How to Unlock Growth Through Behaviour-Change Based Innovation
“Innovation takes birth in sync with the evolution of customer’s expectations and demands or vice versa. Either way, organisations around the world have to continually innovate themselves and keep up with the people’s wants.”
Ketan Kapoor, Co-founder of Mercer-Mettl
The most innovative companies have always known that any innovation requiring large amounts of behaviour change on the part of consumers will take longer to scale, and innovation without scale is simply an idea with no impact.
In regular times consumer behaviour changes gradually. This change can be driven by a company through their branding and marketing or can vary due to external factors, such as new technology or changing cultural norms. However, every so often, there are exogenous shifts that lead to dramatic changes in consumer behaviours. This could be brought on by war, sudden socio-economic changes or, as we are currently experiencing, a pandemic.
Out of the COVID-19 pandemic will emerge changes which have a lasting effect on how we live. This behaviour change is born not just from the impact of the virus itself, but also out of government interventions to stem the crisis, some of which may last years. These changes provide a rare opportunity for companies if they can pivot and scale rapidly to take advantage of this shift.
There are two ways that companies can take advantage of these opportunities. The first is to double down on products already in the market, that may have previously had a slower journey to scale. The second is launching new products to meet the market opportunities that now exist. Underpinning the success of both is achieving rapid scale to capture the paradigm shift as it occurs.
Opportunity 1: Near term rapid scaling of innovation
The first opportunity is to invest further in or reposition existing products, for accelerated scaling. In this scenario, the behaviour and expectation changes of consumers enable mass-market adoption of a technology previously struggling to gain mass-market adoption. One example of this in the current crisis has been Matterport, a maker of 3D cameras for the photography and scanning of houses for the real estate market.
With social distancing measures now in place, real-estate agents listing properties have had to dramatically change the way they display properties and the options for potential buyers to view these. Matterport and their network of resellers have recognised this opportunity and positioned their product as essential in the current times. This has, in turn, driven a 630% increase in sales since the beginning of March.
What does this mean for Execs? The behaviour change born out of the current situation may act as an accelerant to trends that may have already been taking place. Execs may need to adjust their current product portfolio or double down on emerging products to ensure that they can capture the changing behaviours. The existing product portfolio should also be re-examined to ensure that the positioning makes sense in light of shifting consumer behaviours.
Opportunity 2: Long-term possibilities
The second opportunity that arises is launching or positioning products to meet a longer-term behaviour shift. These shifts may take years to emerge, but will often seem obvious in hindsight. While it may be some time before we see the longer-term behaviour changes that arise from the crisis, there are some interesting examples from the last major economic shock in 2008. The resulting recession led to behaviour changes, particularly in regards to using resources more effectively (both monetary and other latent assets). One example of capturing this behaviour shift was the emergence of sharing economy business models and companies such as Airbnb and Uber. They effectively tapped into the zeitgeist of the time, where just a few years earlier, sleeping in a stranger’s spare room or getting into their car would have been unthinkable for many.
What does this mean for Execs? Two things. As soon as possible, get out of survival mode. Think strategically about your market to identify where the opportunities and changes in behaviour are going to be. This will leave you better prepared to take advantage of these shifts. Secondly, build a portfolio of innovations around the most promising opportunities. At this time, it is too early to tell which behaviour changes will be lasting and how exactly they will manifest themselves in consumers expectations. By building a portfolio, you are better placed to take advantage of the changes that emerge and last over the long term.
How to build innovations in a time of changing behaviour?
For companies looking to innovate and take advantage of both short and long term opportunities, there are three essential steps. These are innovating from first principles, taking a market-led view and considering routes to scale.
1. Innovate from first principles
In the current climate and after, all bets are off. Start from first principles when developing a new proposition or venture, rather than from your current capabilities and strengths. Doing so may bring to light some attractive and differentiated propositions for customers, that exist in an untapped space. This also extends to a consideration of how other systems that you and your customers interact with have changed. Useful frameworks to use here are Christensen’s ‘Jobs to be Done’, and the Value Proposition Design toolkit from Osterwalder and Pigner.
2. Take a market-led view
Taking a market-led approach is crucial for all innovation, but particularly so in the current time. Meeting the needs of a past market or assuming that the old behaviours still hold is a dangerous assumption. Without getting out and validating these questions in the market and talking to customers, companies may fail to capture the subtleties in the changing mood of the times. The Where to Play framework from Gruber and Tal as well as some basic Design Thinking principles will provide a solid grounding to work from.
3. Build rapid routes to scale and customer engagement
Rapid scaling is critical to be able to take advantage of the opportunities that emerge from a shift in behaviours. In the change that appears out of a post-COVID-19 world, companies will need to reassess and relearn about the best ways to scale their propositions and engage with their customers. This may be an increase in remote and digital channels or merely figuring out how best to cut through the noise at the current time. Companies will also need to consider how they can rapidly scale to lead the market, possibly through acquisitions, co-venturing or partnerships to accelerate growth.
If companies want to emerge from the crisis in a stronger position, they need to start thinking now about how they can react to new behaviour changes. Doing so will not only allow them to emerge faster from a potential downturn through unlocking growth but also with a more durable product portfolio, better suited to meet the changing times.
