Doubling down on innovation during a downturn is especially hard. It’s easy to talk of using setbacks to invest and position for recovery. But this requires strategy that’s clear and nimble, with management buy-in so teams can spot and seize opportunities swiftly and decisively. 

We’ve been working closely with clients this year to bring innovation in house, equipping teams with design thinking tools and mindsets to capture opportunities where others see only problems.

The last decade saw innovation labs popping up everywhere — Walmart, Facebook, Starbucks, financial services firms, retailers, healthcare companies, hotel chains. But bean bags and spiffy 30,000-square-foot creativity hubs aside, innovation comes with the high degree of uncertainty and extended time horizons that leaders find hard to stomach in an economy reeling from the pandemic. How do the best get it right?

1. Less big cheques, more reality checks

The original moonshot was expensive. The US spent $25 billion on an outrageous mission with very little direct economic return. Apollo’s politics-driven, carte blanche push for technology and a fixed goal made for great movies and some pretty awesome books, but left us a long way from routine space flight. 

Most experts argue for a less flashy approach — in a recession and out of it.

Google X’s Captain of Moonshots Astro Teller (yes, that’s what Eric Teller goes by, a tidy bit of personal branding, we think) advocates measured, systematic innovation. Starting small and scaling up incrementally from a working prototype based on user needs. 

Take Apollo’s modest cousin ARPANET. Set up in 1969, ARPANET received less than a thousandth of NASA’s funding. But the technology they created proved immediately useful, and the network kept evolving in response to user needs. Today the internet is the driving force in the daily routines of almost four billion people worldwide; it is the foundation for all the innovation, media and commerce we’re seeing.

This, as opposed to a centrally planned, all-or-nothing moonshot approach that makes for attention-grabbing headlines but proves fatal in the long-run. Innovators need to have the mental freedom to throw convention to the wind, but this only works with the pragmatic discipline to identify risks early, learn cheaply and quickly when ideas don’t work. It’s all about creating a system that fuels optimism while grounding everyone — just enough — in reality.

2. Innovation as Empathy

There’s the one in a million moonshot innovation — disruptive innovation that alters and improves business in ways the market does not expect. But there’s also sustained innovation that’s built on good organisational design and culture, so good ideas go from concept to commercialisation, and continually find their way into the brand portfolio.

One company that has consistently appeared on “most innovative…” lists is Microsoft. This takes some doing when you’re a 150,000-person tech colossus, almost half a century old.

Microsoft CEO Satya Nadella is an outspoken champion for empathy as key to innovation. Having a son with severe disabilities has shaped Nadella’s thinking. Much like empathy, innovation often begins with personal experience, highlighting the importance of diversity in the workplace as a way to get out of congealed patterns of thinking. Microsoft’s focus on cloud computing, plus a mission to empower everyone to do more has prompted a flood of recent AI innovations for people with disabilities – Seeing AI, Soundscape, Immersive Reader, Eye Control and live captions for Skype and PowerPoint. 

Support for those projects is helping customers achieve more, and helping employees find meaning in what they do. It’s also shifting Microsoft’s fortunes. In May last year, Microsoft overtook Apple, Amazon and Google’s Alphabet Inc, to become the world’s most valuable company (at least for a little while). Bill Gates and Paul Allen founded the company during the 1970s recession, creativity definitely loves constraints.

3. Who needs a lab anyway? 

Microsoft may be pushing forty-five, but Nintendo is pushing a mind-boggling one hundred and thirty. Nintendo was founded in 1889 as a maker of Japanese playing cards. The company’s century-spanning history is one of eccentric ideas, setbacks and revivals. In all these years, Nintendo has pioneered portable games consoles, wireless controllers, touchscreens, motion control, and virtual reality.

People always ask us whether we take risks on purpose. But to us, we don’t really take risks — we just keep trying new things, says Nintendo’s Shinya Takahashi.

If Google X has a Captain of Moonshots, Takahashi is Nintendo’s conductor. He started in the company as an artist in 1989. For Takahashi, innovation isn’t the goal at all, it is to make people laugh. Takahashi describes a time before social media when he’d drop by stores after a game was released. If people looked surprised or happy, he knew he had succeeded. 

With Nintendo, innovation is a happy side-effect. After all, legendary Nintendo engineer Gunpei Yokoi referred to his great achievements — Game & Watch and Gameboy as lateral thinking with withered technology, in reference to the company’s fondness for finding new ways to reinvent dated tech. 

When innovators are forced to take themselves too seriously, we’re always at risk of losing what makes the process worthwhile. Nintendo innovates simply — by staying open. This is a company where surprising customers is never considered a risky approach; it is the only approach.

Balancing Moonshots with Roofshots

Not all innovation labs succeed. For every innovation lab that creates a market winning product, there are many that fall short — with no vision, no alignment with the rest of the business, no leadership buy-in, and no metrics to track success. 

There is reason then to temper moonshot innovation with roof shot thinking — focused on continuous, methodical improvements 1.3–2X, quarter after quarter, year after year. Tesla’s self-driving cars, Amazon’s product recommendation engine, Google Search — these were regular roofshot projects, built slowly and painstakingly over many years. 

In our current economic climate, even conservative brands can work for a responsible, still daring mix — allocating a chunk of company resources on roofshot projects, with a goal of generating the bulk of total revenue, and moonshot projects getting the rest.

If there’s one thing everyone agrees on — it is to steer away from attention-grabbing goals. After the Apollo 1 accident in 1967, mission controller Gene Kranz confessed to his team that they “were too gung-ho about the schedule and locked out all of the problems they saw every day… every element of the program was in trouble… not one of us stood up and said stop.” 

Half a century later, it’s not hard to think of parallels with some of Silicon Valley’s high-profile, high-hubris personal projects. Innovation takes a mental freedom and flexibility, a willingness to learn and experiment, but also a deep grounding in reality. Feet planted firmly on the ground, open and empathetic — these are good places to begin in a world where there are no ready answers and no playbook.