When the Covid-19 pandemic hit, companies worldwide had their business models stress-tested for a new virtual future. Those ready with business models that could operate seamlessly in a digitally-led environment have ridden the Covid-19 wave to increased profitability. At the same time, bricks and mortar stores without online offerings either closed down or are hanging on by a thread. Still, others are working on hybrid models while seeking to transform and modernise their traditional businesses for a truly digital world.
According to management consulting firm BCG the top 5 most innovative companies of 2020 were Apple, Amazon, Microsoft, Samsung and Alphabet. These companies were poised for success in a digital-only world before the pandemic hit and have played in the technology sector for many years. These innovative companies prioritised advanced analytics, digital design and technology-driven platforms.
Innovation is essential for survival.
Innovation is not just a ‘nice to have’ for companies today. For businesses to not just survive but thrive, they have to adapt and transform for operating in a Covid-19 reality where consumers have changed their behaviour because of restrictions to their physical movements and accelerated adoption of working, playing and buying online.
It’s not just technology industry companies that are the most innovative globally, but those that were traditionally not online that have transformed to take their customer bases into an online ecosystem, like Nike, Shopify and Outschool. These are three very different companies that used the pandemic as their launchpad, and how they responded hold lessons for all businesses.
Outschool was launched in 2015 and was initially serving home schoolers. However, the online education platform took off during the Covid-19 pandemic when people worldwide signed up to the edtech platform to keep their kids learning and engaged in online lessons and pursuing new hobbies. Today, Outschool offers over 100,000 live online classes to almost a million learners across the world.
They make a difference by creating critical mass with the number of students they can reach and driving down the cost of education. Learners can pay as little as $10 (+-R150) for a class.
Outschool is one global example of an innovator that has made waves by using the crises to launch new business models. But they also adopted a ‘social impact’ mindset where their models are adding and not just extracting value from their customers. Many South African start-ups are shaking up their industries with innovations that improve and enhance the lives of their customers.
With Environmental, Social and Governance (ESG) concerns becoming increasingly important to both local and international investors; businesses must take a position on issues impacting their environmental footprint. How they treat their workers and communities (Social) and whether their business practices are compliant and ethical (Governance) must become a cornerstone of business practice.
Although there is a healthy dose of scepticism around ESG, even if it is just a marketing gimmick, it warrants enough reputational risk for companies to ignore ESG principles.
Innovation means putting people and the planet up there with profits
Studies show that Millennials (Generation Y, born between 1981 and early 2000s) are more concerned about political issues, inequality and poverty than previous generations. They want to see companies and individuals taking responsibility to reverse the damage done to the planet, and they want to build a more inclusive world. They identify themselves as more collaborative, progressive, creative, adaptable and technological than earlier generations and are more concerned with intrinsic and moral values over extrinsic and material ideologies.
For businesses to be future fit, they’ll need to craft a vision that works for Millennials. Companies will need to use technology to sustain their legacies and create legacies for the customers they serve, keeping in mind what makes their customers tick. Gone are the days of corporate extraction where customers were detached from how businesses are run. In the technological age, customers and consumers have become partners and shareholders that hold companies accountable. Think Ronaldo and Coca-Cola.
Technology provides the opportunities to address social ills and bridge the gap between the haves and have nots for those companies that have made it their intention. Fintech products like SmartWill (the online Wills platform) allow users to get expert advice when drawing up a personal Will, create a digital map of their financial world and plan for their families when they are gone. Customers can do this from their phones; no need to secure a meeting they cannot get to and cannot afford to pay.
The scalability that technology offers businesses is unprecedented, and this provides further opportunity to address social ills. Going from only being able to fit 30 kids in a classroom to having hundreds of students logging into a lesson is a powerful mechanic of the new world. There is now an opportunity as a business leader to mentor more than one person at a time (whatever number you like).
Innovation means thinking out of the box about ESG.
Businesses need to be attuned to ESG issues to protect their reputations, but it should be more than lip service. Millennials want to see companies creating opportunities to entry, not preserving them. They want to see companies that are sharing, not hoarding. The new generation of employees entering the workplace wants to work for innovative companies with a conscience that seek improvement on environmental scores and prioritise inclusivity, along with profit and prestige.
Innovation needs to extend beyond just using technology to ensure a place in the future marketplace. Companies can ask what value they can offer to their industry and customers, even before spending a penny. How can we make a difference in the lives of our consumers that is tangible and sustainable? How can we tick that underlying motivation of ‘inherent value’ while selling our products?
It’s not just free samples or free trials I’m talking about, but tools that technology allows us to place in their hands to better their current situation. Google is one of the most profitable businesses in the world today and offers a ton of free services. Google Maps, Google Classroom, Google My Business, analytics, online training, free email, free storage in the cloud and the list goes on. Their products can be used even if you haven’t spent a cent with them.
With the power of technology, there must be responsibility. Consumers are powerful partners for the future. Understanding what makes them tick and delivering on that is at the heart of being future-fit.
Zale Hechter is the CEO of Cliqtech, the fiduciary tech startup behind www.smartwill.co.za