Innovation Through Crisis
There is a popular meme circulating these days that asks, “Who is responsible for your company’s digital transformation?” CTO? CEO? COVID-19?
As this joke shows, most businesses are struggling to evolve in the current environment. But as every entrepreneur knows, every crisis offers opportunities, and this one is no different.
Before I go into considerations for surviving the current situation, I want to talk about self-care. We all know what the issues are. To analyze, plan and get on top of this, we need to ensure that we are healthy, safe, and in a good mind space.
Establish routines, talk to as many people as possible, and make the most of the current situation. Most importantly, focus on things you can control.
Empathy and decisiveness are the two key qualities that a crisis like the COVID-19 outbreak needs. Your ability to empathize with people in your business and your key relationships will ensure support and loyalty. Decisiveness towards survival, and later investing, will move the needle forward.
Cash Is Everything
For entrepreneurs, cash is everything right now. There are seven places where you can look for cash in your business:
Cost of goods sold (COGS)
It is crucial that you work out—given your current revenue and funding (equity + debt) availability—your scenarios, and establish a path forward to optimizing cash. Without knowing your runway, the rest of what I am about to say falls flat.
I’m involved with a few boards where we have taken a position of revenue-centric spending. Once we have optimized the expenses and on top of our cash position, we have decided to limit our spending to what will generate revenue—now or in the future.
In the now, revenue is about generating leads and retaining clients. To do both, a company needs a customer relationship management (CRM) platform. If you don’t have one, spend the time to set one up inexpensively, and load it with all your customer information.
If you don’t have visibility of your pipeline of clients, you are operating blindly. Pipeline, ultimately, makes every business thrive.
Once a CRM is set up, first think about how your customers are doing. Empathy for your customers right now will go a long way. Help them with a service or product that they need, regardless of whether you will make money or not. Your support in these difficult times will go a long way in retaining them for life.
Engaging clients through knowledge sharing, thoughtful ideas, and proactive support will build a strong, long-lasting relationship.
Focus on Growth and Innovation
The other aspect of the pipeline is growth. Can you increase customer lifetime value (LTV)—meaning, can you increase how much they spend with you over time, and can you create new leads for your business?
There are a range of marketing channels that cost money, and there are many that do not. You can use the time to optimize your owned media, such as social media, newsletter, blogs, or to even start new content channels like webinars and podcasts. You can pay for ads through Google and social media, but focus your spend on customer acquisition as much as possible.
For the future, focus on business model innovation. If your business has taken a beating given the sector that you are in, is it possible to innovate out of this crisis?
Primarily, there are three levels of innovation: incremental, sustaining and disruptive. Before elaborating on the innovation, are you clear about your business’ purpose? If you don’t know why you do what you do, the rest of this article may not make sense. If you are clear about the why, the what and how can adapt rapidly.
Incremental innovation can be something as small as using what you currently have as products and services, and focusing on sectors that are doing well during this time. A range of essential services like healthcare, e-commerce, gaming, telecom networks, and so on, are thriving right now. Do you sell something already that these sectors need from you?
A good example is how hotels are currently offering “quarantine zones” to a range of governments around the world. My former digital agency is focusing on leveraging their B2B clients’ events budgets and helping them reach their customers digitally.
Sustaining innovation means adding a product or a service that complements what you do, but is not part of your offering right now. This is where you pivot your business towards serving a market need that you see, that you know how to deliver, and that will need to make business changes.
For example, my energy business matches investors with renewable projects. We are now going to launch a fund for renewable energy, so people who are out of the stock market can invest in a different, long-term annuity style product that offers a stable and high return. We will launch this as soon as people have a bit more faith back in the economy.
Disruptive innovation is what most people mean when they say innovation. Such innovation usually turns your business upside down. Disintermediation has hit most industries hard in the last decade. What can you do today that will kill your own business model? This is a much more bitter economic pill, but there has never been a better time to do it. The opportunities for disruption often don’t just hurt your business but disrupt the market on the whole with a completely new product service.
We have many examples of existing businesses that have achieved this such as with Apple iPhone and Netflix amongst others.
Lastly, not all innovation is technological—often, it is business model innovation. Fundamentally, the change is about delivering value. The transformation can also be in the order I outlined where once you embark on the journey, through a range of experiments, you reach the outcome you’re after.
A considerable part of this will feel like hell until you try a range of experiments and discover some working. Eventually, they become habits that work and adapt your business to sustain through the crisis. There are many resources available online that help dive deeper in what I have shared.
Getting a grip on your business first is the top priority. If you don’t have cash, how can you get to a place of stability first? If you already have stability, then this is an amazing opportunity to transform what you do, and thrive for what is certainly going to be a changed world after this crisis.
This article was originally published on the EO Global Octane Blog.