As the adage goes, “when the going gets tough, the tough gets going.” The COVID-19 crisis has pushed many companies to the brink. But it has also presented opportunities for agile companies to innovate and seize opportunities.

A recent McKinsey survey reveals 90% of executives expect COVID-19 to alter the way of doing business over the next five years. 75% of them expect the crisis to create growth opportunities. But not everyone can seize such opportunities. Only 30% of these executives feel confident to face the coming changes. During a crisis, most businesses focus on maintaining business continuity and cutting costs. They relegate innovation to the back-burner, which is a mistake.

Here is how to innovate through a crisis, and grow.

• Rethink the Business Model

Market dynamics develop continuously, as customers rethink their needs. The shift becomes more pronounced and fast-paced during a pandemic. Extreme changes in economics make many long-running business models unviable. Customer needs change radically, rendering long drawn out assumptions obsolete.

Weathering the crisis requires a willingness to overcome hurdles and change.

Identify the impaired parts of the business model. For instance, many customers have made a permanent shift to online stores. Chinese consumers’ offline consumption dropped 70% during the lockdown. Only half the earlier volume returned after lifting the lockdown. Likewise, a field sales force may become redundant as customers prefer digital channels.

Prepare alternative models to overcome the crisis. Mere adoption of digital channels may not reap dividends. Innovators assess the implications of the changes in the assets and capabilities of the enterprise. They experiment with alternative business models while guarding against letting assumptions become assertions. They move quickly to reallocate resources toward the best options, away from opportunities that no longer apply. Many brick-and-mortar stores became e-commerce distribution hubs rather than merely offer an online shop.

Keep learning. Apply analytics to make every customer touchpoint a new opportunity to learn. Success depends on:

• Recognizing new patterns of customer behaviour and external environment changes early. Synthesize information from the many signals coming into the enterprise.
• Acting on the insights in double quick-time, to get a head start in the innovation race.

The enterprises of today could take inspiration from Chrysler and GM. During the Great Depression in the 1930s, these automobile manufacturers thrived by adjusting to the new realities rapidly. GM halted production of high-end brands and invested aggressively in Chevrolet, its low-priced car brand. The company used the same engine and parts across different brands to reduce inventories and create flexible capacity.

• Think out of the Box

Smart enterprises listen to customers but think out of the box to delight them. As Henry Ford once remarked, “If I had asked people what they wanted, they would have said ‘faster horses.’”

Examples abound.

With travel restrictions in place and social contact frowned upon, deploying in-person field sales teams become counterproductive. Smart businesses leverage the anywhere, anytime availability of the digital space, and assemble the perfect team of experts for every sales pitch.

Many food distributors who supplied to restaurants have set up digital direct-to-consumer channels.

Many museums create and stream digital content to allow people to enjoy the artefacts from the comforts of their home.

The entertainment industry generates new content such as sports retrospectives to fill the lockdown-induced void in programming.

Supermarket chains such as Walmart, Kroger and Carrefour launched curbside pickup offerings to help customers avoid queues and crowds inside the shop. Clover, a fast-food chain staring at indefinite store closures and food waste, repurposed the ingredients of hot sandwiches into boxes of assorted fruits, vegetables, and other grocery supplies. Earl’s, a popular restaurant chain in Canada and the US offer pick up of prepared meals, do-it-yourself food packages, and grocery collections. A creative Vermont corner store offers daily stock updates on social media.

A restaurant in Malaysia has re-imaged its floor layout into a double-decker model to allow diners to dine with safe distancing.

A whopping 96% of businesses have changed their go-to-sales model since April 2020. Most enterprises now adopt multiple forms of digital engagement, catering to the changing customer requirements.

• Ensure Effective Leadership

Technology alone rarely suffices to enable innovation. Success depends on leaders who can leverage the changing environment and overcome teething problems.

Consider online classes. Universities across the world had been discussing virtual classrooms for many years. But reluctance of the stakeholders to change, the privacy risks involved, regulatory hassles, and stigma attached to distance education confined virtual classrooms to an adjunct to mainstream classroom lectures. Likewise, regulatory hassles and lack of interest rendered telemedicine a non-starter. A swift-moving pandemic blew away these stumbling-blocks. Virtual classrooms and telemedicine are now the norm world-over.

Yet, not all universities who shifted from in-person classroom lectures to virtual learning, and not every healthcare provider who offers telemedicine succeed. The changeover has been imperfect and chaotic in most places. Enterprises with proactive leaders willing to take ownership of the change, succeed.

• Forge Alliances

Successful innovation depends on understanding the customer and a willingness to do new things to match their priorities. But often, the company may not have the expertise or resources to match customer wants. Forward-thinking companies strike strategic alliances to tweak or overhaul their business models.

In China, 40+ hotels, restaurants, and cinema chains, nearly out of business, shared their staff with Hema, Alibaba’s supermarket chain that was struggling to match increasing demand for deliveries.

Several businesses forged partnerships, even with their competitors, to extend their reach. A case in point is fifteen pharmaceutical companies sharing compound libraries to develop coronavirus cure.

• Focus on the Intent Over the Rulebook

Business owners and managers who seek a rulebook for crises and try to control the situation through policies fail badly. During times of crisis, focus on the strategic intent over strategic plans.

Establish a golden rule to add value to the customer. This could mean cutting costs, exceeding customer expectations, or a combination of both. Leave the details to the line managers.

Decentralize decision making. Empower line managers to improvise on the spot, considering local exigencies. Often, such improvisation becomes the seeds of new, innovative business models or product positioning.

• Embrace Agile

Speed is a driver of innovation success, as is the ability to persist despite the hardships that a crisis imposes.

A small-cycle approach to innovation works best in a fluid, uncertain environment. When business outlook transforms, iteration in small circles reduces the uncertainty and keeps things in control. An agile approach, with changes implemented in small prototypes, allows team members to focus on one goal without distractions.

Prioritising innovation is the key to unlocking post-crisis growth. A crisis changes the risk-reward dynamic. It provides a license to ignore the status quo and do something better. When the alternative is closure, CIOs can throw caution to the win and innovate freely, without worrying about the risk of failure.

Here is how smart IT managers reinvent themselves to face new challenges.