One fine summer day on my one hour commute through the Green Mountains of Vermont, I was reflecting on the observation that while most business have suffered varying degrees of decline in the Great Recession of 2008, many have not. Why?
Not This or That
It’s not that some business sectors suffered while others thrived as in the dotcom bubble of the nineties. With the possible exception of healthcare, virtually every business sector declined, some catastrophically. It’s not that those businesses which thrived were necessarily better managed as businesses. Many very well run operations declined while some not so well run still grew. It doesn’t really even have to do with profitability. Businesses with declining sales continued to make profits and growing business often lost money.
One Answer: Innovation
I think the answer is Innovation -- innovation in technology, innovation in markets, innovation in products – something new under the sun. Those businesses which offered new ways of solving real problems, with good value, found customers. Of course they benefited from the simple equation that the smaller one is the easier it is to grow. However, introducing a me-to product into a declining market does not offer a promise of growth, because in a declining market, to grow one must take customers from others and one cannot do that without a better mousetrap. A steady flow of innovative products and services and processes, with their many failures but several successes, will propel a business across those inevitable dips, slowdowns and recessions with minimum pain.
Hmmm... That’s easier said than done and this blog is not going to venture where many have gone before, where tomes have been written, where conferences and workshops have been endured. But suffice it to say, every manager worth her salt should spend some time there and every executive should commit her organization to Innovation as a fundamental value and back it up like a bulldog.
So...Innovation is the engine of sustainable growth. Excellent! Start innovating.
But Not the Only Answer
It seems certain that innovation is not a sufficient condition of success. Many a great idea, flawlessly executed has fetched up on the rocks of poor financial management, unfair employment practices, and clumsy marketing. But I am quite convinced in my ruminations in the Green Mountains that it is a necessary condition of sustainable business growth.