Commercial Creativity: How Will You Respond to the Demand Revolution?

Mayo 05, 2021

Creativity

Prior to the resurgent crisis, most companies operated as well-oiled machines in relatively stable, growing markets. Then the pandemic hit and with it the demand revolution...

Throughout business history there have been many revolutions, mostly led by innovation. Companies developed breakthrough technologies, and customers adapted and slowly adopted them.

The global pandemic spurred an entirely new kind of revolution, largely driven by heightened community awareness and mass digital migration. As consumers, we cannot “unsee” the new behaviors and alternatives that confronted us in 2020, and in many cases, see no reason to undo our choices. Attitudes have completely changed and it is the responsibility of business to keep up with us and meet us where we are. We have taken the lead and developed breakthrough habits, changed attitudes, and redefined expectations. Now it is the companies’ turn to adapt.

Right now, customers are assessing their own needs, recalibrating their expectations, and setting their own future course. To keep up, companies need robust answers to four simple sounding but deceptively complex questions:

  • Where are my customers heading now?
  • Why are they headed there?
  • How quickly are they moving?
  • How boldly can we lead them?

Answering these questions has become incredibly hard for most companies because:

  • Your crystal ball went dark in 2020: A structural shift severely limits the usefulness of historical data and predictive tools.
  • You are starved for insights: The crisis prevented companies from observing customers “in the wild.”
  • Your successful products may no longer have viable markets: Price-value relationships may be out of whack with what customers want and need. Successful products may have lost their competitive edges within months. 
  • Your go-to-market approach may no longer be relevant: Limited contact with customers has disrupted sales and channel models.

Your fundamental revenue model may no longer be acceptable: Heightened community awareness and mass digital migration will profoundly affect traditional pricing models

To succeed in this environment will require extraordinary and unprecedented levels of commercial creativity, which we at Simon Kucher define as the ability to re-engineer every cylinder of the revenue engine to respond to the demand revolution.

Commercial Creativity Whitepaper Download

Winning the future means creating the future

A company’s best response to a demand revolution is to embrace it with a commercial revolution of their own. Unless executives are fully confident that their traditional, pre-crisis business practices will apply seamlessly to the post-crisis world, they need to get commecially creative in ways and in areas they never previously imagined. This means harnessing their energies to secure or rebuild their revenue bases from the ground up in 2021 and beyond.

The first step is understanding your commercial creativity potential and where you should apply it. Assess yourself on our matrix below:

graph

But this won’t be easy

Some companies will be well-prepared to accelerate their boldest plans, make test-and-learn second nature, shift their digital mindset to value creation, and build a strong creative leadership team. But the majority will face an uphill battle to redirect their organizations and mount a robust response. Like it or not, most companies are not built to be especially creative and many will also underestimate the extent and speed of the demand revolution will in their sector.

How to apply commercial creativity

In our recent paper, we take a deep dive into the five levers essential to any company’s successful go-to-market model.

  1. Customer experience: Rather than a narrow focus on the immediate value delivered by a product or service, firms must now consider questions such as “How does this make my customers feel?”. More and more customers now expect their suppliers to be partners or fellow travelers rather than mere transactional vendors.
  2. Channel: Companies can unlock and apply their commercial creativity when they stop viewing online channels and brick-and-mortar or personal channels as a zero-sum tradeoff. They will from now on be firmly interrelated and, in many cases, mutually reinforcing ways for customers to find, purchase, and consume a product or service.
  3. Product (re)invention and innovation: Even in periods of stable, predictable growth, the majority of innovations fail to achieve their financial or commercial goals. “Learn fast” has replaced “fail fast” in the innovation playbook, as companies need to design their portfolios for moving targets.
  4. Revenue model: The way you charge for products and services should facilitate growth when demand surges, and likewise not leave a revenue black hole when demand slacks off. Commercially creative companies will explore a mixture of monetization models, so that the firm can weather extremes as well as periods of stability.
  5. Pricing: One-size-fits-all prices limit revenue growth and deny many customers access to products and services. Applying commercial creativity means offering multiple prices by using price differentiation, targeted promotions, or dynamic pricing. It also means finding more advanced ways to set prices, including using machine learning or algorithms to support decision-making.

commercial creativity whitepaper download