold at a certain point in time but aren’t revisited or challenged as realities change. Identifying and challenging these assumptions is a critical input for innovation. In fact, most innovations contain a broken orthodoxy at the heart of their value proposition. Zappos challenged the orthodoxy that consumers need to try on shoes before buying them. Zipcar questioned why cars needed to be rented by the day when many consumers wanted them by the hour. Rent the Runway questioned why wardrobes were limited by what women could afford to purchase. Spotify challenged the idea that consumers needed to own music in order to listen to it legally. Conversely, being blind to orthodoxies puts companies at risk for disruption.
Health-care workers on the front lines of the COVID-19 epidemic in the United States have faced a dire shortage of face masks and personal protective equipment. Providence, a health-care system with operations across seven states, responded in part by launching the 100 Million Mask Challenge, an innovative move to enlist help from community volunteers to sew masks. This in turn prompted Kaas Tailored, a furniture company in Washington State, to repurpose its manufacturing capacity into mask production lines and to share patterns and sewing processes with other factories that had capacity. Similar to World War II–era coordination, manufacturing repurposing has transpired to address other shortages of goods, including ventilators, sanitizers, and disinfectants.
Increasing production is only one way of solving the shortage problem. In fact, the shortage was created in part by the orthodoxy that single use is the safest and most effective solution. Most masks prevent transmission, rather than kill pathogens, and so in this case, disposal upon use may indeed be the best way to prevent further infection. That said, if masks intended for reuse could be manufactured and distributed, the capacity constraints would be less debilitating, because medical providers would need far fewer of them.
Constraints are beneficial, and can accelerate rather than inhibit innovation.
Even if an orthodoxy is obvious, sometimes business interests prevent companies from challenging it. After all, moving customers to a reusable product could run the risk of cannibalizing sales. Entrepreneurs, unburdened by deeply ingrained organizational beliefs and unconstrained by the desire to protect the interests of the existing business, can be good at identifying and questioning orthodoxies. In fact, several start-ups are, as of March 2020, close to commercializing reusable-mask technology. One is Sonovia, which produces an ultrasonic fabric-finishing technology that blocks and kills pathogens and can remain effective through 100 washes. Although Sonovia was founded in 2017 in the pursuit of reducing hospital-acquired infections, it rapidly mobilized to work toward its products becoming certified to protect against COVID-19, according to its website.
Stepping back and questioning what you believe to be true about your company’s product, business model, and customers can prompt innovation. Executives should regularly ask themselves: “What orthodoxies might be limiting growth opportunities or putting my business at risk for disruption?”
There are two reasons companies often struggle to identify creative solutions to problems. The first is organizational incentives. In the pursuit of reducing risk and avoiding unknowns, companies tend to rely on established resources, well-tested business models, and proven methods. The second is neuroscience: the human brain forms neurological connections on the basis of historical data patterns and associations, much like how an artificial-intelligence algorithm is trained. Humans therefore struggle to envision scenarios that are dramatically different from past events.
Constraints can help jolt managers out of these traps and toward more transformative ideas. For example, to increase the number of patients they are triaging while also slowing the spread of infection, health-care providers have quickly increased telemedicine use in emergency rooms. These health-care providers might find that telemedicine triage is beneficial after the COVID-19 crisis abates. To facilitate the shift from in-person to online selling, the owner of a specialty clothing boutique in Chicago began styling customers through FaceTime, Apple’s videoconferencing application, rather than in the store, using the fit of items already in the customers’ closet for sizing clues. The new shopping model prompted loyal customers to begin referring friends and family from out of state. By being forced to find a different way of generating revenue, this entrepreneur actually grew her business while small businesses around her shuttered. Constraints are beneficial, and can accelerate rather than inhibit innovation.
Here is a practical example. “How would you make yogurt if half of the world’s dairy cows got wiped out by a disease and milk supply dried up?” Ten years ago, I asked this question to one of my clients for whom yogurt production was a significant share of its business portfolio. There are two obvious answers to this question. One, do nothing and hope that price increases can make up for a temporary reduction in sales. Two, make yogurt using something else.
Plant-based yogurts now abound, made using the milk from almonds, soy, coconut, and even oats. None of these alternative yogurts was created by category incumbents. Entrepreneurs conceived of these products in response not to dairy milk shortages but to health trends that dairy executives either didn’t want to believe or couldn’t act on.
Imagine these were normal times. Many businesses are now confronting extreme constraints, which are necessitating significant changes in their business or operating model. But under normal circumstances, businesses should force themselves to consider scenarios that might at first blush appear extreme or unlikely. For example, how would you grow your business if you had to suddenly operate under extreme constraints? How might you deliver your service for half the current cost, or with zero fixed costs? How would you acquire customers if your marketing was suddenly regulated à la the tobacco industry? How would you engineer your product if a key input were no longer available? By considering how your business would need to operate under different means or circumstances, you can surface innovative ideas that you may not have otherwise considered.
Collaboration is the new competitive advantage. In a recent study by CB Insights Growth Collective, part of data-driven research organization CB Insights, 79 percent of high-performing companies cited a preference for innovating via partnership or acquisition, versus only 49 percent of their lower-performing peers. A 2018 Boston Consulting Group global innovation survey also finds that strong innovators were more likely to embrace ideas from external sources such as academic and company partnerships. As product ecosystems become more complex, talent acquisition becomes more fluid, and the rate of technological innovation accelerates, collaboration outside of one’s company grows increasingly essential. Yet only 26 percent of companies surveyed had built a mature open-innovation competency, according to a 2018 study by innovation and strategy consulting firm Luminary Labs. There are many reasons for this, ranging from a fear of sharing intellectual property, to regulatory hurdles such as data privacy laws, to an outright disbelief that outside collaboration is needed.
What we have seen from the COVID-19 response is an extraordinary degree of partnership and coordination. Universities that have more-mature distance-learning programs have shared best practices and resources with those having to build e-learning solutions from scratch. In Madison, Wisconsin, a partnership between tech giant Epic, UnityPoint Health–Meriter’s Children’s Center, and UW Health has formed to provide a residential 24-7 childcare center for parents who work on the front lines of treating COVID-19 and have lost access to childcare. Software-as-a-service companies such as Salesforce have deployed free software to aid health-care systems in the response to COVID-19. Companies such as Amazon, which became inundated with demand during quarantines, absorbed a massive amount of employees who had been displaced from other companies. Hotel operators have coordinated with health-care organizations to repurpose room capacity for quarantine operations. These are just a few examples of the partnerships that have formed.
Companies in crises have a lot to lose if they do nothing, but companies not facing immediate peril may instead see risk to trying something new.
Altruism and humanity drive cooperation during times of crisis. However, once the pandemic passes and this spirit diminishes, remember that collaboration is good business practice. Consider how your company is tapping into the collective expertise of the 7.8 billion people who do not work for your organization and the resources that aren’t controlled by your company. Tactics for external collaboration can range from crowdsourcing new product ideas, to sponsoring open-innovation competitions to solve tough customer problems, to setting up formal technology-development partnerships with research institutions, to actively investing in outside ventures. Forming open partnerships, structures, and collaborations should be a pillar of every innovation strategy.
Most organizations move slowly when making operational changes or commercializing innovation. This often stems from inefficient or unnecessary processes, misaligned incentives, political barriers, or hurdles created by risk-management requirements such as information-technology restrictions or legal reviews. Academic institutions are known for being especially bureaucratic and slow moving. Imagine a public K–12 district deciding to invest in e-learning tools and curricula for students who are homebound for extended periods of time with illness. This would likely require forming a special committee, asking teachers to create and pilot programs, and subjecting proposed software to lengthy IT vetting. This entire process could take years—but the current crisis has shown how quickly some districts are capable of mobilizing.
One well-funded suburban K–8 school system in Illinois authorized its IT department to configure and assign iPads, to be sent home in anticipation of school closures to every student in the district. Previously, iPads had only been lent to students in grades 5 through 8 under strict parent-district user agreements and insurance policies, but these rules were lifted. The district closed schools one day before the state-ordered mandate to enable teachers to work in teams to create a six-hour-per-day curriculum to be delivered through the iPads. Once it became clear that closures would persist beyond a couple of weeks, the teachers worked through spring break to improve offerings for the subsequent weeks of closure, iterating and improving upon what they had learned from the first week of distance learning. The cost of setting this up included one day of student instructional time plus some late nights and stress, but the district and its teachers pulled off over the course of a few days what would likely have otherwise taken years to accomplish.
After analyzing the progression of 5,000 ideas, researchers identified a few operational decisions that collectively paid off more than tenfold.
Four Ways Companies Can Encourage Innovation
Tools for innovating better and faster, even after the recovery.
Four Ways to Ensure Innovation Continues after the CrisisNecessity-driven cases have unique circumstances, of course. A crisis changes the next-best-alternative option. Prior to the crisis, the de facto option was high-quality in-person instruction. For most school systems, distance learning was an unexplored solution to the first alternative, but under the crisis scenario, a patched-together solution has been better than nothing at all. Relative costs and benefits also change in necessity-driven circumstances. Companies in crises have a lot to lose if they do nothing, but companies not facing immediate peril may instead see risk to trying something new. Outside of a true crisis, it is difficult to replicate these unique conditions. There are, however, three practices that can accelerate the speed of innovation under any circumstances:
Consider relaxing existing constraints and processes. Companies often use process as a safety net for poor decision-making, but empowering skilled employees to execute quickly can produce better results. In this case, teachers were empowered to find and use any e-learning tools that they deemed beneficial. Question which actions, approvals, and decision-making processes are absolutely critical. Make streamlined special-case processes with a separate set of rules for projects that need to be sprinted.
Give people the time and incentives to collaborate. Consider how you are incentivizing and disincentivizing innovation efforts, and ensure that this is in line with your objectives. In the case of distance learning, the district repurposed instructional days to enable teachers to build content and delivery models in teams. Teachers had a shared goal: it was in their best interest to help students across the school end the academic year on track, so that they return next fall fully prepared.
Don’t require perfection. When product safety isn’t a concern, be willing to go to market with something that isn’t perfect but is good enough to do the job. Sometimes this requires changing how you measure success. If the solution is good enough to begin solving a problem, get it out there quickly and begin iterating to make it better.
The lessons we can take away from these innovative responses are only the beginning. As I write, the COVID-19 pandemic continues to both paralyze and transform life across the world. New problems are arising and new solutions are being created every day, as the effects continue to ripple throughout the economy and daily life. We are seeing how necessity can inspire innovation. But after the crisis passes, I hope that companies can use some of these tools—such as questioning orthodoxies, imposing constraints, leveraging external collaborations, and executing quickly—to continuously innovate. Perhaps some positive lessons on innovation can come from this dark and frightening time.
Lindsey Lyman is clinical assistant professor of entrepreneurship at Chicago Booth and the founder of Growth Studios, an innovation consultancy.
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