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Innovation in Downturn-Utilizing methods to create an internal environment for innovation

by on January 20, 2010

Economic hardship has affected companies in diverse ways. Companies may take a lot of actions to cope with the situation, but one important thing that they might neglect is that they should keep innovation in mind constantly because innovation helps the company to exceed in the long term. A lot of large companies today are founded in the economic downturn and they thrive because of innovation. Big companies such as Motorola, Hewlett-Packard, and Xerox are originated in the Great Depression.

There are several reasons which cause such phenomena. David Silverman argues that limited consumer funds could result in more careful purchase actions, so the best new products and ideas have a better chance of success during a downturn because the competition could not provide the same value. Some researchers argue that recession creates a period when the competitive pecking order changes dramatically. Besides, recession is also a good time for the company to hire top talents that may not be available in a healthier financial period.

However, promoting innovation in such a harsh environment requires special techniques. In this paper, I would propose methods to help companies create an internal environment that is beneficial to innovation from two different levels, personal level and organizational level. Organization level includes maintaing clear purpose of the company and making a concerted effort to maintain and promote the key elements of innovation in the downsized organization. Personal levels includes solution to the problems caused by deflated aspiration, more idle time of employee, and internal relationship intensifies.

Economic downturn definitely places great challenges to companies. Promoting innovation in economic downturn requires manager has special wisdom and he/she could make proper adjustment when necessary. However, by making proper actions such as stressing clear company purpose, the company might be able to turn the economic disaster into a business opportunity.

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