Where does innovation at scale meet the new S-curve of growth?

Authors

Michael Kanazawa

EY Global Innovation Realized Leader and EY Americas Consulting Growth Strategy Leader

Leader in innovation, growth strategy and corporate transformation. Experienced entrepreneur. Author and speaker.

Glenn Steinberg

EY Global Supply Chain and Operations Leader

Helping companies transform, create value and optimize business performance. Thirsty for knowledge. Ski enthusiast. Husband and father of two Michigan Wolverines.

Contributors
6 minute read 26 Aug 2020

A future-back approach to strategic planning will help innovative companies be at the fore of reshaping industry and customer expectations.

In brief
  • A new generation of leading companies emerging from the pandemic crisis will operate by the rules of a new S-curve of growth.
  • To innovate at scale, organizations can take a future-back approach by using future scenarios to create a multi-horizon strategic roadmap.
  • Using data to understand the customer and moving from supply chains to supply networks will help companies innovate the unique experiences customers demand.

Since World War II, the global economy has followed an extended S-curve of growth. The foundation of this growth has primarily rested on the traditional value drivers of scope, scale and efficiency to measure performance and value.

However, within the last 10 years, we’ve begun to see a shift, both with the backlash against companies that ignore their systemic impacts on the world, and with the explosive rise of digitally-driven, hypergrowth “unicorn” companies that have exponentially raised expectations around the consumer experience and propelled valuations to new heights.

We expect another disruptive generation of leading companies to emerge from the current pandemic crisis, accelerating existing trends and creating new ones. They will operate by the rules of a new S-curve, where innovation timelines compress and ideation, prototyping, piloting and commercialization will happen in rapid cycles at global scale.

Examples of companies that leaped onto the new S-curve during the pandemic include a healthcare enterprise software company developing a video-based medical consultation service in 48 hours for healthcare workers in the UK, an African taxi start-up becoming a delivery service, and a Canadian biotech company that used its AI platform to identify drugs already FDA approved that had the potential to treat COVID-19.

These and other innovative companies have left behind the traditional drivers of scope, scale and efficiency in favor of long-term value creation to meet the dynamic demands of their customers or broader society. In following the path toward long-term value, organizations will need to build their performance using new transformational value drivers that put humans at the center of purpose and strategy, deploy technology at the speed where exponential benefits accrue, and innovate at scale to be at the forefront of reshaping industries and customer expectations.

innovation infograph

The magic of the next S-curve showcases solving challenges with creative approaches

Even before the pandemic, customer behaviors and preferences were shifting toward hyper-personalized, predictive and adaptive customer experiences. The pandemic, which has kept many people at home, has rapidly escalated these expectations. Customers want the companies they interact with to know who they are, what they want and how to deliver products and services that are of high value to their lives.

Companies that use data to gain a deep understanding of their customers and provide unique experiences — whether it’s individualized cancer care, custom-designed and 3D printed athletic shoes that provide a perfect fit or furniture that is ergonomically designed to relieve a customer’s specific pressure points — will exponentially accelerate along the next S-curve of growth.

To innovate at the speed and scale they’ll need for success, companies will have to transform strategically, digitally and operationally.

Companies that use data to gain a deep understanding of their customers and provide unique experiences will exponentially accelerate along the next S-curve of growth.

A future-back approach sets the strategy for innovating at scale

Innovating at scale along this new growth trajectory requires companies to take a future-back approach to strategic planning, as exponential value creators have done in previous times of crisis and change. Leaders of these companies look into the distant future and consider whether their business will be as relevant then as it is now. They then use their purpose to explore their opportunities and their vision to work future-back scenarios that make sure they are following a path where the priorities and actions of today are positioning them on a relevant and exponential trajectory for 15 or 20 years down the road.

With future scenarios as a starting point, companies can then create a multi-horizon strategic map that charts a course from the future back to today. The latest EY Megatrends report is a think-tank research report on global futures and highlights five steps for developing a future-back strategy using megatrends as a foundation. The concept of future-back planning results in an ability to break free from past assumptions, explore megatrends that will change the world and identify weak signals beginning to reveal the future. From there, organizations can use that understanding, today, to develop a better strategic investment and transformation plans. 

Future-back planning provides an opportunity to break free from past assumptions, explore megatrends that will change the world and identify weak signals beginning to reveal the future. Organizations can use that understanding, today, to develop a better strategic investment and transformation plans.

Data will be the differentiator between products and unique experiences

Technologically, companies looking to make the leap from middle of the pack to exponential value creators, will need to more effectively harness the reams of data they are already collecting and generate vast amounts beyond what we collect today.

In a recent EY study, 83% of digital transformation leaders understood the value their companies could gain from leveraging data and analytics insights to speed innovation. Even 70% of digital transformation laggards see the same value.

Understanding the value data can bring

83%

of digital transformation leaders use data to help them innovate faster.

To be successful, organizational leaders need to see data as an asset worth investing in. Further, companies will want to act on the following three innovation imperatives, as outlined in How data can help you innovate when change is constant:

  1. Assemble the right teams that have experience across strategic change, design thinking, data science and industry knowledge. They’ll be able to ask the right questions to get the right results.
  2. Develop a human-centered innovation business model, operating model, and culture that embraces and drives change. Using data to augment the capabilities and experiences for people in innovative new ways is the key to realized value.
  3. Deliver insights and results fast and have a clear plan for industrialization. Analytics sprints can help teams iterate through business questions, starting simply and becoming increasingly complex to support new innovations that can be embedded at scale.

Of course, any actions companies take to strengthen their data and analytics, and artificial intelligence capabilities will need to tie back to the future-back strategy the company has set.

Customer expectations propel operational value chains into an autonomous era

Operationally, value chains will need to evolve to keep pace with making innovations tangible and real in terms of products and services for customers. For years, companies have relied predominantly on efficient, just-in-time supply chains that mass produce products to ship in bulk to customers. In delivering hyper-personalized experiences, companies will need to move toward flexible, resilient supply networks that are highly responsive to local needs, and flexible enough to reconfigure and deliver new products and services quickly.

In a networked era, supply chains will be data-driven and allow for end-to-end visibility, hyper personalization and real-time communication. This will allow companies to manufacture uniquely designed, bespoke products at scale. Emerging technologies also will play a critical role in disruptive innovation by helping companies to make real-time decisions and integrate data to source, make, sell and deliver their products. 

In an autonomous era, companies will produce products at or nearer to the source of consumption. In this new autonomous reality, items would be available to customers on-demand and in real-time by accessing the flow of intellectual property and production when needed and producing products in seconds. 

If the goal is to deliver hyper-personalized experiences, companies will need to move toward resilient supply networks that are highly responsive to local needs, and flexible enough to reconfigure and deliver new products and services quickly.

Along the new S-curve, the beyond is closer than we think

Along the new S-curve of growth, innovating at scale will require companies to place humans at the center of their customer journey, develop a future-back strategy, harness their customer data to deliver unique experiences and turn their supply chains into networked then autonomous supply networks. By understanding individual customer needs and delivering at scale in real time, companies can find themselves leading the next generation of post-pandemic disruptors into a beyond that is closer than we think.

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Summary

A new S-curve of growth is on the way and innovative companies are already leaving behind the traditional drivers of scope, scale and efficiency. Innovating at scale along this new growth trajectory requires companies to take a future-back approach to strategic planning, to see data as an asset worth investing in, and to move toward resilient supply networks that are data driven and enable hyper personalization.

About this article

Authors

Michael Kanazawa

EY Global Innovation Realized Leader and EY Americas Consulting Growth Strategy Leader

Leader in innovation, growth strategy and corporate transformation. Experienced entrepreneur. Author and speaker.

Glenn Steinberg

EY Global Supply Chain and Operations Leader

Helping companies transform, create value and optimize business performance. Thirsty for knowledge. Ski enthusiast. Husband and father of two Michigan Wolverines.

Contributors