How can business innovation increase resilience in a changing economy?

Changes are often provoked by compelling events happening in the market / business environment of a company. Depending on the severity of the impact, such an event can cause a serious threat to the business execution. However, constantly innovating the own business model can be a good risk mitigation for these kinds of threats. Accompanied by occasionally applying concepts simulating the discontinuation of an entire business, forces to discuss rare scenarios with huge impact.

As a well known example of how companies improved their benefits through proccess innovation, we can not forget what Netflix reached years ago launching a contest for programmers in 2006 with the aim of finding the best content recommendation algorithm, which would improve the one the companie already had by 10%. 3 years after, a group of programmers presented an idea that managed to improve the established algorithm by 10.08%. The award?: 1 M $ (not bad!). From then, you can open your Netflix interface and see all the movies and series that it recommends based on the last ones you have seen and your tastes. The improvement in user experience was, at least, notable.

La innovación demanda una forma de pensamiento en la que abrazas la incertidumbre y la ambigüedad. Paradójicamente, esa forma de pensamiento desarrolla nuestra capacidad para encontrar oportunidades en lo que otros ven como problemas. Además, rompe las estructuras organizacionales fijas, de modo que las ideas de todos son bienvenidas. Existe una visión más amplia de cualquier situación a la que se quiera hacer frente. Estas y otras dinámicas propias de una cultura de innovación son las que la convierten en la herramienta perfecta para forjar organizaciones resilientes ante una economía en constante transformación.

Successfully steering a business toward the future involves navigating a delicate balance between preserving core aspects and embracing growth and change. I've found that a major challenge faced by companies is finding the right ratio in balancing these two tracks. It's essential to allocate sufficient energy, effort, and resources to adequately maintain the health of core business while simultaneously making forward progress in areas of growth. Failing to strike this balance can hinder a business, either by jeopardizing its existing market share or impeding its ability to expand into new, viable spaces in a timely manner.

THE biggest threat to innovation -leaders who don’t believe. innovation skeptics foster a culture of risk aversion. It looks like lack of support and poor communication for innovative thinking and a demonstrated preference for the status quo, often not prioritizing delayed or absent transformation initiatives. A better approach- leaders that encourage collaboration, champion innovation and provide resources and support. Innovation needs thinking; which requires time. Innovation thrives where the value of communication is understood and used to increase buy-in and gain traction. If you’re a leader that doesn’t like or promote the need for change, hire a coach or adviser. Leadership drives innovation. Or else it won’t happen.

I've found the "Value Proposition Canvas" by Strategyzer to be a helpful tool in mapping customer needs and opportunities to an understanding of what products, services, and value propositions may be worth conceptualizing and exploring through feedback and validation. Additionally, Customer Journey Mapping provides an end-to-end view of what any specific user or customer may be experiencing in their path to a particular goal or outcome, and surface moments or touch-points that can be created or optimized in order to drive a particular business innovation opportunity.

I would add “Blue Ocean Strategy” and “Jobs to be Done”. And preferably blending them. Personally I don’t believe DT works well for radical innovations. But it may help to substantially improve your core business.

Beyond being just resilient, innovation helps your business become antifragile. In other words, you actually benefit from shocks and volatility. When your organisation has the institutional agility and creativity to turn unexpected new trends into business opportunities, you gain an enormous competitive edge. Think about how much better those businesses who had already embraced remote/hybrid working fared when Covid-19 broke out. So while being resilient is better than being fragile, in a volatile world, we ideally want our business to become *antifragile*. And building world-class innovation capabilities can help us achieve this.

A "changing economy" means either growing (= more or other people have more money to spend) or shrinking (=fewer people or other people have less to spend) In all cases, a key point is that business innovation can be used to reach new target audiences. When new target audiences have more to spend, they don't necessarily spend as previous would (example: Gen X compared to Baby Boomers) In this can business innovation can fit the new audiences. Most meaningful, when target audiences have less to spend, business innovation can create new business models, such as rental, or new payment models, such as subscription, that can match business needs with customer needs. Business innovation can innovate versions that provide more value for money.

Resilience and strategic ingenuity should always be considered together in our company. Taking into account that resilience is a fundamental factor within the organization, it must be established beyond the simple fact to continue operations despite market changes; it′s necessary to maintain constant innovation, year after year. We need resilience to be carried out within an organization through a process of creative impulse, just to make the organization capable to continue along the lines of innovation and adaptation, especially on market and economical crisis times.