Last week I visited San Francisco. The mood in the global epicenter of tech innovation was very different from my last trip almost four years ago. The digital gold rush from the past few years has clearly ended, like an economic hangover after an all night party. Many people are affected by recent layoffs at tech giants like Facebook, Google, and Amazon. The demise of Silicon Valley Bank, the premier bank for startups, is felt widely. Investment funding is much harder to come by. But at the same time, green sprouts of a next innovation wave are emerging, riding on the rapid rise of generative artificial intelligence (AI) as an irresistible innovation.
What makes innovation irresistible? I asked ChatGPT the term: potentially game-changing, catching wide attention in a clear and compelling way. Once people experience this kind of innovation, they won’t go back to their previous habits.
Google Search, the iPhone, Netflix, and even TikTok are clear examples. Beyond tech this also includes innovations such as Swiffer, Impossible Meats, and even something like the Keurig coffee maker. The arrival of AI as a technology available for everyone to access will create a new era of innovation. But it will take time and effort to build this into transformative consumer propositions, especially when resources are scarce.
There is no better time to invest in innovation than in an economic downturn. The most predictable reaction when companies hit a rough patch is to focus all their resources on surviving today. But this comes with an unfortunate trade-off — others will use the time as an opportunity to build a competitive advantage through innovation. Finding the right balance between short term cost management and investing in a long view growth strategy is hard when trying to make reduced budgets work. But studies have proven that companies that invest in their growth strategy during a downturn are the most likely winners when better times return.
A downturn is also a good moment to take stock and sharpen focus on growth opportunities ahead. Moments of uncertainty (which seems to be a constant state now) help to create clarity on how the world around us is evolving. An experienced guide and provocateur like futurist Faith Popcorn stretches our view of the future. With a documented 95% accuracy of predictions since 1980 it’s a risk to dismiss her perspective. In her Signal360 conversation with John Battelle she challenges us to think of the wildest thing that could happen in the marketplace and then imagine what happens if your competition would be the first to introduce it.
Innovation requires rapid learning. Getting your product into the hands of people and seeing how they react is critical to learn. No idea is perfect right out of the gate, so rapid iteration to improve is a must. In a Signal360 guest column, Forrester retail analyst Sucharita Kodali argues that all CPG companies should invest in Direct-To-Consumer (DTC) capabilities. While DTC may not be a viable CPG business model by itself it is a helpful element to grow the overall business. But the option requires an investment in expertise, technology, and processes to do it with excellence.
Irresistible innovation can also come through partnerships in unexpected areas. In Signal360 we have highlighted the challenges we are facing with water around the world. Building a business that is sustainable requires involvement in how people use and take care of natural resources.
Shannon Quinn’s role as P&G’s Water Stewardship Leader is not only focused on reducing the use of water through products and production process but she’s also an active partner to assist with water restoration projects. As a Signal Trailblazer she sets an example how passion and partnerships drive remarkable innovation beyond products alone.
For businesses to stay leaders requires a balance between delivering superior performance today and investing in irresistible innovation for the future. Despite (or because of) the challenging environment, now is a good time to reset the bar for both. This sets the stage for the Signal 2023 summit, planned for Wednesday, July 12. We will share more in the next issues. Until then.
Stan Joosten & John Battelle,
Editors-In-Chief, Signal360 / Co-founders, Signal P&G