Innovation strategy is even more important in times of change

(upbeat music) - No company exists in isolation. We only exist in the context of the environment that surrounds us. And when that environment rapidly changes, business leaders need to be ready to adapt to the new circumstances. Attention immediately goes to the short term, and that's exactly what should happen. But you need to make these decisions with an eye on the future. It's a bit like finding yourself in the middle of a minefield. It's vital that you look right in front of you at the situation, to make sure that you're handling immediate threats. But you also need to keep looking up to make sure you're going to get out of this mess in the right place. Research shows that it's this balance that leads to successful outcomes in times of change. A Harvard Business School study that was conducted after the 2007 recession compared company's coping strategies with their post-recession success, and the results were pretty compelling. They split the companies into four categories: Prevention-focused. These are companies that cut costs and control expenditure more than their competitors. Promotion-focused. These are companies that increase their spending in at least one area and don't make deep cuts. Pragmatic companies. They combine a reduction in their costs, including cutting employees, with increased spending in other areas. And progressive companies, who reduce their costs without significantly reducing employee headcount and increase their spending in other areas. The study examined what percentage of these businesses came out of the recession at least 10% stronger. As you can see, the worst option is to simply cut costs. The best option is to cut costs, hold onto as many staff as you can, and invest in growth opportunities. In a time of change, you need to reassess your business strategy and goals, and potentially adjust them if they don't work for you at the present time. Your innovation strategy then sits on top of your business strategy to help you achieve it. It's all about focusing your innovation efforts in the right place and giving you a framework to help you decide what ideas you need to support right away. So in the short term, you focus on immediate changes you need to make to survive. Your medium-term focus should be on innovation to give you an advantage. And your long-term focus probably isn't so important right now except as a guiding star for your ambitions.