Executive Summary: Amid the “new normal” of the COVID-19 pandemic, firms were forced to evolve processes and adopt new technologies more rapidly. But accelerated does not have to mean haphazard. This report offers strategies and actions from executives around the world for creating and maintaining workplaces where employees innovate and thrive; leading during crises; and elevating corporate social responsibility.
Amid the COVID-19 pandemic, businesses have faced supply chain disruptions, market shifts, and managing remote teams — even as they accelerated digital transformations and weighed strategic innovation investments. Throughout 2020, the Mack Institute for Innovation Management convened meetings with stakeholders across many industries, including our corporate partners and the Wharton School’s global alumni network, to better understand the unprecedented impact and share lessons that will serve leaders facing future uncertainties and crises.
This yearlong effort culminated in our Fall 2020 Conference on December 11, 2020. The event was designed to examine the most current practices in managing innovation in this “new normal,” with an eye to sharing best practice models; identify the challenges and how firms are resolving them; and look ahead to how firms and leaders can emerge stronger from this crisis. While COVID-19 has been devastating in many ways, we find there remains an opportunity for organizations to question the status quo and effect positive change in the current evolving moment — and also to innovate and lead.
In this report, we present how “vigilant” leaders effectively anticipate disruptions; guidance for investing in innovation when resources are limited; examples of firms that are leveraging technological advancements to boost talent productivity and morale; and a look at the influence of sustainability and corporate social responsibility in our emergence from the pandemic. We’ve organized our findings into four categories:
- Technology and Innovation
- Sustainability and Corporate Social Responsibility
- People and Culture
Strategy, Vigilant Leaders, and Challenges From the Pandemic
While some changes due to COVID-19 are undoubtedly temporary, there are more crises on the horizon. According to Paul J. H. Schoemaker, Mack Institute senior fellow and founder and chairman of Q2 Technologies LLC, whatever the driver of disruption, visionary leadership is necessary. Schoemaker co-authored the 2019 book See Sooner, Act Faster: How Vigilant Leaders Thrive in an Era of Digital Turbulence with George S. Day, Mack Institute faculty emeritus in residence. Together, they have studied what allows companies to be adaptive, or what they call “vigilant,” both in the moment and also in terms of what the future might bring.
“Vigilant leaders are very good at understanding why the world is complex, asking good questions, thinking about scenarios, and understanding the limitations of their organizations. That’s really the way to innovate and make uncertainty a benefit for your organization. Those who are able to strengthen their systems through hard-won lessons can really get a competitive advantage,” Schoemaker said at the Fall Conference. He also presented a framework that leaders can use to answer: “What is your vigilance quotient?”
With the pandemic impacting industries differently — some, like telecommunications, are better off, while retail and travel have suffered — many are viewing the period as a much-needed prompt to focus on organizational resilience. Beyond simply surviving, however, firms are also rethinking existing products and innovating new ones in the moment that will be relevant beyond the pandemic. Schoemaker urged conference participants to consider threats — whether virus related or those from business competitors — as opportunities. “Opportunity-seeking should not be just thought of as upsides. It also helps mitigate the downsides,” he said.
To assess which innovation initiatives a firm should prioritize, former Mack Institute Executive Director Saikat Chaudhuri advised in “How to Future-Proof Your Company” in the October 2020 issue of Think:Act Magazine that leaders “frame investment decisions as strategic opportunities.” Investments that pose a strategic opportunity rather than just a cost are those that:
- Provide competitive advantage
- Enhance market positioning
- Help grow an emerging business
- Create table stakes to remain relevant
- Provide product differentiation
In conclusion, leaders don’t need to be able to predict the future, but they do have to invest strategically and foster the development of tools that allow firms to adapt with agility in various scenarios. They must also stay alert — vigilant — to signals emanating from a diverse range of sources. In a nod to the title of his recent book, Schoemaker aptly summarized, “Leaders who are good a spotting anomalies and connecting new dots can help orchestrate new organizational capabilities for seeing around corners and acting ahead of rivals.”
Technology and Innovation in the Face of Discontinuous Change
Throughout the Fall 2020 Conference, several speakers addressed innovation and disruption and offered examples of how their firms are leveraging technology for innovation, both for virtual workspaces during the pandemic and for growth in years to come. As illustrators of company practice, we heard from Tri Pham WG’94, chief strategy and innovation officer of Tata Communications; Vibha Jain Miller, former vice president, human resources, Graduate Management Admission Council; Jared Coyle, head of SAP’s Innovation Experience Group; and Steve Nutbeam, global head of client experience and innovation at J.P. Morgan Asset Management.
With advances in artificial intelligence, robotics, and the cloud, firms are rethinking connectivity within their ecosystems and with customers and employees. As more customers become comfortable with online connectivity, firms are leveraging the opportunity to upgrade and innovate around their digital platforms, to both better serve the existing customers and widen their customer base.
Tri Pham observed that telecommunications customers are opening up to the notion of experimentation and testing with an agile mindset, with minimum viable products that aren’t perfect on initial release. “There’s a little bit more openness and co-creation is a very important part of this, being able to work in small steps and then integrating the solution from there,” he said.
Vibha Jain Miller said with COVID forcing GMAC to close testing sites, the nonprofit embraced the agile/MVP approach to quickly develop and release an online version of its Graduate Management Admission Test (GMAT) exam in 48 days — a process she noted typically would have taken 12 to 18 months. GMAC kept iterating after deployment and expects to continue offering the version post-pandemic.
“This technology for gaming is actually directly applicable to the enterprise business-to-business work that we do.” – Jared Coyle, SAP
Increasing amounts of data also allow firms to learn more about customer behaviors and adoption trends. (One challenge that must be addressed going forward: Creative options will need to be developed to reach customer segments that don’t have technology access.) And virtual and online tools for collaboration and problem-solving are enabling the creation of digital spaces for stakeholder connectivity globally.
When GMAC had to pivot to online for its MBA Tour, a conference where attendees in the past have traveled regionally to learn about business schools, “it couldn’t just be a Zoom meeting,” Miller said. So they focused on adding value for the schools and MBA candidates. They tested versions, and got feedback from stakeholders. The result, she said, “was a very high-touch and high-end experience for those who attended.” There was an uptick in participation: Attendance increased by 25 percent.
Technology adoption must be balanced with appropriate organizational change initiatives, of course, both for people and processes. Leaders must align digital strategy with organizational capabilities and strategy. This may require a revisiting of policies and resource allocation. Measuring new ideas and practices often isn’t possible through traditional metrics; they have to be measured qualitatively and quantitatively in new ways. Recognizing quick wins — such as short-term digital enablement — is one way to provide positive reinforcement of change.
When it comes to searching for useful technologies to adopt, SAP’s Jared Coyle recommended that firms “look to gamers and look to consumers.” Coyle’s team is leveraging technology for innovation in a virtual world both internally at the software giant and to support customers. He created a live, TV-studio quality presentation for the Fall Conference 2020 from his home office — with dynamic backgrounds and multiple audience engagement opportunities — using gaming tech. “This technology for gaming is actually directly applicable to the enterprise business-to-business work that we do. Because showing up, creating inspiration is just the same as what your teenager does when they’re streaming live on Twitch,” he said.
At SAP, Coyle says, teams are using virtual reality headsets to “gather around a campfire” for long co-creation sessions, with tools like 3D whiteboards. They’ve tapped a software used by art institutions to give visitors more details about a painting through smartphones to present additional information during online customer gatherings. “Want to know more about the collaboration and API integration we did on this drone to tie into that procurement environment? Great, pick up your phone, scan it,” Coyle explains. “Here’s all the information you could want. And you can look at it anytime.”
According to Steve Nutbeam, there’s evidence that firms are becoming more accepting of external partnerships in the tech innovation arena. “In years gone by, some companies would always try to build their own technology and proprietary tools. That has changed in the last few years, and has probably changed even more in the last few months due to COVID,” he said. “I would say that organizations have learned how to get over the risk concerns about bringing in outside technology because they’re realizing that other companies have spent more time focusing on these things than they ever could.”
Will firms sustain the rapidly implemented technology and innovation advances made under the pressures of the pandemic? At SAP, Coyle says they have created decision trees to consider use cases for new processes and tech post-COVID. And they have already identified clear benefits, for example, to online collaboration platforms. “When you do these sessions virtually you end up with artifacts that you did not have when you did them in person. Everything you have is recorded,” Coyle said. “That allows you to go back and make sure that you’re retaining the anchor and retaining the team’s focus. We didn’t have that as much when we were doing the in-person activities. We’re moving away from doing the hard stickies, to have virtual interactive boards in every room — because having that asset and having that asset shareable immediately is worth it.”
He doesn’t believe this sustainability is limited to technology companies alone either. “I’ve spoken with a chemicals company, a top furniture manufacturer, and one of the largest oil companies, and they’re all taking similar approaches to what they’re doing with their innovation teams,” he said.
Across several of the conference’s panels, when speaking about innovation in the face of discontinuous change, Pham, Miller, Coyle, and Nutbeam each shared how the crisis had accelerated adoption of new technologies. The key throughout 2020, and what remains true going forward, is a need for firms to balance such progress without losing strategic focus on customers and, at the same time, maintaining productive, thoughtful talent management.
Sustainability and Corporate Social Responsibility
Many are viewing the pandemic and its tragic effects as a call for a full embrace of corporate social responsibility (CSR) and the alignment of social impact benchmarks with organizations’ bottom lines. The private sector in particular, they assert, has capacity to leverage minimal organizational resources, especially technologies, to make a difference in needful areas such as environment, health, and education. As keynote speaker at the Fall 2020 Conference, Vivian Hsu WG’13, deputy director of strategy, planning, and management at the Gates Foundation, provided insight on these themes. Event attendees heard about the potential of private-public partnership and the best practices of innovative firms directly connected to COVID-19 recovery around the world.
“There’s been a recognition about how and where we can collaborate and a building of bridges that I hope will sustain well beyond COVID-19.” – Vivian Hsu WG’13, Gates Foundation
According to Hsu, organizations that haven’t historically collaborated in the vaccine space have convened, with about 300 to 600 people on a regular basis in 2020, to have cross-developer discussions and unlock potential bottlenecks to a sufficient supply of vaccine for the world. They’ve addressed everything from securing syringes and freezers, and the ideal size of the glass vials that carry the vaccine, to expiration date follow-up.
Because participants may be aiming to develop their own proprietary, marketable technologies — which Hsu believes is important to stimulating investment — the convenings have carefully focused on common challenges that can be talked about among competitors.
“There is a lot that can be shared before you really enter that territory of competitive advantage,” Hsu said. “And there haven’t historically been venues to really bring people together for the questions that can be talked about. … There’s been a recognition about how and where we can collaborate and a building of bridges that I hope will sustain well beyond COVID-19.”
Across industries, a firm’s prioritization of sustainability and social impact may lead to an accrual of branding, differentiation, and pricing benefits, but there are many other reasons to pursue the path. It strengthens talent recruitment at a time when graduates are increasingly looking beyond compensation packages and toward a larger purpose. And it responds proactively to the rethinking of societal structures occurring now.
People and Culture
At the start of the Fall 2020 Conference, we asked attendees: Which of the following is your biggest challenge as you navigate the crisis right now? They were given four options and asked to choose one only. “Managing people and culture” was at the top and, unsurprisingly, also a central theme throughout presentations and discussions at the conference. (See chart at right for full results.) Our network members innovated in the face of government-mandated lockdowns that saw in-person teams distributed to home offices and disrupted face-to-face client support and relationship building.
Firms adopted new project management tools and processes to facilitate everyday tasks that suddenly required deeper coordination because walking over to a colleague’s desk wasn’t possible. They adapted their organizational support to provide additional resources for employees, both for morale and operational efficiency’s sake. Some chose to focus on productivity over employee presence and punctuality. Many facilitated online engagements, formal and informal and emphasized transparency, communicating expectation more clearly and more often.
During the conference panel titled “Best Practices in Managing People and Culture,” Miller explained how GMAC stood up an MS Teams platform where employees could share solutions and also chat about how they are coping with coronavirus. They have a “shout-out board” for peer-to-peer recognition, posting badges with messages like “problem solver,” “thank you,” and “kind heart.” Unable to hold benefits enrollment fairs in person, Miller’s team developed an online “wellness week.”
“People were in their homes doing yoga together, learning about topics of interest — everything from how do you order eyeglasses online, to should you increase your retirement saving plan?” Miller said. With locations around the world, GMAC also committed to regional relationship management, meeting with directors regularly and then following up on commitments made. “Rather than being reactive, we have been very proactive in terms of relationship management at all levels of the organization,” Miller said.
Firms prioritized active reskilling, providing training for new ways of doing work. At SAP, Coyle said, employees were retrained to respond to customers’ pressing needs. “We took user-centric designers and turned them into supply chain experts to help with the fact that our organization was going to have to pivot and do a lot more work in the supply chain space,” he says. They held cross-team-training sessions dubbed “Friday Fresh.”
“It’s Fresh Prince of Bel Air themed. Why? Because we can,” Coyle says. “I think that’s one of the key lessons we learned from this. We have an excuse to show up differently and maybe even show up a little bit quirky. And that creates the watercooler moments virtually.”
According to Nutbeam, J.P. Morgan Asset Management has implemented a “reverse mentoring program” where employees who have less experience at the firm coach those in leadership positions on social media, technology, and more.
Firms have adapted talent management approaches — with online onboarding, reassessment of growth opportunities, and more — in ways that will undoubtedly serve them post-pandemic. At Tata Communications, Pham says, the company changed corporate-level key performance indicators to add a metric for employee re-skilling. “There has to be a certain number of hours of training that employees are given. We put in a very comprehensive program, called Tata Communications Academy, to allow our employees to take classes in the cloud, Kubernetes, AI — all the new skills they need for the next phase of business trends,” he says. “They can get certifications, and we leverage programs from Coursera and other public systems, and we subsidize some of that. We saw an amazing uptake. We had a certain target, and we beat it by 10 percent.”
Ultimately, an exploration of COVID’s effect on firms and their best practices for adapting centers on how people are impacted.
First, the very nature of sustainability and corporate social responsibility prioritizes people (while yielding brand benefits at the same time). Second, firms must support talent as they adopt new technologies for productivity. Third, firms need to create spaces (virtual or not) where teams can innovate and develop leaders who direct the efforts of those teams by maintaining vigilance with regards to anticipating disruption. (As Schoemaker noted during his workshop, vigilance is not a trick: “It’s really an attitude, a way of thinking about things.”)
Collectively, these practices will ensure firms can survive and thrive in the “new normal” and in whatever “normal” comes next. Hearteningly, we witnessed at the Fall 2020 Conference that the instinct for innovation is very much alive. Further, we heard from executives who have seen serendipitous benefits resulting from remote work requirements and fast adoption of new technologies that enabled online meetings and collaboration internally and externally.
“If we had taken the decision to all work from home, it would have taken us months of planning, months of preparation, approvals and technology checks,” Nutbeam said. “But all of a sudden that was forced upon us, and we made it work. And I think that has changed the mindset to realize that we can do things that we didn’t think that we could have done in the past with much greater speed. So people are now thinking about the challenges that have existed within our organization very differently.”