Innovative companies need to discover when and how to pivot their businesses— especially now with pressing urgency amidst the pandemic. Business strategy and innovation experts Rita McGrath and Erich Joachimsthaler joined us for a riveting discussion about building resilience for companies against the known and the unknown. Rita, a celebrated author of “Seeing Around Corners: How to Spot Inflection Points in Business Before They Happen” and Strategy professor at Columbia Business School, shared her planning techniques and leadership recommendations in the context of the pandemic. Rita gave us insights into avenues of innovation opportunity, the centricity of trust in value creation, and salvation from the discovery-driven approach.
Here are some of the key principles from Rita McGrath:
1. Directing your attention to the supply chain helps you pivot your business. Rita explains how crucial it is to understand the difference between the two supply chains that run parallel with each other within companies. It is not only the product that is produced that could host the area of innovation, but it can also stem from one of the multiple supply chains down their main product’s pipelines.
If a company labels itself as a “grocery business” or a “restaurant business,” it limits its room to innovate. Framing your business in the interaction field opens companies to many opportunities when it positions itself within the network of the ecosystem and not within the constraints of its specialized category.
“One of the most dysfunctional things the pandemic has revealed is how brittle and how non-resilient so many parts of our very financed and very efficiency-driven economy has become.” – Rita McGrath
2. Shared value creation is built on trust. Putting the customers in the center and building solutions around them promotes a synergic relationship. The brand’s reputation is measured by its ability to solve problems, facilitate engagement, create participation, and commitment in following through with actions.
The manifestation of trust becomes a source of competitive advantage. Listening and tuning into emotions of the communities built around the product becomes a treasure trove of demand signals for companies.
“If you think about platform businesses, so much of it has to do with trust. I have to trust that you’re not going to be trading in some way. I have to trust that you’re going to be an honest broker. A lot of it really is about human connection.” – Rita McGrath
3. The discovery-driven approach allows making early significant changes and avoiding blind big leaps towards innovation. It is a common assumption from spectators to expect innovation leaders to know what they are doing within their field, but in reality, there is no platform for predictable information to draw upon.
Instead of committing to the traditional process of laying out a grandiose plan, it is more efficacious to communicate an ambitious goal. Having multiple checkpoints allows leaders to see what works or doesn’t work, and eventually redirect and audit the process to reach the desired outcome.
“Most organizations with traditional processes encourage people to continue with anything that they started all the way through just naturally. It leads to a lot of confusion.” – Rita McGrath
Tipping points are innovation opportunities. Here are ways to approach them:
- Solve for the bigger problem, not just the product line growth or bottom line: Taking the perspective of the “bigger problem” we are attempting to solve is critical for businesses today. Asking more introspective questions about your customer’s problems and solution allies opens the doors for innovation. Companies also need to understand and take control of their business assets and investment portfolios.
- Don’t confuse confidence with competence: Humility in uncertainty goes a long way. The answers to the company’s most pressing problems reside in the organization’s edges and not at the top of the hierarchy. Leadership should see beyond themselves and respond more to the collective through empathy. Leadership will be able to mitigate biases by not allowing personal reactions to dictate the most optimal outcome.
- The right time to act upon inflection points: Inflection points happen when companies see the problems or signals bubbling up and simmering before it boils over. These events are irreversible and if not acted upon, it gives other companies an open invitation for dominance. Businesses must have a pulse on their current portfolio of projects and strategies before encountering the inevitable pivot points.
Even though events such as the pandemic cannot be predicted, leadership should allow themselves to take improbable scenarios into account. Determining inflection points helps companies call for innovation and build strategies for pivot and action points. The challenges may be daunting for leadership, but harnessing empathy towards both the customers and the employees will clear the path towards solutions.
Watch the full event here: