Developing Innovation Strategies Systematically

René Rohrbeck is professor of strategy and director of the Chair for Foresight, Innovation, and Transformation at EDHEC Business School, one of the top five grandes écoles of economics in France. An internationally recognized thought leader and award winner, he continuously develops new methods and tools that help organizations to look into the future, to drive strategic renewal, and to manage strategy and innovation in times of uncertainty. In an interview with Detecons Managing Partner Steffen Kuhn he discusses the challenges for innovation activities in the Corona crisis.

Steffen Kuhn: Professor Rohrbeck, how did you experience the Corona period in Paris and Lille over the last few months?

Prof. Rene Rohrbeck: Well, President Macron surprised us one day with the news that we are in a "state of war" with a virus. It felt a little bit like that. Especially in the north of France, people were in a state of shock because of the high number of cases. It was a matter of survival. There were strict curfews for more than two months; only with certificates and conditions were people allowed to stay out of the house for an hour, preferably without children. Even with a garden, one felt quite confined and not really a free person. After four weeks of feeling a real crisis, one got used to something and settled into a new kind of normality. It was accepted not to visit most stores anymore, and also to use parks only for jogging. In general, the effects and the emotional situation were much more drastic than in Germany. In Denmark, too, where I have a second professorship at Aarhus University, everything was much more open and relaxed.

How did the companies respond to this challenge? Were there any special strategies?

Many were distressed at first. I remember a remarkable encounter with a restaurateur just before the shutdown of restaurants, which I then reproduced on LinkedIn. He felt at the mercy of complete uncertainty. I persuaded him to take a closer look at various scenarios. After that, he felt much more clearly about the values he has to offer that are very important to customers, even in difficult times. There are always foundations of a business model that are particularly stable. For example, the feeling of experiencing a meal as a special moment. And if necessary, not in a restaurant, but perhaps outdoors or even in a car in the parking lot in front of the restaurant.  

Most French companies adopted a kind of bear strategy: That is, to head for hibernation like a bear in order to somehow survive the "state of war." Instruments for this were the reduction to part-time work and reliance on the state, which even took over 84 percent of wage payments here. In Great Britain, on the other hand, where employees of mine live, many companies applied an ant strategy: Namely, in a colony, about 70 percent of the ants run to where they know exactly that food is available. The remaining 30 percent, however, move where food could only possibly be. Companies in crisis mode need this 30 percent above all!

How do you assess what then developed?

The first focus was on business continuity, i.e. identifying particularly critical processes and providing infrastructure for working from home. All of this was achieved more or less successfully. It was more difficult, however, to create space for creative processes that uncover new opportunities and enable innovation. Here, productivity also decreased as a result of working from home. Reporting standards can be mapped digitally quite well, but product and marketing strategies or innovation work much more difficult. Without effective tools, such as virtual white boards, this is hardly possible.

Much also depends on the management style, which in France is traditionally more directorial.  Supervisors here value a certain conformity of solutions and want to roll them out everywhere. This style makes it possible to act quickly in a crisis. There is no plurality of federal states, for example, which are all allowed to develop their own concepts. However, in order to find a way out of a crisis, for example on the basis of newly explored business areas, a creative style is needed that identifies opportunities and also allows dissonance.

Are there any examples that have impressed you?

In the automotive industry, some suppliers were very agile: One medium-sized company we worked with in an innovation program specialized in the production of antennas in glass panes. He used the ant strategy: In the lab, he developed new solutions for contactless payment or contactless identification and was able to use what was already available. Factors such as glass, visibility and contactless processes are important in the Corona crisis, and the company has expertise in this. So new sales were created using existing technologies.

How are companies generally dealing with innovations at the moment? Should these be pushed right now or should they rather be shut down?

We are currently seeing that every euro is being turned over, and rightly so, as free cash flow is currently very valuable. This is the only way to make reinvestment or entry into new business models at all possible. In many companies, it is not easy to keep spending money on innovations.

A key factor is the wise allocation of teams and budgets: You need a team that looks at innovations from a short-term perspective and also has to consider costs and capacities. Clearly separate from this, however, there must also be a team that examines long-term options. Companies that act in this way are in a better position to innovate because they are no longer watering cans in large portfolios. In addition, the commitment of the management board is all the higher if it no longer invests in 10 topics, but only in two. However, these two topics are then put through their paces and consistently promoted.

Another factor is agile activities in ecosystems! One of our programs at EDHEC is called "Fit-to-Fly," where we bring airports that would otherwise tend to see each other as competitors together with airlines and suppliers to share technologies and find answers to current customer needs.

What strategic methods do you recommend to systematically derive good decisions?

In addition to maturity models, which are good at measuring strategic preparations, the most important tool for a phase of uncertainty is always scenario analysis. This is not only about the ability to act, but also about a cognitive agility, for example, to even imagine a world full of rolling iPhones. What is it like when cars hardly differ externally and only transportation and entertainment inside are important? Such analyses enable rapid and targeted decisions, especially for large companies.

In collaboration projects, we also work a lot with innovation radars, which are designed to observe the drivers of change over time. By the way, a change is taking place here: Whereas human imagination was previously the decisive factor, Big Data is now increasingly entering the research and innovation processes. Automated scanning of documents and venture capital databases often reveals that one's own idea is not new at all and that one or two startups are already developing solutions here. The added value is then to find out suitable combination possibilities and not to reinvent the wheel.

What do innovation units need to do now?

They should create a platform that brings together different perspectives and competencies. Innovation is created where the technologist talks to the product manager, where the telecommunications engineer meets the mechatronics engineer. Or the psychologist meets the IT expert. At EDHEC, we've had very good experiences bringing our students together with various company representatives to think through innovations together and in a structured way on virtual white boards - that's very fruitful. Or you use such methods to enrich customer journeys specifically with data from field services and customer activities. Where could exciting added value arise for a customer if he had what information in what situation?

What are your TOP 3 recommendations for moving successfully into the future?

First, we need to better identify and evaluate the important drivers of change. In my view, this is happening too little at the moment! One reacts too much to the acute need and asks oneself, for example, how one can get people to fly again. Instead, however, one should ask oneself which needs will return at all and which will change. Will there still be people who fly to Florida once a month for the Gulf? And what restrictions on business travel will remain in effect after the Corona crisis?

Second, a homework assignment, of course, is to examine the robustness of your own ecosystems and potential risks of failure. Which supply chains are threatened because key pieces of the puzzle could fail?

And thirdly, direct dialog with customers, but also with suppliers, remains crucial. Both have to be very open and creative. New forms of interaction are emerging here that should be included. For example, at our campus we are increasingly using asynchronous formats such as videos, podcasts and live sessions, even with a small number of students, to meet needs for flexibility and productivity.

Professor Rohrbeck, thank you for the interview!

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