The Role of Innovation in Times of Disruption

Economic downturns and organizational resilience go hand in hand. Organizations that strategically invest and pivot their business models during times of disruption are typically the ones that rise to market leaders in the recovery. That pattern can be seen during the past three economic downturns. According to Henry Chesbrough, Professor at the University of California at Berkeley, “Many startups have been born in recessions, such as Adobe, Amgen, Autodesk, Cisco, Google, MTV, and WhatsApp.”

Unfortunately, when disruptions are seen as severe, most organizations knee-jerk with across the board deep cost cuts. Canceling new projects, deep workforce reductions, retrenching to established markets, and second-guessing crisis strategies are just a few of the actions that directly impact organizational resilience. Innovation budgets are often some of the first items on the chopping block as part of cost reduction.

Before reacting, management teams should reflect on the advice offered by the members of the Berkeley Innovation Forum, of which CSIRO US is a member.

Their advice is to:

1. Speed up digital transformation – Explore different types of digital collaboration and automation tools that can connect people and foster brainstorming in new ways.
2. Stimulate internal and external creativity – Don’t waste the opportunities within the disruption. Use this time to rethink assets, the long term effects of cost-cutting strategies, search for new opportunities and focus on sectors open to innovation.
3. Innovate business models – Understand the trajectory of trends and develop strategies and new models that capitalize on new and emerging opportunities. Think outside the box.
4. Build organizational flexibility – Make IP available to the market through licensing, spin-outs and likewise look for external IP that can short development cycles
5. Strengthen ecosystems – Structure product portfolios to reduce costs while leveraging ecosystems partners’ strengths, from IP, digital expertise to financing.
6. Diversify smartly – Look beyond traditional business portfolios and markets to identify new sources of value, as in monetizing data collected through new products and services.

Solomon Darwin, Director of the University of California at Berkeley-Haas School of Business, Garwood Center for Corporate Innovation, points out the lessons to be learned from the 1918 Spanish Flu. The post-crisis saw a wave of innovations. Fast-forward to today, he recommends that organizations should develop digital access as utility available to anyone, apply lessons learned from this crisis to improve your response to future disruptions and accelerate solutions through open innovation partnerships.

Open innovation was coined by Henry Chesbrough in his book “Open Innovation: The new imperative for creating and profiting from technology,” in which he discusses three forms of innovation: user innovation, cumulative and distributed.

“Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology,” shares Chesbrough. The central idea behind open innovation is that in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research, but should instead collaborate with other organizations.

Berkeley Innovation Forum members shared their best practices on how to turn disruptions into opportunities. Best practices identified include:

• Create an internal and central accelerator that is independently resourced and managed.
• Match cultures with potential startups to ensure strong synergy.
• Spin-out non-strategic initiatives with the option of re-acquiring it in the future.
• Partner with external financing sources, such as Venture Capitalists.
• Build online communities around your products to share ideas, reduce costs, and as a source of creativity.

Through all the advice shared, there was one core message – don’t go it alone. Open innovation is more critical to survival than most may think.

CSIRO US facilitates relationships with North American companies, government agencies, and academic institutions to connect Australian researchers with USA projects to expedite mutually beneficial opportunities for scientific advancements in food agriculture, space, water conservation, wildfire, and smart cities. Partnering in open innovation brings not only deep scientific research competencies to the table but also deep experience with a wide range of real-world problems.

Connect with the team