ANALYSIS: Why Revlon filing for bankruptcy signals the need for innovation and foresight

Revlon, the American cosmetics and skin care giant, filed for Chapter 11 bankruptcy protection citing supply chain issues and rising inflation last June 15, 2022.

Revlon’s Chief Restructuring Officer Robert Caruso wrote in a court filing that the company’s revenues decreased due to the global supply chain disruption. This problem made it difficult for the cosmetics firm to produce its products to meet consumer demand.

Caruso wrote that the company is facing the brunt of inflation which increased its manufacturing costs. 

Furthermore, Caruso also wrote that Revlon faced intensified competition for the raw materials they need to manufacture its products.

Revlon seems to be the latest corporate giant to face difficulties due to the disruptions brought by today’s volatile, uncertain, complex, and ambiguous (VUCA) world.

Tackling global crises through corporate foresight

Revlon is not the lone company that was disrupted by the global supply chain crisis. Companies internationally faced port congestion, raw material shortages, and rising transportation costs as a result of this disruption.

For example, Ikea had to increase its prices by 9% on average in 2022 to account for increased transportation and raw material costs brought by this disruption, CNN reported.

Interestingly, however, many organizations in the past have weathered and even experienced unprecedented growth amid global crises. Those that survived global crises usually have a strong corporate foresight team within their organization.

Corporate foresight is the use of strategic foresight and futures thinking to methodically identify, anticipate and prepare for the changes in the future. Corporations around the world used this to analyze today’s world to create scenarios of how the future might unfold. 

By doing this, organizations are in a better position to respond to future disruptions that may affect their business such as the Covid-19 pandemic and the supply chain crisis.

Shell, an international energy conglomerate, is one good example of a company that successfully weathered a crisis with the help of corporate foresight.  Its corporate foresight team was able to foresee and prepare the company for the 1973 oil crisis. This helped the company weather the crisis and recover more rapidly than its competitors.

However, corporate foresight is often not enough to respond to disruptions and competitors. This needs to be combined with a strong corporate innovation practice.

Challenging competing startups through corporate innovation

While crises may strike organizations at any time, businesses also have to contend with new and more nimble competitors such as startups vying to capture their market share.

Revlon, for example, faced fierce competition from popular celebrity-backed cosmetic startups such as Kylie Jenner’s Kylie Cosmetics and Rihanna’s Fenty Beauty. These startups edged out Revlon in this highly competitive consumer market,  Reuters reported.

One way organizations can ensure that their businesses are not disrupted by the competition is through corporate innovation.

Organizations employ corporate innovation to bring new ideas to the table, grow their business, make their business more resilient to crises, and improve their offerings, internal processes, and business models. In the end, these make organizations more competitive and prepared for the future.

There are many ways to innovate. 

For example, an organization can build a new venture whose product and service offerings are vastly different from the organization’s core business. Organizations that go this route have the goal of entering new markets which will help their organization grow more rapidly.

Another way for organizations to innovate is by investing in promising startups. Here, corporations identify startups they can invest in which have the potential for significant returns on their investment.

There are many more ways to innovate to grow your organization and cement your place as the market leader in your industry. 

Schedule a strategy session with our team and see how you can prepare for future crises through corporate innovation and corporate foresight.