The Crisis is a terrible thing to waste

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?

It’s personal
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.


Innovation Management or Leadership: A difference? |

My first article as Guest Editor on Read it directly at

The countdown has started; the last bilateral negotiations are becoming frenzied as we approach the opening date for the 2009 United Nations Climate Change Conference in Copenhagen. A pattern is emerging where countries are embracing this opportunity to show leadership and managing the event as a contingency. The pattern is one of A and B teams of countries, a pattern similar to that in Danish companies investing in innovation.

[From Innovation Management or Leadership: A difference? |]

Crisis or Transformation Management

Browsing through the headlines of today’s issue of the Wall Street Journal, one can see how companies of all sizes struggle to kept afloat amid the current crisis. Most companies feel the effects of the crisis directly or indirectly and have defaulted to crisis management.

Cost cutting by numbers

Traditional crisis management is often a numbers’ game, where CFOs and number crunchers excel. The company head count is often found among the many items in the Excel sheet, and subject for a percentage change. The default approach is often to close entire sites or execute companywide layoffs throughout all departments, which can result in disruptions to the company productivity and surviving employees left with Post Layoff Distress Syndrome, PLDS; a new term born during this crisis.

By cost cutting through a numbers the company runs the risk of loosing key employees as the cost cutting also hits the well performing teams and departments, or invaluable knowledge. Knowledge that is both expensive and difficult to regain or build up.

Cost cutting through insight

There is however another, more insightful way to execute the layoffs. Partnering with the HR department and the methodology of Organizational Network Analysis, the crisis management team can obtain innovative insight into the inner workings and dynamics of the organization. This insight will permit the team of either validating a thesis of which sites, departments, or offices to shut down, or identifying informal clusters within the organizational matrix that would be hash hit by layoffs.

By cost cutting through insight the company leverages dynamics of the information organization to remain agile and resilient in times of crisis, because of the objectivity of the Organizational Network Analysis methodology.

Transformation management

Default reaction to crisis is crisis management and often cost cutting, when a more suitable reaction would transformation management. An added benefit from the using organizational insights when executing cost cutting initiatives is that the results can be used in transformation management. It is possible to identify change agents and resistors and their impact on the organization.

Only 20% of researched Danish companies had a formal definition of innovation

Yesterday I had one of those experiences, where you want to stand at the top of the mountain and shout. A friend of mine is working within an organization that just recently went through a major restructure. Instead of addressing the issues of integration the joining entities, the management launched an “innovation” project to push the problems down into the organization. Rationale: we need to think outside the box to make this new organization work!

Question: how can serious efforts to spur innovation gain momentum, when the term innovation is used so randomly and without discrimination?

As part of my MBA dissertation last year I conducted a study in Denmark on the topic of Open Innovation within Danish companies. One of the findings were that only a rough 20% of the questioned companies had a formal definition of innovation. This was disturbing for various reasons: first, because enthusiastic employees repeatedly learned what was not part of the “innovation strategy”, when presenting their ideas, which their only do a 2-4 times before resignation; second, because organizational creativity is not directed to the benefit of the company, which amid the current crisis and management’s repeated cry of creativity within the organization impacts the bottom line; third, because any innovation attempts are almost destined to fail thus reinforcing management’s notion of innovation is not paying off.

Question: why doesn’t management define innovation to address their strategic priorities and bring clarity to a term, which is fluffy to most people?