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Does A Recession Inspire Innovation?

April 28, 2010

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When a recession hits our country like it has here recently, it puts even more pressures on companies to perform well. Pressure applied by the consumers investing in their brand. When the economy slumps, conusmers have less money to spend, therefore using more discretion when making purchasing decisions. This means that your customers will want to get the most for their money aka get great products cheap. It’s times like these when consumers have the most influence on the market demand. Companies are even more compelled to cater to the needs of their buyers since there is less buying power but the same, if not more, competition to get hold of those purchasing dollars.

Companies are forced to do more with less. For those who are complacent and not led by future-minded individuals, a recession can lead to disaster. Sure, even the best and well led companies will experience hurt from a recession (almost everyone does) but it’s a matter of minimizing that negative impact and coming out of the economic downfall even stronger than before. When their backs are up against the ropes, companies are forced to do something to weather the storm and be stronger in the future.

They have to be innovative.

Creating new products and coming up with more cost-effective ways to deliver products are just a couple of the results of a recession. Sustainability pratices and #CSR have really come into vogue lately in the corporate world. When resources (environmental and financial) are scarce, we are forced to make what resources we have go further than before. They have to find out new ways to make their products cheaper for their client base so they can gain some potentially lost business as a result of the recession and retain that business once the dust settles. These ways may result in lower profit margins in the short run. However, provided they help a company “thrive” in a recession, these decisions will reap greater long term dividends.

Do businesses only innovate and change when they have to? Tough times hurt but they can help re-structure a company for the better. It’s like the saying goes, “What doesn’t kill us only makes us stronger.” What companies do you see being stronger as a result of the recession?

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One Comment leave one →
  1. April Hawkins permalink
    April 28, 2010 3:01 pm

    Good article!

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