It’s no secret that many businesses in modern industries are constantly thinking about disruption, sometimes, without even knowing it. But if you use a crisis to come up with new pathways to success (and you get there first), you stand to run ahead of the pack and disrupt how an entire industry conducts their business.
A large percentage of businesses find it easier to pour time and money into innovation when things are going to plan but in times of crisis, they revert to thinking of disruption as a hinderance, not an advantage. A McKinsey report revealed only 21%* of executives feel they have the expertise, resources and commitment to pursue new growth successfully in the wake of COVID-19. Too often, we can get caught up in broken rhythms, upset routines, or perhaps confused communication. When in a panic to survive and streamline our core business, the last thing on our minds is innovation.
Yet, it is exactly at the point of crisis where we can see many house-hold names have been born throughout history.
Our friends at Techstars discuss this pattern through a number of examples, from Nestle’s success in coffee post the Great Depression to the way Uber and AirBnB responded to financially-stretched consumers post 2008. However, the company that stands out, both in my mind and in the top of my stock market list, is Apple.
It’s a cautionary tale. While Apple dominates financially today, the company could have collapsed many times in its history. They were many years focused on survival before the turning point happened in the early 2000’s. Rather accidentally, while everyone was looking in one direction, something magical happened in another. And it was all thanks to the determination of one small team.
With the tech stock crash fresh in everyone’s minds, Apple was just barely breaking even. In 2001, they chose to concentrate a majority of their attention and resources on one product; the Macintosh Personal Computer (Mac). It was a risky call, especially as it left other innovation programs under-resourced, but it was justified as they panicked to keep their head above water.
Meanwhile, the portable music team knew it needed to work quickly to avoid Apple shutting them down. They were driven by passion. Even as the tragic attacks of September 11, 2001 unfolded, an Apple team carrying key iPod prototypes from Taiwan landed on U.S. soil—hours before the U.S. government shut down air travel nationwide. Nothing, not a financial crisis, a terror attack or lack of resources, could stop them. The iPod group’s persevering spirit proved essential in preventing a deadline delay that may very well have seen the whole project shut down. To date, Apple has sold more than 304 million iPods, making it one of their most successful products ever.
The two crises taught Apple a valuable lesson; nothing should interrupt employees from innovating or pouring their passions into products they truly love to create. My personal moral of this story – diamonds are made under pressure.
The lesson for us all here is that forward thinking organisations need to implement focused and structured innovation programs that align with business strategy to lead them into the future. Programs which ramp-up when the pressure builds.
At EG, we believe in a programmatic approach, systematically identifying areas of our business that could benefit from technological advancement then scanning, vetting, experimenting, and incubating future technologies to build those applications across the enterprise. A crisis should never interrupt this process. It should foster it.
Recently, EG announced a partnership with Techstars, a global platform for innovation. The partnership will give us meaningful engagement with relevant startups and amplify peer and expert connections. In addition, we are investing more heavily than ever before in our property risk management system PRISMS® and are increasing the data collected and assessed in our Alternative Data for Asset Management (ADAM) platform.
As we attempt to make our way out of this pandemic, it will be those companies with strong balance sheets and future thinking that bring the next wave of disruptive innovations forward. Perhaps the pressure of this crisis will produce your industries’ next disruptive diamond.
*Innovation in a crisis: Why it is more critical than ever https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/innovation-in-a-crisis-why-it-is-more-critical-than-ever#