A Human-Centric Innovation Primer for Delivery & Logistics’ COVID-19 Response
Imagine, for a moment, that you’re an observer from an alien civilization. You’re probably pretty perplexed right now. Because unless your intergalactic telescope is deceiving you, things have abruptly stopped moving on Earth. Borders are closed, businesses and offices are shuttered, transportation is at a standstill, and people are rarely leaving their homes, if at all. This definitely doesn’t check out.
You send an investigator to Earth to get a better read on the situation. The report comes back instantly: yes, Earth has mostly stopped. But it’s also speeding up. It’s a little complicated.
Things are moving fast and slow.
For anyone working in retail or logistics, work has either dried up or is moving so fast you can’t keep up. With a third of the world’s population under lockdown, 75% of companies are experiencing unprecedented supply chain disruptions and falling trade has led 13% of container ships to be left idle.
At the same time, Amazon is hiring 75,000 new staff in addition to the 100,000 they recruited last month to meet rising demand. As the vast majority of us stay at home, e-commerce has ballooned and many retailers simply aren’t prepared — in fact 89% of total retail sales in the U.S. still took place offline before the crisis, and the profitability of UK supermarket Tesco is threatened by £925m in additional costs to handle the sudden surge of demand.
Things have stopped moving around, but they’re also moving around more. The truth is as true as its opposite.
Real innovation starts with human behaviour.
If you’re reading this, you’ve probably been paying close attention to how others are responding to the pressures of COVID-19. Specifically, in the logistics, delivery, and omnichannel retail business spaces, many have been successful in repurposing existing assets to serve new needs as demand shifts from, say, moving people to moving meals from point A to point B. For example, Chinese mobility app Didi augmented its core ride hailing business with a new on-demand shopping delivery service — effectively turning its fleet of drivers into a large-scale distribution network. The news has been full of such examples. Of course, there’s a big difference between repurposing surplus as a stop-gap solution and expanding into a new service model as a long term innovation strategy.
Knowing what innovations to invest in is hard in the best of times, let alone in a crisis when the market is unstable and constantly changing. How should companies make decisions about which kinds of experiments in business or service model innovation are worth pursuing?
Here’s our take on this: since we’re all about a human-centered approach to business design and innovation, we always start with consumer behavior — in other words, the real choices that real people are making right now.
Take, for example, how we helped the world’s largest retailer transition into an omnichannel business. We used observed behaviour — an action that can be tracked and measured, like buying groceries online — as the foundation for our strategy and as a means of prioritising investments in innovation. Here’s what we found:
- Customers who already shopped at this retailer both online and offline tended to spend significantly more than those who only shopped one channel.
- The needs and priorities of current multichannel customers (people who shopped both online and in-store) were different from those of single-channel customers (people who opted for one or the other): they cared about saving time as much as they cared about saving money.
- Finally, we saw that grocery shopping was the highest-frequency behavior, since people tend to shop for groceries more often than general merchandise.
By using time saving as a filter for product and service innovation, and by beginning in grocery — the best place to drive customer adoption of new digital behaviours, given its frequency — we were able to help this retailer move millions of customers to omnichannel shopping and in doing so, radically transform its business for the future.
Although this work didn’t happen in the midst of a global pandemic, the same behaviour-centric approach is especially applicable in uncertain times like the present.
Step 1: Prioritise your behaviours.
As we grapple with the rapidly-unfolding impact of COVID-19, our behaviours will continue to evolve — but not all behaviours that emerge today will persist. For instance, while we probably won’t continue to hoard every last roll of toilet paper, there’s a good chance that we’ll be diligently washing our hands to the tune of “Happy Birthday” for quite a while. That’s why it’s important to prioritise and adjust the scale of your investment based on the persistence of a given behaviour.
We recommend sorting these behaviours into three categories:
Short-term behaviours require quick, tactical responses to capture timely needs.
Lasting under a year, these tend to be immediate consumer reactions to the spread of the virus or social distancing measures. While some of these behaviours are impactful, you cannot ground your future growth on them as they will cease to exist later on. For example, as sales of home office and entertainment products soar while people adjust to social distancing, logistics companies may adjust last-mile delivery operations toward bulkier goods in the short term to meet this demand.
Long-term behaviours are persistent, but less urgent.
These often challenge deeply-rooted cultural beliefs or engrained ways of working, and may have a lasting profound impact on the business. As these take effect over a longer period of time, it can be challenging for organisations to treat them as priorities and invest accordingly. For example, the sudden change in consumer demand for gig-economy based mobility and delivery services — like Uber and Seamless — has exposed the lack of job and health security for gig workers. While short-term tactical measures are needed to combat some of these issues, it will require longer-term changes in company HR policies and business models to address the core of issues of workers rights in the gig-economy working model.
Gateway behaviours are short-term actions that lead to new habits.
These should be your key priority, as they represent an opportunity to leverage an immediate surge in behaviours to become part of a customer’s habit. They have major potential, but gateway behaviours can be fleeting. That means you need to urgently act on these short-term behavioural surges before they’re no longer relevant, and strategically invest to convert them into a long-term opportunity.
An example of gateway behaviours is the rise of online shopping amongst baby boomers. In the past, this group has shopped online less than other demographics and have started doing so to avoid going to shopping malls. These new customers are likely to form new habits that persist beyond the crisis. Baby boomers tend to value simplicity and seamlessness across online/offline channels more than other generations, and the creation of an omnichannel experience centred on these needs could become a sustainable new line of business.
By identifying and sorting valuable behaviours into the three categories above, you can prioritise investments on gateway behaviours that are most urgent and valuable. It will also help clarify which short-term behaviours require an urgent tactical response, and which are long-term behaviours that are less urgent, but still require a strategic response.
Step 2: Meet emerging needs by leveraging what you already have.
Now that you’re up to speed on the most valuable consumer behaviours, the next step is to identify the needs behind them. Then, it’s all about leveraging your assets to meet these emerging needs.
In the past few months, many of us have woken up to empty grocery store aisles, closed restaurants, and news reports of people fighting over toilet paper. Many turned to online grocery shopping and found the next available delivery date weeks away — if they were able to order at all — and were left unsure if they’d be able to stock up on the essentials. Some even suddenly found themselves under quarantine, with no option but to rely on neighbours to buy food.
Shopping online, focused spending on essentials, reliance on neighbours to buy food and eating at home are all behaviours that point to the basic human need of security. This need for security is driving consumer decisions, and creating the emergent need to purchase groceries and essentials from the safety of their homes.
Once you have a clear idea of where the additional capacity, demand, and pressure points are for your business, you can find ways to address customer needs based on your unique portfolio of assets — and this is already happening across sectors around the globe. Players are addressing the increasing demand for home delivery of groceries and essentials by leveraging their own assets:
- As restaurants closed in the UK, sustainable food wholesaler Natoora launched an online grocery app to meet the sudden uptick in consumer appetite, creating a new B2C side of their business.
- In Malaysia, mobility-cum-super-app Grab launched Grab Pasar to deliver produce from local fresh markets to consumers, expanding their delivery service portfolio to small businesses and helping protect local livelihoods.
- Chinese news app Toutiao (a subsidiary of TikTok parent company Bytedance) leveraged their large readership to launch an at-home services platform that delivers food and medicine, among other online services. By partnering with local online-to-offline service giant Meituan, they were able to quickly acquire delivery capabilities.
You can find the most effective way to meet emergent needs by considering the forces that drive decision-making and valuable consumer behaviours, as well as the unique ways in which your business might be equipped to respond.
Step 3: Launch, test, learn, repeat.
No matter how great an opportunity may seem on paper, there are underlying assumptions, interdependencies, and uncertainties that have yet to be tested. The next step is to move it from an idea to a technically feasible, commercially viable solution that customers actually want.
To illustrate how to do this, let’s take the aforementioned Grab Pasar as an example. There’s a number of hypothetical obstacles they could face at launch — for instance, local producers could lack technical knowledge to operate the platform, consumers might not have trust in delivery staff to pick out the best produce available, or costs could be too high to support small producers. To help mitigate these issues, Grab could test and learn with local producers through a prototype app, adjusting the product design to adapt to their preferred user experience. To test customer desirability, Grab could preview a description of the service on their existing platform and monitor consumer click-throughs to estimate demand. This would also produce useful information to gauge commercial viability, before testing the solution in a limited area before scaling.
In a time when market conditions are evolving daily, rapid experimentation can help capture emergent opportunities fast, and provide valuable feedback to validate, improve, and de-risk investments.
Innovation isn’t just a smart move. It’s a crucial one.
It might feel like a strange idea in these strange times, but our industry has the largest opportunity to benefit from thoughtful strategic moves during COVID-19. And if we don’t innovate? We have the most to lose. How you innovate is your question to answer, but we’ve given you a few places to start.
There are the 3 key steps to help you ideate:
- Identify your opening for innovation — keep an eye out for what we call “gateway behaviours,” which will persist even after we’re all let out.
- Look at complementary models and ways to capitalize on excess capacity or competitor/market demands.
- Take advantage of this opportunity to iterate — move quickly, be honest with your products and services, and continue to push even after a soft launch.
By following these steps, you’ll be able to work toward turning disruption into growth — and, more importantly, you’ll help support the global community through this difficult time.
Author: Zoe Law, Associate Director, Business Transformation, R/GA London, is a digital innovator experienced in influencing key stakeholders and leading cross functional teams to drive innovation and launch new ventures for corporates and startups across Asia and Europe. She has a proven track record of bringing inventive concepts into daily operations through strategy development, operational design and large scale programme launches.
Business Transformation is R/GA’s consulting practice, designed to help the C-suite innovate. We answer clients’ most pressing innovation challenges by creating transformation imperatives which fuse human-centered problem solving with business rigor to identify new opportunities and bring them to market — fast.
For more information, please contact David Toma, Executive Director EMEA, Business Transformation, R/GA.
Vision & Analysis Article
We hone in on specific sector problems, identifying the key themes and business imperatives shaping companies — and track the ways in which the fluctuating global economy feeds through to that community. With commentary from our subject matter experts, we surface high impact ideas and human-centered innovations that can lead to network effects for the industry-at-large.