Crisis Innovation Guide: The New Normal (part 1 of 5)

The COVID-19 crisis has changed our society and economy in long-lasting ways. Businesses are now facing unprecedented challenges and constraints as we enter into uncharted territory. The pandemic has left even the best-prepared companies struggling to stay afloat.

However, while uncertain times like these can be unnerving, they also offer opportunities to those who dare to innovate. Successful companies will be those who take immediate action and adapt their business models to the ‘new normal’.

The Covid-19 crisis, has put a serious strain on our economy, caused a rise in unemployment and called into question the adequacy of numerous systems (health, education, finance).

Companies across a wide range of industries are facing challenges posed by the introduction of new restrictions to slow the spread of the virus. These challenges include a drop in product demand due to consumer safety concerns, supply and production constraints, HR headaches (layoffs and WFH) and political instability. According to a recent study, 85% of companies reported that the crisis had a negative impact on their financial revenue.

Leaders find themselves frantically putting out fires to resolve short-term issues while attempting to weigh up long term options amidst a climate of uncertainty.

The pandemic and subsequent lockdown announcement came as a surprise to most of us. Journalists have been employing words like ‘unprecedented’ and ‘unparalleled’ to capture the sense that this was a universal crisis that came out of nowhere. But was the pandemic really unforeseeable? Could we have done something more to prepare for it? What can we learn from our failures that will better prepare us for the crises of the future?

Michele Wucker, an economy analyst specialised in crisis anticipation, suggests that the Covid-19 pandemic should be classified as a high-impact ‘grey rhino’ crisis. Unlike ‘black swan’ crises which are next to impossible to predict, grey rhino crises are highly probable. Just like previous grey rhinos (Hurricane Katrina and the 2008 financial crisis), Wucker explains that the warning signs were there but we failed to react in time. This, she claims is due to the fact that our economic and incentive systems are set up to ensure short-term success and rewards. These systems, she argues, need to be reformed if we are to respond to crises further down the line. Her advice is simple: act fast (because there is no other option), stay downwind and adopt a long-term vision.

Mankind’s inability to prepare for crises is baffling. This is precisely what authors Robert Meyer and Howard Kunreuther wished to explore in their book ‘The Ostrich Paradox’. We had been warned in explicit terms about the threat of a respiratory virus with pandemic potential, yet we chose to adopt ‘willful blindness’ rather than to prepare for the fight.

The inaction of others only served to reinforce our own apathy for a phenomenon that psychologists refer to as ‘normalcy bias’ or ‘negative panic’. These issues simply must be addressed if we are to survive crises of the future. It is alarming to think how slowly we learn and what other signals we might be ignoring.

Covid-19 has shaken society to its core but there are many more potential crises waiting for us around the corner with a destructive potential far exceeding Covid-19. We’re talking political shifts and major IT breeches. Not to mention climate change, a crisis of mammoth proportions, which by comparison makes Covid-19 look like a sandbox in the Sahara.

In business we see the same thing. Complacency, and there is only proper action once the crisis is already there.

Over the past month, we have witnessed somewhat of a ‘return to normality’. However, the lasting effects of the COVID-19 pandemic is clear for all to see: face masks, hand sanitiser, working from home and the apparent death of physical B2B interactions.

As society begins to start up again, companies are noticing that their customers’ behaviour has changed or that they are no longer interested in purchasing their products.

Most experts suggest that the ‘low touch economy’ is the new normal and that it will take years before we see a full recovery. Even then, the landscape of the post-COVID-19 world lies blurry on the horizon.

What will follow could better be described as a ‘high touch economy’: one in which personal touch screens will increase in importance and where society as a whole will become increasingly empathetic with regards to our planet, social systems and health. The crisis has also taught us that we cannot live without physical human interactions. This is something that cannot be substituted with video calls and will return to our societies assuming the threat of COVID-19 has been eradicated.

It may well be the case that your business model no longer fits the emerging paradigm and that it will need to be adapted to changing markets and customer needs. Recognising this is the first step, but the tricky part is understanding how you can adapt your innovation strategy from survival mode to success.

Innovation is about identifying opportunities in the market, understanding customer needs and developing a solution to meet those needs in a profitable and sustainable way. However, the current economic climate may be considered an ephemeral, transitory period, laden with instability and uncertainty. Depending on the outcome and duration of our subsequent battles with the coronavirus, the landscape of the future could look very different.

It is therefore essential for companies to adopt two parallel innovation strategies: one which focuses on putting out fires in the short-term (change) and responding to current market needs, and another based on a long-term vision, which may include incremental changes that better prepare your organisation for the challenges of the future (transformation). This will give your organisation the best possible chance of surviving and thriving into the next decade.

The ComPassIon model was designed to help you to accelerate your change process and align your short-term and long-term innovation strategies. Like a compass, it will guide you towards where you want to end up while emphasising the importance of showing compassion towards employees, clients and the planet.

This article is the first part of a larger series of five contributions, which together constitute a ‘Crisis Innovation Guide’; a guide with tips and tools on how innovation can help your organisation prepare for the turbulent period ahead. The guide is constructed around multiple scientific and opinion articles, interviews with researchers, and input from various webinars and conferences, the sum of which provides an overview of the latest talking points of the COVID-19 crisis.

From 16 November 2020 onwards, every week will see a new contribution as part of the Crisis Innovation Guide. The guide will be made available as a downloadable PDF to members of UMIO Prime as of 14 December 2020 through the UMIO Prime app. The app also provides access to all available articles of the series until now.

If you feel our expertise on innovation can help you and your organisation get ahead, please get in touch and let’s start creating an impact together!