Tips for Doubling Down on Product Innovation in Uncertainty
The innovation we have seen over the last few years has been truly awe-inspiring. For example, distilleries making hand sanitizer and software companies reconfiguring software to help hospitals track during COVID. More recently innovation has turned to supply chain and talent gaps; for example, companies like Lucid Motors, an electric vehicle manufacturer, and Boeing creating boot camps to quickly train up a whole new talent pool.
We can learn from that now as markets feel uncertain and budgets tighten in some sectors of the economy. When times are good, we often forget the proverb, “necessity is the mother of invention”. We mistakenly believe that more resources (time, money, talent) will help us innovate. But our experience and research all show that innovation can flourish even when resources might be tight.
Constraints help, not hurt
For example, a meta-analysis published at the end of 2019 found that constraints help, rather than hinder, innovation. Oguz Acar, Murat Tarakci, and Daan van Knippenberg reviewed 145 empirical studies on the effects of constraints on creativity and innovation and found that individuals, teams, and organizations benefit from a healthy dose of constraints. In other words, the limits of time, money, and available materials that some of us may be dealing with help us be more innovative.
Data shows investing in a downturn sets us up for success in the next upswing
While I would categorize this as a period of greater economic uncertainty, not officially a recession, we can still apply the lessons from past downturns, for example, a McKinsey & Co analysis showed that companies that invested in innovation during the 2009 financial crisis outperformed the market by over 30% and continued to outperform over the next five years.
The takeaway: don’t over-correct by turning off your innovation plans; instead adjust your mindset for an opportunity to get ahead of your competition, manage risk mindfully and focus your efforts for long-term success.
Four Tips to Innovate in a time of Economic Uncertainty
Here are a few things I’ve observed over the years about how to innovate during a time of uncertainty and come out the other side ahead of the competition:
- Adjust Our Mindset
Innovating in uncertainty requires shifting our mindset so we are not held back by fear. It is natural to have fear when there is market uncertainty and volatility. But fear is where innovation dies.
The good news is that there are specific behaviors that help us face and move through, our fears. I am inspired by Vecteris co-founder, Eisha Armstrong, who suggested that we do these five things to overcome our natural fears about the unknown:
- Think big but start small - running small experiment after experiment will help you achieve big goals with less risk and faster success
- Mindfully focus on the risk you can control – focusing on everything that could go wrong can be paralyzing, instead, focus on what you can personally control
- Expect less than perfect - it is easier to face our fears of failure when we accept that what we do does not have to be perfect
- Ask for help - give up the idea that we need to have all of the answers and ask our broader organization and community for ideas
- Practice gratitude – gratitude shifts our mindset to one where we see opportunity, rather than scarcity
- Talk Directly to Customers to Understand How Their Needs and Willingness to Pay May be Changing
Innovation starts with identifying an urgent and expensive customer problem. We can typically use many tools to identify customer needs (surveys, focus groups, etc.). But our best tool right now is to talk to customers and end-users directly.
Speaking directly with customers is the fastest way to understand their challenges today and tomorrow as priorities change quickly. Talking to customers will also help you understand how buying behaviors are changing and allow you to explore pricing and packaging options that work in today’s environment (e.g. do we need to aim for simpler and more affordable?).
- Build with Flexibility in Mind
Once we start building a new product, the architecture should be as flexible as possible because things can shift rapidly. For example, use a more modular architecture, place a premium on flexibility when making design decisions, and delay hard-coded decisions until products are tested.
- And Prioritize Relentlessly
It is important during times of uncertainty to focus our efforts on the areas with the greatest impact. Revisit prioritization more frequently, dump the under-performers, pause on the CEO’s pet project, and kill the zombies. You know you should have done it 6 months ago, now you have the perfect excuse.
I’d love to hear how your organizations are innovating despite having constraints and uncertainty– share some inspiration, please!