It is often said that an economic crisis creates the highest number of entrepreneurs. It appears that people are most creative when faced with harsh constraints and limited resources. If so, then a “crisis is a terrible thing to waste”; a quote credited to Stanford professor Paul Romer at the beginning of the crisis in 2008.
The biggest crisis is yet to come
The recent EU Innobaromenter reveal that Danish companies are being split into an A and B team of innovation. The Bs are companies that have reduced their investments on innovation (see my post). Companies of this B team are steering through the financial crisis opting for crisis management. However, they still need to face the biggest crisis yet. The loss of competitiveness to the A team, which is still investing in innovation. And to face the competition from China, India, Brazil etc.
Managing innovation: a matter of change management
I am often faced with the question of how to manage innovation during crisis. I believe innovation management is a question of effective change management. The majority of definitions of innovation contain an element of some degree of “newness” within a relevant context. Anything new will almost always imply some degree of change of the status quo. If so then successful innovation management will have an important element of effective change management.
The trick is effective ideas management
Financial crisis will lead to more constraints being put on innovation – even in succesful companies. If creativity flurrish when faced with constraints, then the trick for Company leadership is to balance the level and mix of constraints while managing the ideas and flow of creativity.
A common mistake in ideas management is only to evaluate the singular idea. I recommend evaluating ideas in terms of:
– time: should the idea be pursued today or after the crisis? Has the time passed for this idea?
– context: is the idea appropriate for our business context? Should or could we partner up to exploit the idea?
– combination: could the idea be combined with another idea(s) to become more promising? Which elements are missing for making the idea a blockbuster?
If managed properly leadership will experience a pool of creativity as employees will rally to help the company out of crisis. They are fighting for their jobs and the future on a personal level. This is a force that few companies cherish or leverage.
A crisis is a terrible thing to waste, so don’t waste it. It is possible to be effective and successful in innovation during crisis, but Company leadership plays a more prominent and important role in times of crisis than during prosperous times. It becomes an option game, where the trick is to invest in an option of the future while managing the present.
Stratety2Tactics facilitate Company leaderships to become more successful in the option game. We translate your strategy into tactical plans and operational innovation targets that can be implemented by the organization.