How to capture a culture of innovation: lessons from the COVID-19 crisis

The challenges of the pandemic have forced many businesses to adopt an innovative mindset in order to adapt to new demands in record time. And while many of us look forward to the world returning to what will be the new normal, this way of thinking is something that many organisations will want to hold on to.

The year 2020 was one of seismic change for everyone, both at home and at work. Businesses were forced to evolve and adapt rapidly in light of the COVID-19 crisis. In the year where hybrid and home working, virtual meetings, social distancing and face masks became the new normal, many organisations had to completely revamp their business models and working practices.

Innovation became a matter of survival during the COVID-19 pandemic

According to a global study of 899 C-suite executives by McKinsey, companies have accelerated by three to four years the digitisation of their customer and supply chain interactions, and of their internal operations, following the pandemic. Furthermore, the share of digital or digitally enabled products in their portfolios has progressed by seven years.

One of the most common changes for organisations around the world was needing to switch to a fully remote workforce. “Our shift, like other businesses, was very rapid,” says Peter Histon, Chief Technology Officer at life insurance firm Resolution Life Australasia. “We wanted to ensure our people could safely work at home whilst being connected to their team on a daily basis. Our people’s wellbeing is really important to us.

“We used a monthly engagement survey to ask them how they were managing, what further support they needed and if they were set up adequately with the appropriate equipment to do their job. We delivered monitors, chairs and headsets all across Australia. Each leader was empowered to make decisions that would support their team’s wellbeing and performance.”

It was a similar story at PwC UK. Laura Hinton, Chief People Officer, says that prior to COVID-19 around 10 per cent of PwC’s employees worked remotely at any one time. This switched to nearly 100 per cent almost overnight. “Of course, switching all of our 22,000 people to remote working was unexpected, but our investment in technology and embracing a culture change meant this particular adaptation was relatively smooth,” she notes.

Hinton says a decade’s worth of innovation and change took place in months and that some of the new practices, including flexible and remote working, will form the framework for businesses in the post-pandemic world.

Kathleen Jones, Chief People Officer (interim) at Rathbone Brothers, says the investment management sector has been similarly overhauled in a very short space of time. Much of this change has, Jones believes, actually been a positive thing. “Organisations like ours were worried about embracing flexible working because these businesses weren’t sure how they would manage productivity, but this has made many companies see that people can remain productive and professional while working remotely,” she says. “The pandemic has been a catalyst for a new way of thinking for us.”

How adopting an agile mindset can create opportunities for your organisation

Some organisations had to do more than move to a remote working model, and completely changed their business model to ensure they survived the effects of the pandemic. Across the globe, organisations pivoted to create products to help fight the spread of COVID-19.

Fiasco, a New Zealand-based company which usually supplies touring equipment such as protective road cases for musicians, was forced to quickly rethink its strategy when the live music industry was paused. The business considered what different products it could produce with its existing supply chain and began making home working desks and plastic screens for retailers instead.

In China, Foxconn Technology Group repurposed its production lines to make surgical masks. Meanwhile, luxury goods conglomerate LVMH began producing hand sanitiser at its Dior and Givenchy perfume sites. And in South Korea, CJ CGV, a major cinema chain, created completely contactless theatres, with robots, automated snack bars and unmanned ticketing systems.

Michel van Hove is Partner at Strategos, a US strategy and innovation consultancy founded in 1995 by Gary Hamel. He says that with mounting challenges, many businesses moved quickly to offer new or altered services or products. “There was a general sense of urgency and, in many cases, companies quickly scaled up basic infrastructure that was already in place.”

He adds that in times of difficulty there are often opportunities available to those who can see them. “Generally speaking, when constraints are applied there will always be individuals who see this as an opportunity to come up with different working practices and behaviours that help them achieve better outcomes.”

Why innovative organisations outperform their peers

While an organisational culture that promotes change and innovation can be necessary to survive economic challenges, it can also give businesses a competitive edge when things are more stable.

Boston Consulting Group’s global Most Innovative Companies Report 2020 found that 66 per cent of the 2,500 executives surveyed see innovation as a top three management priority. Yet only 45 per cent are “committed innovators” – that is, they see innovation as a top priority and back up that commitment with significant investment.

“Sceptical innovators” (30 per cent of the total) see innovation as neither a strategic priority nor a significant target of funding. And “confused innovators” (25 per cent of the total) report a mismatch between the stated strategic importance of innovation and their level of funding for it.

The research found that committed innovators are seeing the best results. Almost 60 per cent report generating a rising proportion of sales from products and services launched in the past three years, compared with only 30 per cent of the sceptics and 47 per cent of the confused.

And in Australia, a 2020 survey of 180 firms by Innovation and Science Australia found that SMEs with high growth in technology spending increased their revenue 3.5 percentage points per year faster, and employment 5.2 percentage points faster, than those with low technology spending.

How can organisations continue to prioritise innovation post-COVID-19?

With this in mind, how can businesses ensure that the innovative mindset they gained by necessity during the COVID-19 pandemic becomes a permanent part of their culture?

1. Celebrate your achievements

One way to maintain the momentum of employees’ innovation-ready mindset is to celebrate their achievements so far. Kate Cooper, Head of Research, Policy and Standards at the Institute of Leadership and Management, points out that while the long-term impact on productivity after switching to home working is still something of an unknown, employees’ willingness to make this change is something businesses should champion.

“So many people have demonstrated capabilities to learn new technologies very quickly, to find ways of collaborating with colleagues and manage performance – all virtually,” Cooper says.

This is indicative of an adaptability we will continue to need in the future, she says, not just in response to a crisis. “It could be we need to get something to market, find new suppliers or train people on a new system – whatever it is, an ability to respond quickly and effectively will deliver real competitive advantage.”

2. Continue to disrupt and question your business model

In November 2020, Resolution Life switched to a new working model called ‘enterprise agile’ to support an innovative mindset beyond the pandemic, says Histon. “This has enabled us to fundamentally shift the way we collaborate across the organisation, to transparently generate ideas, test solutions and ultimately deliver great outcomes for our customers.”

As part of this shift, the business now holds regular events called ‘ceremonies’ to provide feedback from different levels of the business.

“One of the ceremonies we’ve implemented as a part of our agile flip is the concept of a fortnightly showcase. These are open to the entire organisation and the senior leadership team (including our CEO) have a presence at each of the showcases.

“This gives our people the opportunity to hear regularly from the senior leadership team about how important innovation is and how they are embracing ‘different’.”

3. Build a culture of clear, consistent communication

Sheryl Fenney, Vice President, Global HR at Fanatics, an international sports merchandise business that works with the likes of the NFL, Manchester United and Bayern Munich, says she and her colleagues learned that building a culture of communication and strong leadership was essential when implementing quick changes to their business.

“With so much uncertainty in our lives and with our offices being across 11 countries, it was important that our global leadership team gave a strong, clear and consistent message,” she notes. “Increasing our communication, both at a global and local level, was also vital.”

They also learned that they needed to put employee welfare at the heart of business, says Fenney. “We did a lot of work making sure that we regularly communicated to our whole organisation and that our leaders showed humility, empathy and honesty when they spoke, many sharing personal stories of challenges they’ve faced,” she comments.

But while the COVID-19 crisis was very much a global issue, Fanatics had found that in previous periods of significant change within the company, different countries responded in varying ways. In the UK, for example, employees sometimes struggled to adapt. “In the UK we had found, after compiling employee feedback previously, that people were more resistant to change or saw it as a negative,” Fenney says.

To help combat this, Fanatics rolled out a number of ‘change workshops’ for UK employees, delivered by an external facilitator. “This wasn’t needed as much in other countries, such as the US, where the employee base was much more used to and excited by change,” Fenney notes.

4. Your processes must keep pace

Of course, for many businesses, following processes to ensure services or products are delivered to a set standard is as important as innovating regularly. Accordingly, van Hove warns that these should be developed with equal urgency.

“At Strategos we believe innovation can flourish by enabling creativity with robust processes,” he explains. “These are not mutually exclusive as many like to believe. Core processes and shared purpose provide overall coherence for everyone.

“If we look at our clients, 2020 was a time when prescribed ways of working (policies and procedures) were often ‘ignored’ in favour of helping colleagues and customers. Organisations need to innovate their products and services, but those same processes must apply to their working practices.”

Kosta Mavroulakis, CEO and Founder of global innovation scouts Empact Ventures, agrees and recommends that organisations research to see if there are existing products that may support them in this endeavour, something he has witnessed organisations do throughout the pandemic. “It led them to make better use of existing off-the-shelf platforms, which better align to their existing system and processes,” he notes. “In other cases, it forced them to seek out new innovation provided by tech start-ups and scale-ups, or even to invest in creating their own.”

Renewable energy firm Bulb has taken on an additional 200 employees since the start of the Covid-19 crisis last March, and taken advantage of existing platforms to get the most from its workforce. “We use a mix of data and feedback to understand how things are working,” says Tom Fraine, Chief People Officer at Bulb. “One example is Slack – we know that this platform helps us work better remotely because our teams use it every day. If it doesn’t work, we change it.”

If businesses want to move quickly and effectively, Fraine says, they have to look closely at how their teams are using the tools and processes they have in place and change them if necessary. “We know that in order to be effective, we have to be agile in how we operate.”

Fenney, meanwhile, says that organisations can create a balance by putting equal weight on the importance of both innovation and process, even when recruiting: “Being innovative and agile is key for all roles, but it is important that we balance creativity with subject matter experts to ensure due diligence and compliance.”

5. Give your people the freedom to fail

Another key way of nurturing an innovative mindset is to ensure that reversing changes where necessary is not seen as a step back. Not every new idea will be a success, and encouraging your people to be mindful of this is important, says van Hove.

“When innovating, learning about the idea needs to come before the commercial argument. Assumptions-based testing is a great way to put ‘learning before earning’ and allows colleagues to roll back changes, reflect and reconsider ideas or correct the course if necessary.”

Resolution Life has a reflection process known as ‘retros’, where teams recap on recent changes in the business. “Every fortnight in our retros, our squads and self-managing teams reflect on what went well and what could be improved,” says Histon. “This session really highlights how we’re a learning organisation and recognise there’s always room for improvement.

“Part of the focus in the agile model is testing and learning, and the phrase we use is ‘it’s ok to fail, but let’s do it quickly’. We want to test new ideas, but we want to know if they are going to work. If not, we can try a different approach before launching to customers. This means we have to be very focused on what we are learning and be open to changing things accordingly.”

Mavroulakis, meanwhile, says there is value in communicating clearly to internal and external stakeholders, and that innovations within an organisation may roll back if they are found to be ineffective. “Organisations can adapt their online and offline communications to be clearer about the changes, and how they are subject to change, to enable them to reverse them in the future,” he says.

Ultimately, an organisation’s ability to sustain a culture of innovation at all times, not just during a pandemic, requires a deep knowledge of what allows its employees to break barriers. No two organisations will have followed the same route, and even colleagues within the same organisation will have had different experiences. It’s for this reason, van Hove says, that organisations must investigate thoroughly and gain a full overview of what has helped their people over the past year.

“It is not enough to send out questionnaires, as many organisations did during the pandemic,” he says. “They must identify and engage with individuals to understand at a deeper level what motivated them to innovate their work practices.”