You are probably familiar with the phrase ‘fight or flight’. A term usually used to describe the possible two options a person or animal is left with, when they are facing a threat to their survival. As an extension of ourselves, businesses react in very similar ways. Oftentimes the reaction from business is not one or the other, but a more nuanced approach to create the best of both worlds.
While it is impossible to know all the forces affecting any business at one time, there are generally set actions that take place in regard to the initial flight response. Quickly highlighting and attempting to slash and burn any additional expenditure from the previous few months profit and loss is often the first port of call. Whether this is cutting out that external advisor, the three extra packets of Tim Tams per week, or looking towards wages, it can have a large and lasting impact on the business and team morale. Whispers from the accounting team, turn into shouts about cleaning up the balance sheet and retaining cash. Figures fall in and out of forecasts at breakneck speed and the preservation cycle begins.
These are all areas that will require attention, but as the dust begins to settle, graduating to the fight response enables businesses to better weather the remainder of the storm, but more importantly take ownership of additional revenue streams and opportunities for when the clouds are gone. While these new opportunities are welcome, innovation through current business remains critical, with strategies to be considered:
Refine or Revisit Your Core Product Range
The former CEO of Intel, Andy Grove, is well known for a few things, one being this famous quote:
“Success breeds complacency. Complacency breeds failure. Only the paranoid survive.”
It can be easy to overlook your core range and rely on legacy sales channels, particularly during busy times. As internal resources become available during quieter times it offers the opportunity to add further products to your range, that are already based on sound marketing insights. The likelihood is that your internal team will also be more efficient at working through designs they know well, rather than blue sky avenues.
Design Towards Supply Chain Redundancy
This strategy adds further weight to revisiting your core range, especially if you are heavily reliant on key components, or limited suppliers. Gearing your design in new or existing products can be done through the simplification of parts and/or alternate material selection. The aim is to build resilience primarily through flexibility and location. Completing a structured Design for Manufacturing Analysis of your product will enable a new contract manufacturer in any location to begin production in a shorter time. A businesses ability to audit or implement further QC measures also becomes less onerous, if the production is moved closer to home.
Leveraging Opportunity on the Supply Side
As experienced in the Great Financial Crisis there is an unwillingness in industry to mothball or leave production lines idle. Many machinery manufacturers were faced with a drop off in sales and heavily discounted their products – often selling machinery at cost to keep their production lines moving in anticipation of the market picking up. For the savvy customer this presents an opportunity to greatly reduce CapEx compared with a booming market.
Contract manufacturers are also faced with a reduction in output so often have spare capacity with production machinery. This is an opportunity to collaborate and refine or develop new processes, especially for product development purposes. They may be able to subsidise machine time as an opportunity to train staff or learn new processes, creating a win-win scenario.
As April draws to a close, much uncertainty remains, not just locally but internationally as well. Businesses can take some solace in the fact that government channels, the likes of: NZTE, Callaghan Innovation and Regional Business Partner Network are attempting to reduce uncertainty through a wealth of information, support and cash initiatives, while using innovation as a tool for stimulus. Recent results from a joint survey of businesses by Agritech New Zealand and Callaghan Innovation indicate 26% of respondents viewing this time as an opportunity to accelerate their R&D activity, with a further 35% intending to refocus current R&D objectives to be responsive to the new environment.
In going one step further, MBIE is implementing the ‘COVID-19 Innovation Acceleration Fund’. With one of the core purposes being –
“Provide rapid short-term support to New Zealand based entities to develop and more quickly deploy a range of new products, processes, or services.”
It must be said that the underlying purpose of this initiative is to provide products and services that are –
“…immediately and directly attributable to addressing COVID-19 in the short, to medium term.”
It could be argued that this initiative should be viewed in isolation, but ultimately it does go to show the strong intent that government puts on innovation being necessary to social and economic wellbeing.
At first glance, it may appear a daunting prospect to consider innovating during uncertain times, particularly as the rate of change to new and emerging markets can accelerate through uncertainty. Some boldness may be required to divert resources towards new thinking and new opportunities, but the support and the options are there. While a constant state of paranoia, as Mr Grove suggests, may not seem like an ideal way of life to many, it does make you wonder about the risk of losing sight of further innovation.