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Innovation is anything, but business as usual

November 27, 2012

The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew, and act anew.

Rousing words from President Abraham Lincoln, taken from his 1862 annual address to Congress. It’s a call to action which has resonance with the current economic turbulence, where the need for new attitudes and new thinking to face the challenges is needed, a ‘can do’ spirit in the face of adversity.

But most businesses hesitate to adopt new thinking and innovate during an economic downturn, instead they focus on hunkering down and a low-key ‘back to basics’ existence, defaulting to a cost-reduction focus. Whilst this often secures bottom-line improvement, it rarely offers anything more than a one-off saving, and certainly impedes curiosity, experiment and thinking beyond the immediate time horizon. On the whole, plans for new ideas and investments are put on the ‘wait and see’ pile.

However, the Great Depression of the 1930s saw several successful companies that did not delay investment in their future. One was DuPont. In April 1930, Wallace Carothers, a research scientist, recorded the initial discovery of neoprene (synthetic rubber). At the same time, DuPont’s financial performance was suffering, with sales down 15% that year. However, maintaining a long-term view on their strategy, DuPont boosted R&D spending.

A lack of competitor ambition and low raw-material prices helped the company keep the cost of its research investment manageable. Neoprene, which DuPont publicly announced in November 1931 and introduced commercially in 1937, became a major C20th innovation. By 1939, every car and plane manufactured in the United States had neoprene components. Similarly, DuPont discovered nylon in 1934 and introduced it in 1938 after intensive product development.

Another example of innovation in adversity occurred in 1910. Retired U.S. Army Lieutenant Colonel Jacob Schick was mining for gold in Alaska when he got fed up with having to lather up to shave in the freezing weather. He sketched his idea for an electric dry razor while stuck in camp with a sprained ankle. He sent his plans to various manufacturers, but all were rejected. He put the idea on hold with the advent of World War I, when he returned to active duty. In 1919 he left the Army and resumed his quest, founding the Magazine Repeating Razor Company. Schick developed his ‘injector razor’ – keep the handle, swap the blades. Still dreaming of a dry shave, Schick sold Magazine Repeating Razor to fund Schick Dry Shaver. His electric dry shaver reached the market in 1929.

When Henry Ford’s first Model T rolled off the assembly line, listening to music in the car meant the passengers were singing. Then two brothers, Paul and Joseph Galvin, who had started Chicago’s Galvin Manufacturing to sell electric converters for battery-operated radios, needed new revenue after the Wall Street Crash. By teaming up with William Lear, who owned a radio parts company in the same factory building, and audio engineer Elmer Wavering, they installed the first car radio in May 1930. The next month, Paul drove 800 miles to a radio manufacturers’ convention in Atlantic City. Lacking a booth inside, he parked his car near a pier and cranked up the radio, coaxing attendees to look and listen. Orders began flowing in. In 1933, Ford began offering factory-installed radios from the brothers, and Galvin Manufacturing changed its name to Motorola.

In 1933, Ruth Wakefield, who ran the Toll House Inn, invented one of our most loved comfort foods. Her cookie recipe called for baker’s chocolate, which she didn’t have on hand. She chopped up a chocolate bar instead, thinking it would melt into the cookie. Nestlé was so impressed with the cookie’s success that it made a deal with Ruth: a lifetime of chocolate in return for permission to print the recipe. She accepted, and the instructions for Toll House Cookies can still be found on packages of Nestlé chocolate chips.

With cash scarce, Charles Darrow, an out-of-work engineer, designed a game in which players compete for riches and domination of a city’s real estate. But he probably never imagined his creation, Monopoly, would become the bestselling board game of all time. Darrow’s concept wasn’t entirely original, it may have been borrowed from The Landlord’s Game, patented in 1924 by Elizabeth Magie, which also featured property ownership and rents. Darrow named properties after the streets of Atlantic City, and won his own patent in 1935. He first tried to sell Parker Brothers on his idea, but it rejected the game, claiming it had 52 design errors. Undeterred, Darrow sold 5,000 handmade sets in a Philadelphia department store. Parker Brothers promptly changed its mind.

Thus although deep downturns are destructive, they can also have an upside. The Depression-era economist Joseph Schumpeter emphasized the positive consequences of downturns: the destruction of underperforming companies, the release of capital from dying sectors to new industries, and the movement of high-quality, skilled workers toward stronger employers. For companies with cash and ideas, history shows that downturns can provide enormous strategic opportunities.

However, some organisations feel that seeking breakthroughs is too steep a challenge and are content with simply sustaining the business, but research shows that focusing on short-term aspirations typically yields only short-term results, whilst those seeking significant breakthroughs will both identify the big ideas and also generate closer, incremental ideas along the way.

Many organisation rely on serendipitous acts of creativity to foster innovation, others take an ad-hoc unstructured approach. But I am going to remain optimistic, for one small but important reason, and that’s because adversity is what breeds innovation, a mother of necessity. Facing difficulty is a time, perhaps the only time, when people’s best is brought out in them, as shown by the examples above.

Indeed in his 1891 essay The Advantages of Poverty, Andrew Carnegie argues that, as opposed to the children of the rich who enjoy all material advantages, the children of less wealthy classes appear on the stage, athletes trained for the contest, with sinews braced, indomitable wills, resolved to do or die. He continues that these are the people who have always marched, and always will march, straight to the front and lead the world; they are the epoch-makers.

Not having had an easy life filled with all the advantages is sometimes itself the real advantage. Facing adversity has a way of summoning strength and resolve like no other set of circumstances. This will bring out the best in those of us who are prepared to work and who are unprepared to quit.

Carnegie’s views align him with a number of innovation leaders who believe that success is born out of learning from failure and capitalising on the learning. In a competitive world, not fearing failure and successfully mitigating and taking advantage of risk can be the difference between whether or not you are relevant next year. As the Roman poet, Horace, so eloquently said: Adversity reveals genius, prosperity conceals it

If someone was to build a passenger-carrying rocket for joy rides into space, would you go? Of course you would, especially if Richard Branson was involved. He’s a live wire, someone with a can do, will do attitude who doesn’t let short-term difficulties become traumatic, although I’ve had some mixed experience with Virgin Atlantic – the last time we flew the rate of progress through the lounge to board the plane was so slow that technically I was classified as a missing person. However, his innovation in mass-market long haul flights has been effective, and of course, very customer focussed.

But let’s consider Branson himself. In the last twenty years, barely a week passed when we weren’t treated to the spectacle of Branson’s mouse like whiskery face being winched to safety from some vast expanse of ocean.  His speedboats kept running into logs of wood or his balloons were always too heavy for sustained flight.

However, I like the way he’s made it in business without a pinstripe suit or an obvious predilection for golf, and despite the often-disastrous attempts to go across the Pacific on a tea tray or up Everest on a washing machine, I do like the way he keeps on trying, his boldness and attitude of giving it-a-go. He’s also dyslexic, so overcome that personal challenge too.

He may be a publicity-seeker, but he says he’ll get us in space with Virgin Galactic. My concern wouldn’t be the perilous spins, loud bangs and crashes of Branson’s previous failures as I sat there, but rather the expectation that every passenger will have to conform to Branson’s relaxed style and only allowed to fly in jumpers and corduroys, and his beardy face beaming out doing the safety procedure promo. He’s got nice teeth though.

But recall Fatal Attraction, you thought Glenn Close was dead, you relaxed and then, whoa, she reared up out of the bath with that big spiky knife. That’s one thing Branson doesn’t do. No, not lie in a bath of cold water pretending to be dead, love him or loathe him, he doesn’t sit back and think That’s it, I’ve had enough.

Obviously he doesn’t need the money, but he just keeps on with his self-belief and crashes into the next idea. He’s a disruptive force that never gives up and while his opponents are kept fully employed wondering what he is going to do, he is busy doing it, and its often something they hadn’t thought he’d do.

These are risky times. Governments are falling and countries going bankrupt. Companies are struggling to find the right balance between caution and optimism. No one knows what will happen next, and it is crazy to operate your business as though you do.But the more volatile the times, the more essential it is to keep your options open. Thus, taking less risk (closing down innovation options) is actually more dangerous than investing to preserve a number of future-focused options.

There are lessons for us all in the attitudes of entrepreneurs like Branson, their world is everything-is-possible and optimism rules. A strong sense of the possible is essential to driving innovation, that in turn leads to success. Whilst the image of the swashbuckling adventure-hungry risk-taking buccaneering entrepreneur is somewhat of a caricature, positive energy and exuberance makes a refreshing change, as the news is a constant stream of maudlin and misery.

Prudence and ‘saving for a rainy day’ is a healthy trait in many situations – and indeed the banks have shown the crisis that can result when prudence is eschewed – but there is a place for innovation at times when all expectations are low. Confidence and certainty are lacking currently and the UK, never the most upbeat of nations, is running a severe optimism deficit. Encouraging innovation maybe counter intuitive, but it’s a start. Innovation is anything but business as usual, because as Abraham Lincoln said, dogmas of the quiet past are inadequate for the stormy present. There are no old roads to new directions, if you always do what you always did, you will always get what you always got.

4 Comments leave one →
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