When times are hard, we have to wonder what’s next in terms of innovation. The best strategists are saying that times like this result in even more emphasis on short-term thinking, meaning that innovation, which tends to rely on long-term planning, will suffer.
According to psychologists, people under stress tend to see fewer options. Their vision narrows; the mind’s creative system shuts down. But, given these circumstances, we need innovation more than ever – especially something called “disruptive innovation” which profoundly impacts how companies do business. In fact, leading strategists believe we are going to see more of it in the longer term.
There are many examples in history of nations and companies innovating in the face of intense pressure.
For example, while Great Britain was the first nation to undergo industrialization, they were soon matched and overcome by other powers such as Germany and the United States. Rather than try to match the advantages of those bigger and more populous nations, however, the British focused on trade. They controlled the seas, and had a large empire to serve as a captive market. By the late 19th Century, Great Britain was overshadowed by Germany and the United States, but remained the premier economic power for many decades by virtue of its globe-spanning trade and finance network.
Another example can be found in Hollywood during the Great Depression. Hard times meant a shortage of financing for new production, and at the same time a highly disruptive new technology had been introduced during the darkest depths of the Depression: talking pictures. That meant the studios had to not only continue producing films, but invest in new technology, and the technicians to work with it.
And yet, despite those immense challenges, the 1930s is remembered by film historians as a golden age for Hollywood. It was certainly a profitable one, as suffering audiences flocked to the theaters to escape their troubles.
A more recent example is the auto industry of the 1970s. Here in North America, the previous decade had seen something of an arms race among carmakers, with more and more powerful cars being produced. Then suddenly the price of oil skyrocketed and new environmental regulations, including the adoption of unleaded gasoline, killed off the muscle cars.
But carmakers responded by turning out fleets of much smaller cars powered by far less powerful and more fuel-efficien
t engines. The emphasis switched from raw power to efficiency, a priority that for many carmakers like Toyota and Honda continues to this day. Today’s Honda Civic, for example, has an engine with a far
larger displacement, and much more power, than its 1970s ancestor, and yet gets much better mileage.
Given the innovations that resulted from these and many other challenging moments in history, it’s hard not to
wonder what innovations will come out of the present downturn.
If the past is any guide, we will either be blessed or cursed to “live in interesting times.”
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