January 23rd, 2008 | |
Posted in Business
1. During recessions, consumers generally look for alternatives to their existing spending habits, usually as a means to save money. As pointed out by Next: Innovation Tools & Trends, maybe consumers will look for products that help them save money but allow them to still achieve what they want? Let’s call this the Productivity-Efficiency Paradigm - a Mr. List innovation! When money is easy and things are good, consumers/businesses spend more in order to ultimately achieve greater productivity. When times are tough however, the goal is to reduce spending while maintaining the same level of productivity.
2. While consumer spending habits over the upswing in this most recent economic cycle have revolved around “value-for-money” (think of how many luxury cars you see in Wal-Mart parking lots), this concept becomes more acute during recessions. Purchases become increasingly based around wallet-friendly goods and services, as opposed to the latest “must-haves.” Having said that, innovation opens up many doors that allow purchasing habits to achieve both.
3. Innovation tends to be a virtuous circle - exciting new innovations inspire competition, which inspires innovation. When the imagination is inspired, money tends to follow. This also suggests that the venture capital community, which generally closes its purse strings when the economy goes south, should actually increase investment spending, which in turn will inspire more innovative thinking among entrepreneurs, arguably the greatest disruptive force in the economy.
4. As Paul Kedrosky points out in his book Coping With Recession, “Investments in innovation may trigger off other forms of investment which, in turn, help to stimulate the economy and bring forward the end of the recession.”
5. As simply put here, as a recession settles in, a company should work harder at developing the next big thing. By doing so, you would be well placed in the market when the economy picks up again. Can anyone say Apple?
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