How to innovate for responsible growth: big-picture thinking, diverse perspectives, and bold decisions

Since the COVID-19 pandemic began upending everyone’s lives, businesses have had to innovate to meet the changing needs of customers, employees, partners and the communities in which they operate. The most successful among them acted quickly, delivering growth in the near term where business performance for others remained flat or declined. But Roger Gagnon, UK Chief Experience Officer at PwC UK, argues that it was a focus on innovating responsibly - optimising benefits for the greatest number of stakeholders, and minimising the unintended negative consequences of innovation - that has helped high performing organisations thrive.

Product and service innovation is one of the key levers for responsible growth, alongside customer experience, marketing, pricing, sales and service. For organisations, the right combination of these levers - and the level at which they need to dial up or down - is essential for building trust and delivering sustained outcomes.

So, what does it take for organisations to innovate responsibly?

According to Gagnon, the first step, perhaps counterintuitively, is understanding that the ‘user’ is only one stakeholder in the product and service innovation process. Sometimes, not even the most important stakeholder. Today’s new products, services, and experiences exist in complex ecosystems, where designing for systems is often the critical success factor.

“Innovation practitioners need to understand how their products and services will operate within these systems,” says Gagnon. “What are the benefits and drawbacks? What are the potential unintended consequences? How will innovation affect every part of the system?”

“Think about how innovations in the PPE industry have kept millions protected over the last couple of years, but also had a huge environmental impact through a need for single-use plastic. Or how the gig economy has fuelled significant innovation - such as transport apps and food delivery services - while inadvertently leaving workers needing multiple jobs to make ends meet.”

Roger Gagnon, Chief Experience Officer, PwC United Kingdom

Unpacking and addressing these issues and innovating responsibly requires collaboration across a broad range of disciplines, and getting it right can be a challenge.

But the longer-term results are worth it. Today’s consumers increasingly want to be associated with brands that ‘talk the talk, and walk the walk’ - delivering on promises, and prioritising people, planet, and purpose over profit. Innovating responsibly might cost more, and it might take longer to bring an idea to market, but those that succeed will find long-term responsible growth.

From user-centred design to system-centred design

When we think about innovative products and services, we tend to first envision how they will meet an existing or latent need for the user. But in today’s complex arena, users are only one of the stakeholders involved in the process. Innovators today need to think about new products and services with the whole system in mind - this is the path towards doing good business, doing good, and building long-term benefits for all.

Designing successfully for a complex system means acknowledging the intricacies, mapping the system, and understanding the relationships and interdependencies between all of the stakeholders involved in bringing a new product, service or experience to market.

“Primary insight is key. You need to consider everyone who has a possible stake in the idea, the role that they will need to play and the jobs they’ll need to do when this product or service is out there in the real world.”

Roger Gagnon, Chief Experience Officer, PwC United Kingdom

For example, here in the UK, health and social care innovation can’t focus on patients alone. It must take into account others in the system who deal with patients’ needs: GPs and health and care professionals, support networks, the NHS and Clinical Commissioning Groups, government at all levels, and the private sector, including other healthcare providers. All of these parties have a stake in innovation.

While this approach takes more work and time, it gives companies a much better chance of delivering something that will succeed - responsibly - in the complexity of a real-world environment.

The cost of innovation: A big-picture view

The classic model of innovation says that to succeed in the marketplace, an idea must be desirable, feasible and viable. While these are all still necessary components, there’s a fourth that’s vital for responsible innovation: integrity. This describes how innovation impacts society - not just in the target marketplace but across the broader ecosystem. Because a new product or service designed to benefit some could have unintended negative consequences for others.

Consider how today’s sharing apps for holiday accommodations have led to rising costs for renters and less predictable tax revenues for city governments. Or the second-hand clothing market, where the bulk of donated clothes in developed countries end up not in local resale shops but African markets. There, the abundance of low-cost clothing undermines regional textile businesses, creating a new problem that’s unseen by those who live where the problem originated.

According to Gagnon, sometimes ‘solutions’ don’t solve a problem as much as they shift the cost – economic, environmental, social or otherwise – to someone or someplace else. “This ‘innovation arbitrage’ underscores the need, not only to consider the unintended impacts of innovation, but approach innovation with integrity to avoid negative unintended consequences on society,” he says.

“This ‘innovation arbitrage’ underscores the need, not only to consider the unintended impacts of innovation, but approach innovation with integrity to avoid negative unintended consequences on society.”

Roger Gagnon, Chief Experience Officer, PwC United Kingdom

How can you do this?

Start by mapping out all of the stakeholders - direct and indirect - that stand to be impacted by your proposed innovation. “Then put yourself in those people’s shoes”, says Gagnon, who argues that it’s essential to conduct primary research - qualitative and quantitative - with affected stakeholders’ groups to stress-test ideas before design begins, and certainly before development to maximise the potential innovation to do good, and thoughtfully minimise the bad.

Collaborate across disciplines

Most large organisations today are complex systems, where delivering projects and programmes requires coordination and collaboration across a broad range of stakeholders, each with their own goals, objectives, wants, and needs. To innovate responsibly, Gagnon argues that tapping the expertise of more than just “the usual suspects” is key.

Every person in your workforce has skills in a different area, and something unique to bring to the table - whether that’s social, environmental, legal, regulatory or something else. And they will be able to analyse an idea from their unique perspective.

“When you involve multiple disciplines in discussions around innovation, you can examine the idea from many angles. This takes work. It can also cost more money and might even lead to tension and disagreements. But ultimately, this approach helps you come up with better, more effective, and more thoughtful solutions, with ROI that goes beyond purely commercial metrics. Involving as many perspectives as you can in the product and service innovation process will allow you to anticipate - and find ways to mitigate - negative consequences that those closest to the problem, or solution might have missed.”

Roger Gagnon, Chief Experience Officer, PwC United Kingdom

Managing innovation

Because it’s a process that’s sometimes structured and at other times organic, innovation must be constantly managed, monitored and optimised. And that requires C-suite leaders to take an active role.

“It’s not about micromanaging. It’s about paying close attention to strategy. It’s about considering capital and operating expenditures and how these need to be adjusted as conditions change. It’s about working dynamically and being ready to respond when there’s a new development in the market. Successfully innovating takes leaders that do more than just give a team money and an assignment, then turn up at the end to see what they’ve come up with. They need to be involved in the journey throughout.”

Roger Gagnon, Chief Experience Officer, PwC United Kingdom

Whatever problem you’re trying to solve, leaders need to stay on top of developments and emerging trends across their industry and beyond. Hopefully, that arms them with the insights they need when it’s time to change direction or otherwise adjust the course of a project. For instance, if it’s clear a project is faltering, leadership must be ready to show courage and make difficult decisions to avoid the sunk cost fallacy. This might mean pulling the plug rather than doubling down on efforts or spending just because “we’ve already come this far”.

The keys to responsible innovation

To align innovation with responsible growth, companies must think not just about the user, but about the whole system in which your innovation will live. How will each stakeholder engage with your innovation? What benefits will they reap? And what negative impacts might each experience?

Next, consider more than the three classic levers of innovation – desirability, feasibility and viability – and think about integrity too. You need to understand how your innovation impacts society at large.

From there, apply that systems perspective to your organisation, and seek a diverse range of viewpoints from your team. Responsible innovation requires the expertise of more than just strategists, designers, and developers. You need insights from people across many specialities – from social to environmental to legal and more.

Finally, lead from the front and stay actively engaged in your company’s innovation efforts. Innovating responsibly and successfully requires ongoing management, monitoring and optimisation, as well as bold decision-making when conditions change.


To discuss any issues raised in this article, please get in touch.
 

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Roger Gagnon

Roger Gagnon

Chief Experience Officer, PwC United Kingdom

Tel: +44 (0)7885 823059

Rosie Hall

Rosie Hall

Senior Manager in Technology & Innovation, PwC United Kingdom

Tel: +44 (0)7753 464538

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