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A leader’s guide to postpandemic innovation strategies

Harmony Internal - McKinsey

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ESSENTIALS FOR LEADERS AND THOSE THEY LEAD

Edited by Rama Ramaswami
Senior Editor, New York

It is the best of times and the worst of times for innovation. You’d think that remote work would stifle creative collaboration, but quite the opposite is true—thanks to virtual networks and bold adoption of technology, organizations have innovated and digitized at record speed, in some cases accelerating the creation of digital offerings by a stunning seven to ten years. At the same time, many leaders are preoccupied with the immediate fallout of the pandemic and are not confident that they have the resources and commitment to innovate for the long term . But it’s possible to combine speed and stability to create new approaches to innovation. This week, let’s explore some strategies that work even in uncertain environments.

AN IDEA

Image of three closed doors and one door slightly ajar

Find your focus and pursue it

Innovation isn’t about playing it safe, but many companies have been doing just that since the COVID-19 crisis began. McKinsey research shows that organizations are deprioritizing innovation in favor of shoring up their core business, sticking with known opportunities, and waiting until “there is more clarity.” But they may be losing out on unconventional ways to grow. The pandemic set in motion far-reaching disruptions such as radical shifts in consumer behavior, changes to sales models, and the advent of unexpected competitors. For example, medical-device manufacturers suddenly had to contend with home appliance makers that began to produce ventilators. Such shifts represent major long-term opportunities for organizations, and savvy leaders know that historically, companies that invest in innovation during a crisis outperform their peers during the recovery. Not sure how to jumpstart your innovation plan? This framework may help.

A BIG NUMBER

That’s the number of practices that contribute to high performance in innovation. In a multiyear, global study of organizations conducted in 2012, McKinsey found that high performers in product, process, or business-model innovation had eight attributes and behaviors in common—and managed them better than their peers would have. For example, most companies have high aspirations, but high-performing innovators combine aspirations with meeting quantitative financial-growth objectives. And most companies want to discover new things, but the best innovators collect and synthesize insights to identify problems and potential solutions. Follow-up research that we conducted in 2019 shows that mastering five or more of the eight innovation essentials correlates with strong financial results.

A QUOTE

“Sometimes I want to shake people and say, ‘Wait a minute, the world is a different place.’”

That’s Jack Welch, the legendary CEO of GE, in an interview with the New York Times in 1985. Underlying Welch’s sweeping—and controversial—transformation of GE over several decades was a clear recognition that organizations must anticipate and keep pace with change—or be overwhelmed by it. “Change before you have to,” is a familiar Welch maxim. But even successful, well-managed companies can be blindsided by change and fail to make the strategic and cultural innovations needed to cope with it; in this Wall Street Journal article, a research scientist and former innovation leader at IBM explains why.

A SPOTLIGHT INTERVIEW

Innovation doesn’t have to be flashy to have a significant impact. Engineering and construction management company Bechtel focuses on innovation in everyday activities such as training, teamwork, and technology adoption to achieve its net-zero targets, according to Shaun Kenny, Bechtel’s global infrastructure leader. In this discussion with McKinsey’s Tony Hansen , Kenny describes how his company innovates to meet energy transition challenges. “For our industry, the key questions are ‘what’ and ‘how’—that is, ‘What types of major projects are being delivered and developed?’ and ‘How will we deliver them?’” he says. Innovations in various focus areas help address those questions: for example, improving cycle time for installations increases productivity, and mobile workstations and base camps in the field enable professionals to visualize what they are building. “Sustainability is about bringing innovation to the ways we work today to enable the needs of future generations,” Kenny says.

INSIDE JOB

Image of a pink document with confidential written on it in blue lettering

If you want to innovate fast but without too much risk, “intrapreneurship”—acting as an entrepreneur within an established company—may be just the thing for you. Most large corporations have unused ideas that enterprising employees can turn into an innovation, which may even result in a new business or subsidiary for the company. A “skunk works” project is a variant of this. Derived from a secret program to develop a spy plane, the term now refers to any unit within an organization that works on confidential or advanced projects, with little or no interference from the parent company. The advantage of these models is that even if your venture fails, you have a safety net.

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by "McKinsey Leading Off" <publishing@email.mckinsey.com> - 02:10 - 8 Aug 2022

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A leader’s guide to postpandemic innovation strategies

Find your focus and pursue it

“Sometimes I want to shake people and say, ‘Wait a minute, the world is a different place.’”