The fear of business contagion requires different innovation response

We are presently facing a profound set of changes in the conditions that businesses operate within the immediate years ahead, that of the fear of business contagion; these will need a different set of innovation shifts and responses to counter this and seize new opportunities.

Over two posts, I want to lay out the underlying concerns (here) and the new dynamics we can deploy by changing how we undertake innovation as my second post.

This first post discusses what is changing, and there is a growing argument in what I am seeing that we are facing one of those contagion periods where one set of conditions is triggering another, followed by another.

The four interlocking conditions

The economic and political conditions we seem to be facing of global uncertainties are triggering a profound shift in the social conditions and causing personal shifts we are all undertaking, and that will have an intense shift for business to adapt and react to.

Let’s take these separately and how these when combined, will require a very different innovation mindset in the coming months and years.

Economic and Political Conditions

The growing level of international tensions and global conflicts are already impacting our supply chains. The growing uncertainties are triggering the fears of global and local recessions and the spectre of rising inflation to levels not seen for many years and outside of many people’s personal experiences. The shifts will change how each country and company compete. Volatility and extremes will become more commonplace and require a different reaction time and response.

The ability to pass on inflation or be agile in supply response to sudden shortages will need very different agility than ever before. Decisions will need to be closer to the point of ‘conflict’ and certainly more local. Waiting for decisions will lead to lost opportunities. Adaptivity in changing conditions will increase rewards but bring more risk and exposure. This changing dynamic flows through into the other conditions.

Social conditions

The social conditions are pointing to rising levels of instability and unrest. As rising prices are seen not just in essentials (food, energy, stable items and services) but in items we have taken for granted (airfares, travel, well-being, clothing) and our accepted needs of everyday life (technology, fuel, water, heating), we become confronted and begin to react, in anger, despair and needed support. This presents a very different fluid environment and has a knock-on effect; we quickly relate and identify with others facing their changing conditions. We suddenly see very different “network effects” that have social consequences and impacts.

To counter this sudden shifting of social conditions, innovation needs to adopt a broader view of adapting to changing needs. Being agile and responsive becomes central to seeing opportunity gaps quicker and responding in socially aware ways. Rising demand for change becomes a new normal.

Personal Shifts

The “needs-driven” becomes dominant. Expectations rapidly change, and a new approach to governance and questioning takes place. In a world where the vast majority are always connected and aware of their immediate surroundings (at least), new skills and learning suddenly kick in.

Knowledge adoption and awareness become higher in personal needs. Innovation takes on new twists. It will utilise the digital tools we have at our disposal to shape our opinions, assumptions and attitudes to be highly aware and adaptive. Where is the job opportunity to seize, where do I go to save costs or reduce my money outlay, what decisions do I need to make to reduce my costs, adjust my living conditions and find different ways to extract value and achieve a return in a diminishing set of market conditions.

The profound shifts needed in business to adapt

Change brings complicated challenges. The more complex the business, in its hierarchy, making decisions, and managing its local and global network will lead to a different set of operational disruptions. Risk-taking rises in need. The need is to break out of past or present traditional boundaries and borders to capitalize on the new innovation potential of opportunity seizing.

The value of agility, flexibility, knowledge awareness and rapid diffusion of (new) solutions to meet these changing operating conditions and seize upon “breaking opportunities.” adds increased complexity, highly disruptive to today’s accepted view of “effectiveness and efficiency” but gets rewarded in this ability to perform differently, responding to changing market and societal needs.

All of these conditions are the triggers for wholesale change.

You simply adapt or die. Contagion, by definition here, is in its economics and financial effect. Contagion can be explained as a situation where a shock or series of shocks spreads out and affects others that trigger a crisis. We have built up such an interdependence; when contagion happens, it spreads quickly and unexpectedly.

The role of innovation suddenly changes.

I have written consistently about risk and innovation. We do need to revisit our appetite for risk, we need to reflect on a return differently. Perhaps this three-part primer on risk has value here to begin to rethink innovation and its need to be adapted and respond to a different world ahead of us.

In a three-part series, part one outlined the implicit need to align innovation to the corporate strategy, and through this, we can determine ‘acceptable risk’.

In part two, I offered numerous reasons why we should recognize and treat innovation risk differently to allow it to perform closer to its promise of driving growth and achieving real advantage.

In the third and last part, part three, where I lay out different mechanisms and framing of risk and innovation. These need to be evolved to fit your own risk appetite, not one size fits all. I hope it helps.

I believe we need to explore the new dynamics we can deploy by changing how we undertake innovation.

Moving from the triggering conditions, my next post explores the changes around innovation we can move towards to adapt to the new environment we face today and in the future. I have optimism that innovation can be an even greater catalyst in times of significant change.

I will be looking at issues such as moving from complicated to complex; we have different collaboration tools to be more agile and adapt, we need to adopt a clearer mindset to working in innovation ecosystems, and we need to leverage the digital transformation we have been undertaking.

It is our ability to perform differently has always been a high mark of innovation, often not well understood at senior management levels.

This very nature of leveraging the conditions needed for innovation across the organization can lead a business into a new era of innovation opportunity- that carpe diem instinct which is in all of us, I believe we will need to!