Dr Roy Stanley on the Black Swan Event of Covid-19: Innovation and Products

On Day 2 of our look at COVID-19 as a Black Swan Event, Bdaily chairman and entrepreneur Dr Roy Stanley looks at how firms can design, create and distribute new products in response to a chaotic event.

“Henry Ford once said, “If I had asked my customers what they wanted they would have said a faster horse!”.

“Entrepreneurship by its very nature seeks to find the innovation that will be disruptive to a particular market or industry (Schumpeter). In developing new products, conventional marketing would have us listen intently to customers.

“In many circumstances the reason for the demise of firms or their regression is because companies listened to their customers and gave them the product performance they were looking for.

“It is difficult for firms to justify using resources to develop products or services that seem insignificant or do not yet exist.

“As a consequence of using a return on investment model, many firms are trapped into a minimum risk cycle and stay static in their sales growth . “COVID-19 is a major Black Swan Event (BSE), leading us to look at ways of rapidly innovating: ventilators, PPE and data gathering.

“There have been a number of other events that have stimulated major shifts, all of which were unpredictable, rare and with massive consequences. Consider the impact on various industries of the iPod and the iPhone, Facebook, Google and Amazon.

“BSEs can cause vulnerabilities. USA Newspaper advertising revenue has declined from just under $50 billion in 2006 to less than $14.3 billion in 2018 due, in large part, to the increase of “free” substitutes on the Internet.

“What was a positive BSE, the development of the Internet, has proven to be a negative BSE for the print newspaper industry and the catalyst for its potential demise.

“If we are not innovating, somebody else is - which could cause the demise of our business.

“I have to indicate a health warning: Innovation is risky and can cost a great deal. Remember what Edison said – “genius is 1 per cent inspiration and 99 per cent perspiration”.

“Emmerson said: “Build a better mousetrap, and the world will beat a path to your door”. Be brave!

“Questions for our own businesses:

“Does the business need to innovate its products if so why and how do we spot opportunities for innovation?

“What are the internal drivers for innovation: Will it reduce costs? Will it improve quality? Will it replace outdated products? Will it improve or increase capacity?

“What are the external drivers for innovation? Will it meet new regulatory requirements? Will it create new market opportunities? Will it increase market share? Will it please the customer? Where will we get the biggest bang for our buck?

“And ultimately, will it drive more profitable sales?”