It’s the Worst (and Best) of Times for Online Innovation

9 Oct 2009

This recession is the worst of times and the best of times for innovation, in general, and especially online.

Senior executives across the land send the twin messages, “let’s take care our our customers” and “let’s get back to what we do best.”

Everything was once a hairbrained idea

The first message is always admirable, recession or no. I think what it’s supposed to mean is “work harder” at what you should be doing all the time, which is thinking about and taking care of your customers.

The second thought is the real-innovation killer. A recession is no time for “experimentation” in the minds of many senior executives. Kills everything that’s “optional” and “nice to have.” It’s a time to hunker down and get back to the basic drivers that made the business successful–simplify and focus product lines, cut costs in the supply chain, and offer discounts and promotions to lure customers.

Where does innovation come from in an environment like this? Directors, VPs and Managers are nailed to their desks 60 hours a week trying to make incremental improvements, just trying to make their numbers.

I left a half day session yesterday with a client that has online customer service for their in-store experience. The goal of the workshop was to come up with a list of a dozen “little” improvements to the customer service site before the holidays (and yes, that’s before the holidays of 2009) Everyone in the room was smart, focused on the customer experience problems (there were many) and realistic about getting something done.

But the system is comprised of three smaller systems–Website, reservation, and channel partner Website–so hands are tied behind backs everywhere.

We came up with more than a dozen “tweaks” all of which will do something to eliminate some of the worst of the UX issues. But that’s it for the innovation strategy—let’s just get this through the holiday season without losing customers and revenue. We’ll wait for the economic news in the Spring and decide if it’s time for a “redesign.”

(“Redesign” is a word that I’m pushing out of my vocabulary. It implies that the underlying premise and interaction model are fine, we just need to replace the graphics and a few “whistles and bells.” What we really need is a damn sheet of blank paper and a CEO who can articulate long-term business strategy as it relates to online channels.” But I digress…)

Another downside of this conservationism is that it has a corrosive effect in the ranks of younger employees. This pulling back just fulfills every nightmare about how slow, dumb and uninspired the boss can be—how “politics” governs what executives decide.

The plain fact is that if we base our thinking on what’s happened in the past we will never do anything different from what we’ve done. Innovation is withering, and with it our hopes for an enduring culture of innovation.

So what’s the good news? Where is some innovation thriving in the Recession? Several places that I see:

Because of pressure to reduce costs in the supply, distribution, sales and marketing chains, companies are looking to online as a way to speed communications internally and coordinate to eliminate inefficient linkages in systems.

There are also simultaneous “green” initiatives, especially within government agencies, to reduce paper communications. The days of executives printing out their e-mails and taking them on the plane to read them are coming to an end. These initiaitives, like the Federal government’s “E-publishing” mandate, also help justify innovations online.

Since the cost of development online is so low–especially with frameworks like Ruby and Groovy and so on–agile development efforts can get innovations online with such low costs and short schedules that the ROI is just sick it’s so good. One client bought a cheaper, must less functional form of reservation system for $100,000 less to handle more than $50 million in business. Think about the business case for undoing that mess, even if they spend $250,000 implementing the more expensive version.

Here’s some disturbing news that’s helping innovation: companies are teetering on the verge of bankruptcy, business units are fighting for their lives. How does this help innovation? These unfortunate companies can’t afford to be conservative anymore.

Just look at the radical re-structuring of the newspaper industry over the past five and the next five years. Paper products get smaller and in some cities less than daily. Content is focused on commentary and expert analysis–getting away from the “newspaper of record” model getting chewed up by online. And there’s word now that some newspapers are looking to put parts of the online product behind a “subscribers only” partition—as the Minneapolis Star Tribune is preparing any day with their coverage of the Minnesota Vikings football team.

This is also not a horrible time to start a new company bring innovation to a marketplace, if not to an individual company. One of my favorite new companies is Moo.com which has a nifty set of wizards that allow you to design truly great business cards and invitations in minutes. I’ve ordered new cards and they’ve been drop shipped to me in 3-5 business days for less than a penny apiece. Plus they come in a very stylish box to hold them in. Better idea than getting the lousy thin cardboard ones at Kinkos by far.

I believe there is a place for small, well-organized teams of online “product design” firms to partner with corporations to bring innovation into even the most hunkered-down corporation, using fast, hyper-efficient development methods and partnering with the people inside the corporation to build prototypes and then pilots and then products and get them into the marketplace.

Finally I think we’re living in a new decade that prizes innovation. We’re already sick of the old in so many ways–politics, materialism, the economy, celebrity culture, on and on. We’re ready for new ideas because we know that beyond hard work, new ideas the only things that will really improve our lives.

I’m for making it the best of times in the future by fighting for innovation today.