3 ways to innovate in an economic downturn

Recessions present great opportunities for innovators. It could be a good time to make game-changing offers, simple and affordable solutions, or make bold and strategic moves. The scarcity of resources that usually accompany recessions pushes innovators to do things they should already be doing: prune wisely, bring back the advantage to cut costs, master smart strategic experiments, and manage innovation risks by sharing them with others.

The feeling that a recession is about to grow. If that happens, will it slow innovation? not necessarily. History shows that recessions create three specific opportunities for innovators.

1. Game-changing offers

Startups with radical products or services that “echo” the big event driving the recession can take off. For example, Airbnb, an online marketplace for “places to stay and things to do,” was created during the height of the recession in 2008. Its service has attracted frugal millennials looking for a cheap way to travel, as has the car-sharing service with Uber model.

The persistent distrust of traditional financing providers after the global financial crisis helped spur new providers. For example, Jack Dorsey founded Square (later renamed roadblock), the financial services start-up best known for its white, square-shaped credit card reader, in 2009. “There’s no better time to start a new company or a new idea than a recession or a recession,” Dorsey, who also helped found Twitter and reflected. “there [are] Lots of people who really need creativity to create something new.” Turn back the clock even more. Walt Disney founded his eponymous company in 1923, at a time when the world desperately needed hope. It is reasonable to anticipate the need for alternative energy sources to combat Climate change and reduced dependence on authoritarian regimes, increased food safety, and the supply chains that can be relied upon to attract the entrepreneurial energy of today.

2. Simple and affordable solutions

Deflation periods can be great times to make offers that connect with consumers who are tighter constraints or are naturally frugal given the ongoing uncertainty.

There was a stagnation in the aftermath of World War II, in 1948-49, before the post-war boom. In 1948, the McDonald brothers launched all of their auto shops, closed their flagship store, installed new equipment, and reopened three months later with a new approach to food preparation. Instead of having one skilled cook prepare orders to order, McDonald’s has simplified the menu so that less skilled people can prepare the same thing over and over again. All McDonald’s menu items can be eaten with one hand while consumers are driving.

It was Henry Ford’s own assembly line approach applied to food service. The brothers called the model the “Speedee Service System”. It made it much easier to hire and fire chefs and allowed McDonald’s to lower prices and prepare food faster. The new business model began to take off. In 1953, the company began franchising its stores to other entrepreneurs. Franchise owner Ray Kroc purchased the two brothers in 1954 and expanded McDonald’s into the global powerhouse it is today.

3. Bold strategic moves

Downturns can be great times for established companies to make drastic changes. Shantanu Narayan took over as Adobe’s CEO in late 2007. The 25-year-old company seemed stuck, with products like Photoshop and PageMaker stagnating. Nimble Software as-a-Service (SaaS) competitors are starting to emerge. The onslaught of global financial crises will challenge even the most powerful incumbents.

In the face of these challenges, Narain and his team took a bold turnaround strategy. In 2008, they tested a model provided by Photoshop. A few years later, Adobe “burned the boats,” discontinued packaged software and went with the SaaS model entirely. In 2009, Adobe bought Omniture for about $1.8 billion, a price 40% lower than its pre-crisis peak (but 2.5 times higher than its mid-crisis low!). This acquisition was a cornerstone of Adobe’s efforts to build a new growing business related to advertising and analytics services. From 2009 to 2019, Adobe’s revenue tripled, and its stock price increased 29% annually, making it one of the biggest converters of the decade.

These three avenues for growth emerged from research featured in my 2009 book The bright side. The title of the book not only referred to these kinds of opportunities; He pointed to the fact that the scarcity of resources that usually accompanies recessions forces innovators to do things they should have already done:

trim wisely

Take a closer look at what’s in your innovation portfolio. Cut at least 50% of it. You should focus your resources on where they can have the most impact. It’s possible that many of the projects you’ve taken on are zombie-swinging, sucking the life of innovation out of your organization. Kill the zombies. It’s something you never regret – you should have done it already, you have to do it now.

Bring back the feature to cut costs

Customer focus should be an essential component of cost reduction efforts. After all, you can’t do more with less until you can decide what more You know. This means knowing what job the customer (employee, stakeholder, channel partner) has to do.

Master smart strategic experiments

The experience has never been easier, which makes it all the more important to do it with proper discipline. As a good scientist, start with a hypothesis. Design an experiment with clear goals. Predict what you think will happen. Test in a way that you can measure and evaluate your predictions. You never know for sure, so remember the acronym HOPE (Hypothesis, Objective, Prediction, and Execution Plan).

Share the innovation download

People believe that successful entrepreneurs look for risks. this is not true. Smart Entrepreneurs management By sharing it as widely as possible. Now more than ever, companies must embrace open innovation and find smart ways to collaborate.

In the onslaught of never-ending change, it’s easy for leaders to freeze and focus on survival. Do not freeze. Seize the bright side and find a unique opportunity to turn today’s obscurity into tomorrow’s opportunity.

Leave a Comment