10. Failure to Innovate/Meet Customer Needs
Moderna’s speedy COVID-19 vaccine release bore the hallmark of an innovative process that not only has enabled the U.S.-based biotech company to build resilience during an unprecedented crisis but also has turned challenges into impactful products that benefit billions of people.
Moderna’s co-founder Noubar Afeyan listed three factors that made her company innovative:
- Moderna invested in breakthrough mRNA technology more than 10 years ago and has developed it as a bioplatform, a system that can easily be scaled and tailored to treat many different diseases. When the pandemic struck, the company was not afraid to take risks, successfully using this existing technology and its decade-long experience to solve a new problem.
- Moderna embraced cutting-edge technology and used artificial intelligence (AI) to speed up vaccine development. AI helped automate other key systems and processes to build efficiencies across the organization. Previously, the company could only produce about 30 mRNAs manually per month. Using AI has expanded its capacity to about a thousand, with much better consistency in quality.
- Moderna created an innovation-friendly environment, attracting many industry professionals who are highly motivated, smart and ambitious.
The Chinese character for crisis is made up of two parts: danger and opportunity. While COVID-19 has caused devastating disruptions to the global economy, decimating many famous brands, it is also forcing companies across different industries to innovate and reinvent themselves. Businesses have found new ways to sell, service and operate during the crisis.
The challenge is this: How can these innovations bring systematic growth after the pandemic abates? This question weighs heavily on the minds of participants in Aon’s 2021 Global Risk Management Survey. Participants rank failure to innovate or meet customer needs at number 10.
As expected, the technology sector predicts failure to innovate or meet customer needs to be a number two risk in three years. This is because many high-tech companies thrive on new disruptive technologies, such as cutting-edge computing, cloud computing and artificial intelligence, all of which are being introduced at an unprecedented speed. A company clinging to established products and business models will lose ground quickly, and many are already being pushed out of the market.
Interestingly, participants in two highly competitive regions — North America and Asia Pacific — perceive failure to innovate or meet customer demand at number five and number six, respectively.
For the past two decades, North America has served as a haven for tech and bioscience start-ups, drawing some of the finest talent from around the world. From the birth of giant online retailers and the development of global social media apps to the growth of the cloud and gene therapy, Silicon Valley in California has become home to more than 39 Fortune 1000 tech giants, as well as 40,000 start-ups. At the same time, Canada is quickly becoming a center for technology as well.
Innovation is critical to ensuring leading positions in the future. Even though North America has acted as the catalyst for many monumental technological developments, other regions are closing the gap. Asia has made tremendous progress in new technologies. More than 90 percent of the world’s smartphones are made there. In addition, companies have focused significant innovative capacity on mobile application processors and are developing new types of hardware. Last year, the Chinese company Royole released the world’s first flexible smartphone, and Samsung launched the first smartphone with a foldable glass screen. In addition, Asian firms have capitalized on the region’s well-developed infrastructure to establish themselves at the cutting edge of 5G development and deployment. Of the five companies that hold the majority of 5G patents, four are Asian. While the region’s consumer markets are expanding and digitalizing rapidly, there is still a great deal of room for growth and innovation in consumer-facing technologies.
Innovation is a turbulent process of venturing into the unknown. Many businesses have responded to the crisis by developing entirely new products and services that will last long into the future. For example, many healthcare providers across the U.S. began to offer telemedicine appointments during the lockdown. Looking ahead, hospitals can gain competitive advantage by continuing to innovate their service offerings, gradually developing higher standards for delivering virtual healthcare.
At the same time, many innovative companies like Moderna use existing technology and resources to solve problems that they have never tackled before. While this may seem like an unpredictable technique, experts say this type of innovation can be systematically used to produce highly innovative products and services on a regular basis.
The COVID-19 crisis has taught us that it is important for organizations and leaders to become more comfortable with uncertainty and ambiguity, which are fundamental parts of the innovation process. Failure to innovate is a commercial risk that can also be directly impacted by impaired resilience and a failure to manage volatility. It highlights the importance of a comprehensive and forward-looking approach to enterprise risk management.