You’re certainly not alone if you’re staring down a budget half the size of last year and questioning how you’re going to drive meaningful growth this year.
With 86 per cent of CEOs preparing for a likely recession, budgets across marketing, product, innovation and learning and development are on the chopping block. Yes, you could baton the hatches and prepare for conservative growth. But that doesn’t sound like what you’d want.
You can still achieve growth in a recession. In fact, many of the market leaders do. I’d recommend a more proactive path: lean innovation!
What is lean innovation?
In the 1950s, Toyota famously developed the concept of lean manufacturing in a bid to reduce waste and develop cars faster and better.
This practice was so impactful that it was later adopted globally, reaching far beyond the automotive industry.
This evolution led to the emergence of lean innovation, a practice focused on increasing efficiencies by capturing customer feedback early and often, minimising waste in the project development and delivery cycle.
Lean innovation prioritises rapid experimentation over elaborate planning and celebrates continuous, incremental improvement
Why is lean innovation so powerful for FMCG business resilience now?
A fast-moving industry needs fast-moving innovation, especially now.
After 15 years in the retail industry, I know lean innovation and incremental change is the key to building business resilience over the next 12 to 24 months. Heck, it’s a good business practice to have regardless!
Lean innovation will help FMCG businesses:
- Avoid overinvesting in projects that are too expensive, too complicated, too different from what customers want, and too late to market.
- Champion customer-centricity by prioritising customer feedback loops and rapid testing.
- Develop an unshakeable culture of incremental change. Helping your teams learn from the process, develop the mindset and tools for lean innovation and feel more invested in their output.
Four practices for getting started with lean innovation
So, how do you drive innovation while your CFO is tightening the purse strings? Here are four practices to implement to build business resilience.
1. Innovation enablement
Who in your organisation is tasked with innovation? Your founder? C-suite leaders? A dedicated innovation team?
More than ever, we are seeing the mammoth job of organisational innovation gatekept by a select few.
Like Toyota, lean innovation needs to be highly collaborative – from the production floor to the marketing team, and beyond. By getting your entire organisation across your chosen innovation practices, you can drive change faster. And not only faster, but you will naturally take a more holistic approach, strengthened by a diversity of voices and ideas across the organisation.
Eager to learn some strategies for driving incremental change? Read ‘Incremental Performance – Doing Big Things With Small Budgets’
2. A hybrid approach
‘Cost-effective’ and ‘innovation’ are two words you rarely read in the same sentence.
Traditionally, organisations looked outward to devise innovative ideas which unsurprisingly carry a considerable price tag. And I’m certainly not saying this doesn’t have a place in 2023. I’d just encourage you to consider a hybrid mix of lean in-house and open innovation to champion learning and knowledge sharing.
The purpose of this is to ensure you have innovation skills internally so that you are not entirely reliant on external consultants for solutions.
You can read more about this hybrid approach in ‘The Future of In-House Retail Innovation’
3. Focus on delivering customer value
The Pareto Principle observes that most things in life are not distributed evenly, including customer value. Step back from a project and it quickly becomes obvious that just 20 per cent of your project delivers 80 per cent of the value sought by customers. The rest is essentially bells and whistles.
With lean innovation, I always encourage clients to distil their ideas down to features or initiatives that will directly and quickly benefit the customer.
Consider a past project. What would it look like if you stripped it of all the bells and whistles and focused on delivering only what your customers initially asked for, nothing more? This is your Minimum Viable Product (MVP).
Now consider how this might change the time and resources you had to invest. See where I’m going here! With lean innovation, you can still deliver customer value, but you can do it in half the time and with a much more conservative budget.
4. Rapid testing and learning
I’ll say it time again, spending years working on a before it hits the market is risky business.
When budgets are tight there is no luxury of a long runway before launch. You need to tighten your innovation cycles and get your idea out into the market and validated with real customer feedback quickly. It may not be grand to begin with, but with rapid testing, your refinements will compound into something great and your time to value (TTV) will dramatically reduce.
And forget about assigning 101 KPIs to measure it against. Focus on the one or two metrics that really matter, test, learn from your results and repeat.
Want a free masterclass on lean innovation?
This is your opportunity to attend a free one-day immersive masterclass. MI Academy’s award-winning HackGames is returning to Retail Week for a third year. Apply to play today to join the leading minds in retail and e-commerce as they “hack it out” to find innovative solutions to our industry’s greatest challenges.
Player applications are closing soon. Click here to apply today (it only takes four minutes!)
About the author: Alita Harvey-Rodriguez is the founder & MD of MI Academy.
