Oct 20, 2020
Growth was a challenge even before 2020. But now, with constantly changing consumer demand, government protocols and safety standards, many companies are struggling to tread water through the pandemic. Yet, some are seizing the opportunity to become nimbler and more innovative, setting themselves up for near- and longer-term success. Last year we wrote about the idea of thinking like a startup… and practicing agility to stay ahead of demand. Today, this theme is playing out even more strongly in the market.
Certainly, startups have faced their own set of pandemic challenges, but they also have a key advantage: being flexible and agile. While we have seen plenty of larger, traditional companies talking about agility in recent years, few really put the principles into practice. Large organizations are complex, with rigid management processes, many stakeholders with competing demands, and tremendous loss aversion. All of which contributed to a general bias toward inertia. Until Covid-19. The pandemic shook business-as-usual for just about everyone and forced companies to be more agile or be left behind.
As we separate winners from losers, we have observed several common themes driving success, all tied to agile thinking: embracing disruption as opportunity, using active listening to track dynamic customer needs and adopting agile innovation techniques to get to market quicker with new solutions.
Why is agility so hard for big companies? It takes a lot more energy to change the course of a larger ship. The massive pressures to maintain business performance (from leadership, consumers, Wall Street) often stand in the way of transformation. But embracing several agile principles from startup culture can help larger companies generate growth – and navigate the COVID-19 storm:
Companies that adopt these principles can shift to a nimbler mindset and bend the growth curve in their favor. There is risk involved, but the greatest risk is inaction… and being left behind while others meet the moment.
Principle 1 – Embrace disruption as opportunity
Few events in history have forced urgency upon the market like the current pandemic. This unprecedented shock requires companies to challenge the way they view their competitive landscape, including categories, consumers, competitors, capabilities, and channels. COVID-19 blurred so many lines for companies, as customers spent less, became more fickle, and explored new brands, even as many competitors either failed or transformed.
When movie theaters shuttered, so did the Hollywood film industry as we knew it. But while most media companies cringed, others rapidly pivoted to new models. Hamilton on Broadway, Pixar’s Onward and Disney’s live-action Mulan were slated for theatrical release when COVID-19 hit. Instead, Disney released them via their direct-to-consumer platform Disney+. While none of the films hit the big screen, they were successful in boosting subscription numbers for the nascent streaming service while also generating revenue via on-demand access fees. Mulan drew over 650K new users to Disney+ over release weekend, a 68% increase vs. the week prior – and spending within the app grew almost 200%. The results are striking for Disney+, which reached its 5-year subscription goal in a matter of months, more than tripling subscriptions to Apple TV. Indeed, Disney is doubling down on this strategic pivot – recently announcing a reorganization of its media businesses to support this direct to consumer model and earning a stock bump from investors.
STREAMING SERVICES SUBSCRIPTION NUMBERS
Startups tend to face disruption as an existential challenge to overcome. Big companies that respond to disruption with similar urgency have an opportunity to turn crisis into profit.
2 – Listen actively and more often
Companies have more “big data” than ever but are finding that simply collecting such data is not enough to build a lifeline of loyal customers. Winning companies must make a concerted effort to make more personal connections with consumers, more frequently, and in the moments that matter. The pandemic is continually shifting demand, so brands that can sense an impending shift and quickly respond are most likely to remain relevant. 1:1 or few: few communication strategies and social listening are becoming critical levers in any growth strategy.
Companies are winning loyalty via customer empathy during Covid-19: Headspace (a mindfulness/meditation app) started offering free subscriptions to healthcare professionals and consumers to meet rising mental health fears. ConAgra is leveraging social listening to better address emerging consumer problems. For example, teams noticed that consumers were looking for recipes that boost immunity and quickly altered online search terms for their products to better connect consumers with solutions.
Netflix observed how frequently binge watchers fall asleep mid-program and created smart socks that automatically pause a show when you doze off. Dominoes constantly mines customer frustrations and frictions to reinvent their core advantage – fast fulfillment (even on a beach via hotspot technology).
Indeed, our Cambridge teams have seen a spike in demand for helping clients get closer to consumers by scraping reviews and social chatter or embedding segmentations in CRM and external media databases to enable more precise outreach. The lesson is simple, companies that listen better are much quicker to identify and solve problems for their customers.
3 – Innovate with agility
Necessity is the mother of invention, and we’ve seen a great deal of both in 2020. Embracing disruption and real-time listening are a great start… knowing is half the battle. The other half is being able to respond fast enough to meet the moment. The innovation process in big companies tends to be methodical and slow – and with good reason: nobody wants to make multi-million-dollar mistakes. But widescale disruption necessitates a more rapid creative process. And active listening provides the real-time signals to move fast without sacrificing customer-centricity. Collaboration has taken center stage as leadership teams embrace great ideas from anywhere across their organizations – and work with unprecedented speed to set plans in motion, shifting priorities, supply chains and marketing and sales practices.
Fast casual restaurants – facing a near-national shut-down earlier this year – identified a quick way to get their products in front of customers who were unable to dine-in: distributing them as prepared meals in grocery stores. For libraries, home improvement stores and restaurants, contactless pickup has erupted as a convenient, fast and easy way to better meet customer needs. In airports, NapCity quickly repurposed their travel rest pods as sterilized contactless spaces for wary voyagers. Even big CPG has embraced this type of creativity. ConAgra’s R&D team crafted in-home delivery kits for employees to conduct new product taste tests, enabling them to keep up planned innovation and created a more real-world setting to collect feedback. Results have been so compelling they intend to keep this program for ongoing innovation.
Innovations in 2020 have taken two primary forms, both highly successful. Some “innovation” has come via adaptation of existing products and services to fit a new need. Out of necessity, companies searched their portfolios for ways to simultaneously offer solutions addressing customer pain points while maintaining brand relevance and profits. Other innovations have truly been breakthrough… solving struggles that consumers have dealt with via hacks, workarounds or compromises. But in either form, the key to success has been getting to market with speed.
The headwinds are strong and the risk of being left behind is palpable for big companies during this uncertain time. But the pandemic has also created an environment ripe for growth. Much of the inertia that often plagues large companies has broken down as the pandemic need for speed fuels momentum to cut through bureaucracy and red tape.
Embracing a few core principles that have been long-standing tenets of agility can help larger companies keep up or even get ahead: embrace the “must solve” mindset disruption forces, listen actively and be agile in innovation. Covid-19 has forced winning companies to adopt these principles, resulting in innovative leaps forward that are suddenly measured in months rather than years.