Recession is the mother of innovation
Recession is the mother of innovation
Introduction
Necessity is the mother of invention and what could be direr than the global recession that plunged the world’s most powerful economies into despair. The recession that has plagued nations across the world took birth in the US.
When noted investment banks and companies collapsed as a result of the financial meltdown, it was only a matter of time before innovators and entrepreneurs came up with ingenious ventures to cope with the crisis. New ventures financed with seed money and funding from private equity firms and investors took up the challenge to flourish in adverse economic times.
Investments from funders as well as government initiatives have led to the emergence of entrepreneurs in diverse fields such as information technology and pharmaceuticals.
Recession is definitely the mother of innovation.
Viewpoint
• The most important effect of the recession has been to spur the leading companies to think out of the box and come up with services that offer value to the customers. From personalized products to free trials, companies have started employing innovative tactics to attract and retain consumers. They are also becoming more alert about how to promote their products in fresh and original ways as a result of the recession.
• As spending power has diminished due to the adverse impact of the recession, people are becoming wary of fancy products that are associated with hefty price tags. This has changed the way manufacturing firms are viewing the domestic and international market. For instance, while luxury brands are still creating niche products, even noted companies are now focusing on products which are mainstream that will attract the masses.
• The recession has also caused small companies to become more innovative. From using online marketing techniques and social media campaigns to establishing strategic partnerships with competitors, companies all over the world are exploring new avenues for generating revenue.
They are also ensuring that they are able to flourish through methods such as moving the business online. By reinventing themselves, they are overcoming the adverse impact of an economic meltdown.
• Companies and investors are now looking at the wider picture and opting for innovating branding strategies as well. International brand management has become a core functioning of sales and marketing divisions across the corporate sector. Small firms as well as global companies are using new ways to market themselves across regions and countries.
Establishing a global presence and improving their visibility through innovative marketing strategies has been the reason why many top firms are not only surviving, but actually thriving following the recession.
• Noted surveys have found that firms are coping with the downturn by diversifying and producing innovative items to widen sales channels. They are expanding overseas to take advantage of the booming consumerism in nations with massive populations.
Conclusion
Every dark cloud has a silver lining. The recession which destroyed the livelihoods and businesses across the world’s most powerful nations also spurred innovation among companies worldwide. Corporate management and entrepreneurs as well as political leaders are working to use innovative methods for countering the harmful impact of the recession.
While recovery is still far from certain for some nations across the world, the negative impact of the recession is receding into the background as many companies seek to work towards harnessing innovative technologies and marketing strategies to combat the effects of the meltdown.
Discussion
- Recession is the mother of innovation -Lubna Lakdawala (03/27/14)
Recession is the mother of innovation
We have always talked about recession in the negative sense. Words like economic recession, global meltdown, economic crisis, depression have always created a dread among people. Companies take drastic measures to lower their expenditure. People are advised to spend wisely and save for the future. Everywhere we look, people want to know if we're in a recession. Letting all these negative impacts aside, we should also realize that recession also has a positive side.
The positive side of recession is INNOVATION. Economic recession makes us think! What different ways have we thought of today that will earn us some extra cash? Recession makes a company or a person desperate for some increased revenue thus leading to innovative ways to earn more. Seriously, in this world where consumerism is highly encouraged, it has made everybody wiser than before. The advantage of recession is that, the more we think of it, the more creative ideas we get. And that is our first step towards successfully dealing with recession.
Can recession be the mother of innovation? After all, many of the world’s multibillion-dollar corporations, from Disney to Microsoft were founded during economic downturns. Bill Gates founded the technology giant in the middle recession in the US. Microsoft emerged to become one of the major application software vendors in the home computer industry. The reason for this is always attributed to the fact that he innovated and launched something which changes the world at large. His innovation was not only beneficial for him as an individual but the entire country benefited because of it.
It is considerably easier to innovate and start new things during recession because during recession the operating costs tend to be cheaper talent is easier to find because of widespread layoffs, people are willing to compromise thus making it easier for the employer to find eligible candidates. Another important factor of recession which leads to innovation is that there is less competition. Many companies play safe during recession and frankly, many players are taken out of the market due to foreclosure thus giving a chance to innovate and explore the market and earn increased revenue.
It is common that during recession many companies start laying off employees as a method of cost reduction. Doing this is not always the best answer. This mentality will do more harm than good. Rather companies should focus on innovative cost cutting methods. E.g. There is a huge place for innovation in all of this and companies ought to use the internet in creative ways to help lower costs but sell more. As it is only innovative solutions and products etc that will give companies a leeway in this economic slump.
Like the old saying "Necessity is the Mother of All Invention”, recession thus makes it necessary for companies to innovate. Failing to innovate can become a great mistake by the companies. Innovation is the only way companies can survive this downturn.
