Cut costs. Manage cashflow. Innovate. The first two of these activities might seem like natural priorities during economic downturn. But the third might be perceived as an impractical luxury. Innovation – the process of creating value from new ideas – might be viewed as an unwelcome and untimely risk.
The problem with that attitude: innovation does not always carry risk. And even if it did, risk offers the potential for reward. Either way… As the world’s businesses struggle in the face of economic downturn, it is new ideas, and new solutions to old problems, that will deliver opportunity. Smart companies – that recognise the importance of innovation – have the potential to come out of the downturn stronger and more competitive than they were before.
As businesses across the world prepare to batten down the hatches and weather the storm, why not think differently. Why not innovate. As an iconic Levi ad once said: “When the world zigs, zag”.
NESTA, an independent body with a mission “to make the UK more innovative” recently wrote that “during economic downturns innovation is the single most important condition for transforming the crisis into an opportunity… Economic downturns can have positive effects; they force companies to increase their efficiency, cut waste, and strive to do things in smarter ways.”
Grand examples from the past give virtue to the proposition of innovating during downturn. During the last recession at the beginning of this decade, Apple worked on iTunes, iPod and its retail stores. At the time, Apple was down and out. But these three innovations have since propelled the company to unthinkable heights.
This story is both inspiring and daunting. Game-changing inventions like the iPod make innovation look like a pastime reserved only for the wealthy or tech elite. On the contrary: innovation is not just about inventions or world changing ideas; it is about having the desire to create positive change in whatever we are doing. It is about a motivation to think differently, to think up new ideas that solve old problems, to refine what we do and the way that we do it, to make new things, and to make old things better. These values make up innovation.
In our current climate, perhaps ‘problems’ represent the greatest opportunity for innovation. Identify a problem, and try to solve it with fresh thinking. This two-step process could help cut costs, improve efficiencies, overcome obstacles, increase sales, or diversify. Sometimes, a collection of small, incremental improvements are all it takes to transform products, services and processes.
Talking about how innovation can help businesses now, in times of economic hardship, BusinessWeek’s ‘innovation guru’ Bruce Nussbaum offers three key things innovation can do. It can “simplify” operations, business models, products and supply chains. It can “differentiate” products and services to stand out from competition. And it can “change” things, from processes to products and services.
Innovation can aid not just short-term survival, but long-term development, growth and competitive advantage. In times of economic hardship, we must do things like manage cashflow and cut costs. But in many ways these tasks are reactive. Innovation is proactive. By thinking differently, we can innovate our way through the storm, and be better because of it.
More on innovation
Over the past two months we’ve been piloting a new, innovation focussed newsletter. Check out the first two articles below:
Why you should care about innovation
Five reasons why you should care about innovation.
What’s your agenda?
An innovation agenda turns desire into action, and brings focus and direction to your innovation initiatives.
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