Putting a Crisis to Work: 3 Starting Points for Innovating During Downturns
Much is made of the need to commit to innovation during economic downturns. Most managers are familiar with some variant of the chart comparing the post-recession rebounds of firms that continued to innovate versus those that didn’t. But as long as that is interpreted in narrow financial terms – as allocation of budget to innovation – it can feel like unhelpful advice. Sure, it would be nice to keep investing, but the budget is simply not available.
This post aims to broaden the idea of committing to innovation beyond simply the allocation of funds. In some important non-financial ways difficult economic circumstances can actually improve the conditions for innovation. Here are three starting points for how managers can look past their shrinking budgets and find ways to put the downturn to work for their innovation objectives:
Mindset: Harness the new appetite for boldness
When the status quo becomes self-evidently insufficient, senior decision makers and budget holders become more willing to reconsider first principles, to consider unfamiliar markets/business models, or try out new partnerships that would feel like a distraction in ‘normal times’.
The bold opportunities that looked like a risk two years ago now look like a lifeline, formerly complacent employees have a new sense of urgency, and the radical thinkers have an opportunity to shine.
Capacity: Experiment with new potential from under-used assets
Not true in all organizations, but lean economic times often come with reduced customer demand and teams/equipment operating at below capacity. That spare capacity can present opportunities for experimentation and innovation.
As we’ve discussed in previous posts, the entrepreneurial approach is to start from the assets you have and imagine new outputs from creative recombinations. It’s a powerful and cost-efficient approach that becomes much more practical when some of those assets become idle, or team members become hungry for new ways to demonstrate their value.
Scope: Think big and drive systems across the business
In large organizations, siloed thinking and bureaucracy are the perpetual enemies of innovation. Great ideas die not from rejection, but from sinking slowly into a quicksand of stakeholder engagement and coordination overhead.
Those silos and many stakeholders may be tolerated when business is good, as part of the process for efficiency of core processes.
But that willingness to tolerate can dissipate when business is less good, providing an opening for innovators to think more boldly about system-level changes that cut across the org chart, and to find the senior sponsorship to make it happen.
Moving from why to how
Across these three dimensions — Mindset, Capacity and Scope – there are reasons for corporate innovators to move past making the case for why they should innovate, and to get onto the how of making it happen.
Look forward to better times ahead, but as one great leader in time of crisis, Winston Churchill said during the bleakest days of World War II, “Never let a crisis go to waste”.
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