The government is paying you to innovate - Innovation Blog | Deloitte Australia has been saved
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The current business environment is unusual. Unlike previous economic contractions in the past 100 years, the current contraction is driven by a deliberate decision to address a health crisis, rather than as a response to an overheated economy or asset bubble unwinding. Consumer demand is down due to a combination of lower household incomes and—for those whose jobs and pay remain untouched—far less opportunity to spend.
While aggregate demand is down and dropping, the contraction’s impact is extremely uneven. Some areas of the economy are seeing up to half of all businesses closing, while a few are thriving.
This rapidly changing environment is driving consumers to form new habits, and these habits create both new opportunities and challenges. For example, while dining in a restaurant might be impossible, delivery has taken off; there’s a temporary run on yeast and flour in the supermarkets as the working-from-home experiment with baking their own bread; and gin distilleries are swapping from making gin to hand sanitiser.
Clearly there are opportunities for some organisations to pivot and to embrace both short and longer-term opportunities. But how do organisations stay afloat when so many activities are either banned or suffering from a drop in demand? How do organisations find the opportunities to capitalise on demand where it is ballooning out between the restrictions?
Organisations need to find new ways to do old things: taking a cocktail bar on the road, for example. Or new things in old ways: such as delivering burger ingredients, a ‘burger kit’ rather than a ‘burger’, direct to the consumer. Or there’s the opportunity to unbundle something, to break it apart, transforming it into a hybrid the weaves together the old and the new. And finally, there’s innovation focused on solving new problems, uncovering new opportunities.
Innovation is always a gamble. Consumers are unpredictable, and a good idea in a workshop doesn’t always translate into a viable product or service. These, however, are unusual times.
The government is injecting money into the economy to help cushion the blow of our self-imposed economic contraction. Some of this cash goes direct to consumers, payments to support the less fortunate transition to a stay-at-home lifestyle. Some is finding its way to business, primarily in the form of unsecured loans (with no repayments for six months) and the Job Keeper allowance, designed to prop up payroll.
Government has already challenged us to think about new ways, saying the status quo for the economy cannot be sustained in the post-Covid world. That change can start now, using stimulus measures to underwrite or reduce the cost (and risk) of experimenting, innovating.
There’s some hope that we’re in for a ‘V’-shaped contraction, the abrupt start matched by an abrupt end. This is unlikely. Given the gravity of the situation, governments are likely to be cautious and lift restrictions progressively. While this is unlikely to take years, it will take months.
This shutdown, no matter how long it is, will also be long enough that many of these new habits will remain with us long after the shutdown ends.
Taking advantage of the current opportunity to innovate, getting the team working to create the next generation of productive assets, is possibly the best way trade through the current contraction, and to position an organisation for the ‘new normal’ that we’ll see at the other end.
Peter is currently a fellow at The Centre for the edge - helping organisations embrace the digital revolution through understanding and applying what is happening on the edge of business and society.Peter has spent 20 years working at the intersection between business and technology. These days he works as a consultant and strategic advisor on both business and technology sides of the fence.