In the modern western world, it’s considered axiomatic that struggle and adversity stimulate innovation. As a concept it sits side by side with ‘creative destruction’ at the heart of capitalism. So right now, with the global economy in a period of adversity that seems to be lasting for a very long time, we should be witnessing an explosion of innovation.
Is this in fact the case?
First of all, let’s look at why it should be. The longest economic boom in history has come to a somewhat cataclysmic conclusion. During the boom, it’s safe to say that innovation flourished. Since 2002, the digital economy has taken a firm hold. Companies like Facebook, Google and LinkedIn have appeared as if from nowhere and found the holy grail of monetising the Internet through innovation in technology, business and marketing models. Apple has innovated its way back from the brink of disaster to become the biggest company in the world. These are the marquee brands of the tech boom innovation fairytale. There are thousands of others.
Beyond the tech sector, innovation has been hard at work in many other areas of the economy. In fact, it is innovation in the financial sector that is widely blamed for the abrupt and drastic end to the good times, which leads us to ask whether or not innovation is always a good thing. But let’s leave that for another day.
So now that the party’s over, are we seeing firms compete for a shrinking pool of business by accelerating the innovation?
Sadly, one would have to say no – although a lot of firms are talking more than ever about it, their investments tell a different story.
As behavioural economics shows us, people are inherently inclined to loss aversion: we overestimate risk – more so in times of uncertainty. And innovation is inherently risky. In moments of crisis, risk is not widely or enthusiastically embraced. Most firms – like most individuals – react to danger by curling up into a ball – trying to return or cling to security.
So is it simply that when times are tough, innovative thinking stands out from the crowd? Or is it that good ideas, and the trajectory on which they can place a business, are more noticeable when the market is unforgiving of mediocrity?
Or is it that rather than creating new ideas – or inspiring people to develop them – crisis creates a broken landscape, where new ideas are more likely to flourish. New shoots cannot thrive in dense environments; they need space – and turmoil in the earth – to survive. Perhaps the scorched earth of crop burning takes the analogy too far, but the current crisis does have its parallels.
After all, although the Apples and the Googles rose to prominence during the greatest economic boom in history, the innovative thinking at their heart - the groundwork for their ultimate success – preceded the boom; was, in fact, perhaps a response to the turmoil of a previous crisis.
For us in the ideas business, it’s useful to realise that while new ideas are our stock in trade, there’s a rhythm to the speed and willingness with which the rest of the world will adopt, develop and promote them. Moreover, the answer is not always ‘new’. Often it is about looking with new eyes. And rather than focusing all our energy on novelty, we should be striving to see past the complexity and simply solve the problem.
When the pressure is off the individual to ‘imagine’ a way out of crisis, then the group can combine its energies, existing thinking and new ways of understanding to overcome fresh challenges. And this is where there is opportunity in crisis – to build closer, more positive and healthy communities, with flourishing ideas on broken ground.
