Til forsiden

Innovation’s purpose is to prepare for the future.  That’s common wisdom.  But what if current conditions are so profound that they jeopardize an organization’s future, as is too often the case today?  In that case, it’s time to shift perspectives and begin applying innovative techniques to survival in the present.  The key difference between conventional innovation (for the future) and innovation for survival is the speed with which innovative solutions must be developed and implemented.   Also, innovation cannot be loosely applied; even adhering to a strategic plan may project the inflection point too far into the future to have value.  By then, the organization may be in extreme pain, unable to make essential changes – if it hasn’t already expired!

The first step in surviving is to survey the damage that the organization has already sustained, the damage that it is currently sustaining, and the damage that it may sustain in the foreseeable future.  In other words, the organization’s survival champion must quickly acquire acute situation awareness relying on information networks that exist within the organization, mechanical and human.  Anticipating today’s crisis, an article in the November 2001 issue of the Harvard Business Review, “Moving Upward in a Downturn,” by Darrell Rigby (Product No. R0106F, available for purchase here), describes a “storm warning” system that can be implemented to identify and plan for oncoming economic, industrial, and market disturbances.  Rigby then proposes a number of strategic and tactical responses – “strengthen your core business,” “bargain-shop for acquisitions,” etc. – all of which anticipate relatively quick recovery, blue skies “after the storm.”

Writing during a relatively mild recession, Rigby can be forgiven if his prescription for action seems inadequate given today’s extremely negative conditions.  Recovery is nowhere in sight and experts refuse to speculate when it might arrive.  As the economic crisis spirals downward, is there still a way that innovation can contribute to an organization’s survival?

A November 2, 2008, item in the New York Times Unboxed series, “It’s No Time to Forget About Innovation,” by Janet Rae-Dupree, takes a longer-term POV.  Surveying the field, Rae-Dupree finds that innovation is essential to organizational survival regardless of the duration of the crisis.  Historically, seizing immediate opportunities to innovate for short-term cost savings (the bottom-line) and increases in revenue (the top-line) often results in radical innovations that stand the organization in good stead when recovery occurs – but often, even sooner.  Rae-Dupree quotes Chris Shipley, DEMO Conference executive producer:

Hard times can be the source of innovative inspiration. “Some of the best products and services come out of some of the worst times,” [Shipley] says. In the early 1990s, tens of millions of dollars had gone down the drain in a futile effort to develop “pen computing” — an early phase of mobile computing — and a recession was shriveling the economic outlook.

Yet the tiny Palm Computing managed to revitalize the entire industry in a matter of months by transforming itself overnight from a software maker into a hardware company.

“Our biggest challenge right now is fear.  The worst thing that a company can do right now is go into hibernation, into duck-and-cover. If you just sit on your backside and wait for things to get better, they’re not going to. They’re going to get better for somebody, but not necessarily for you.”

By far and away the most commonly recommended solution to survive hard times and thrive in the eventual recovery, whether it takes months or years, is to embed in the organization a culture of innovation that is constantly evolving new ideas, concepts, and products and services.  An Italian-French study published in December 2007, Product Innovation and Survival in a High-Tech Industry, by Lionel Nesta and Roberto Fontana, discovered that remaining on the frontier of technology insulates a high-tech firm from dire prospects by making it attractive as an acquisition in the worst case and as a preferred vendor and investment vehicle in the best cases:

We find that location near the technological frontier is an important determinant of firm survival. Firms located near the frontier are also more likely to be acquired than to exit by failure if they cannot survive. This suggests that product location in the technology space acts as a signal of firm quality. Possessing a substantial stock of intangible capital, on the other hand, determines neither exit via failure nor exit via acquisition, although it increases the probability of surviving.

As in so many instances, the contribution that innovation makes to organizational success – in this case, to organizational survival – is inexactly known.  But two things are clear.  First, not to innovate is to risk everything.  Firms that merely pull in their horns to wait out a crisis disproportionately succumb before the recovery arrives. Second, great successes occur during crises when competitors are unable to respond or conditions are already so risky that radical strategies can be applied without fear that they’ll make things worse.  Sometimes, these risky strategies have positive outcomes.  To paraphrase an axiom of gaming, “If you innovate, you might lose – but if you don’t innovate, you definitely will not win.”