The global economy has been plagued by recessions and depressions in the past but has found a way to bounce back via innovation booms. Are we on the verge of another game-changer?
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By Engel Schmidl
You probably used a product containing neoprene today. The synthetic rubber compound is found in everything from fashion leggings to noise isolation material in power transformer installations.
Invented by DuPont scientists during the Great Depression of the 1930s, it became a significant moneymaker for the American chemical giant in the 1940s when the US Defense Department used it for military applications. It continued to make a lot of money for DuPont for decades after.
But neoprene is far from the only product or enterprise to emerge from the chaos of crisis. The radical disruption brought about by events like wars, stock market crashes and even pandemics can create fertile ground for those able to adapt and deliver in troubled times.
Supermarkets have taken on a central role in people’s lives during COVID-19, with chains like Coles, Woolworths and ALDI doing a roaring trade.
Interestingly, the supermarket concept was born at the height of the Great Depression. Michael Cullen opened what is regarded as the world’s first supermarket, in Queens, New York, on August 4, 1930. The King Kullen Grocery Co. store ushered in the supermarket era. The private family business is still in operation today, with 29 outlets across Long Island and New York.
On October 23, 2001, Apple launched the iPod personal music player. It was six weeks after the terror attacks of September 11. Most companies were too shellshocked at the time to attempt something so audacious, but Steve Jobs saw things differently.
Asked why he chose then to unveil the now-iconic product, Jobs said: “It’s a tough time, but life goes on. It must go on. I think we’re feeling good about coming out with this at a difficult time. Hopefully, it will bring a little bit of joy to people.”
These are just three examples of successful businesses or product innovation born during tough times. There are thousands more.
The pandemic presents challenges of a magnitude we haven’t seen since at least the Great Depression. However, shrewd pundits are tipping history will repeat itself, and innovative companies and talented entrepreneurs will once more play a vital role in rejuvenating the economy.
What qualities will enable businesses and entrepreneurs to rise above hard times?
Related video: Leading during a crisis. Watch now.
Resourcefulness, agility and compassion
Dr Rachel Doern is the Senior Lecturer in Entrepreneurship at the Institute of Management Studies, Goldsmiths University of London. She specialises in studying how entrepreneurs and businesses operate in times of crisis.
She says COVID-19 will have a profound impact on the business world, from accelerating the uptake of remote working through to rethinking supply chain management. For entrepreneurs and businesses to prosper, she says resourcefulness, agility and empathy will be crucial.
“Utilising slack resources, taking advantage of existing resources and support, and continually building new resources will provide a buffer for businesses and give them the space to identify and exploit new opportunities,” she says.
Dr Doern says the rapid onset of the crisis is already forcing businesses to adapt to meet new market demands. She says some of these pivots may be temporary, while others will be longer lasting.
“Many smaller businesses are moving to online delivery. Some are partnering with other local businesses to make use of their distribution channels. Restaurants are repurposing to deliver foodstuffs and pubs are turning into click and collect locations for basic groceries as some supermarkets struggle with supply chains. Fitness centres and gyms are renting out their equipment. Breweries and distilleries have started making hand sanitiser.”
Beyond overcoming the operational obstacles of the current climate, Dr Doern says businesses that display emotional intelligence will be able to better serve and connect to their customers.
“Those businesses that understand how the coronavirus has profoundly impacted their customers and stakeholders may be able to respond in a way that not only addresses their immediate needs but forges with them more meaningful and enduring relationships.”
Science, innovation and research
The mythic tale of the heroic entrepreneur is often told with little mention of the institutional supports that made their success possible.
But where would Sergey Brin and Larry Page of Google, Mark Zuckerberg of Facebook and Jeff Bezos of Amazon be without the groundbreaking work of computer scientists at the US Defense Department’s Advanced Research Projects Agency (DARPA) in the late 1960s?
The truth is that scientific and technological innovation, and its commercialisation, largely depend on governments, universities and the corporate sector working together.
Professor Thomas Spurling AM, of the Centre for Transformative Innovation at the Swinburne University of Technology, has worked extensively across the private and public sectors for more than 50 years. Among his long list of honours and achievements, Professor Spurling was instrumental in the development of polymer banknotes in his time at the Commonwealth Scientific and Industrial Research Organisation (CSIRO).
Professor Spurling says Australian governments during both world wars focused on science and innovation as a means to reconstruct the country’s economy. He says the current situation calls for a similar focus.
“I think history tells us that unless we enlist science and innovation, we’ll be in some trouble,” he says. “We have to use our ingenuity to restructure some of our industries in a much greater internationally competitive way.”
He says Australia’s science and innovation resources are far greater now than after both world wars. “We’ve got CSIRO, the university system and the medical research institutes, all of which are very strong.”
Perhaps the virus itself may even inspire the local scientific research community and commercial innovators to collaborate and develop new products and businesses.
“Why can’t Australia become the world leader in antiviral medicines, vaccines and treatments? We have the resources to do it. Why don’t we have a national effort to develop that, as an example? Now, that may not come up because other countries might be doing that, but we’re well placed to do it. We could finally get a research-based pharmaceutical industry in Australia.”
Creativity, design and strategy
Watched everything on Netflix already? Sick of YouTube? Maybe you’re ready for a virtual adventure.
With the social isolation restrictions placed upon us right now due to the pandemic, Professor Gerda Gemser thinks new means of escape and entertainment might be just around the corner. Even once the worst of the crisis abates, international travel might continue to be complicated and financially out of reach for many.
Could the long touted potential of VR finally be realised?
“I think virtual reality might be a fascinating growth area,” says Gemser, the Full Professor of (Corporate) Entrepreneurship at the University of Melbourne, Faculty of Business and Economics. “I think we might see more investment in things like virtual reality because even if we are not going to travel anymore, we still want to have our escape.”
Professor Gemser specialises in design thinking, a discipline which in recent years has moved well beyond its original domain of the creative industries and become a staple at major companies like IBM and 3M.
She says the pandemic has highlighted that businesses require creative thinking to identify opportunities in a fast-changing landscape, as well as a more holistic approach to problem-solving.
“It’s about thinking on your feet, trying to be flexible and agile. You have to be able to react to what comes across your path. Of course, what we see now is [that] we need those characteristics to react to something that has hit us in a way we didn’t expect.”
She’s wary of making predictions about how deeply the pandemic will change consumer behaviour and corporate thinking. Still, she thinks the abrupt and damaging nature of the crisis will leave its mark.
She says examples like gin distilleries turning their expertise to producing hand sanitiser show creativity and pragmatism can co-exist.
“I think it’s brilliant,” she says. “It’s not necessarily only from a humanitarian perspective, but also because they have to keep themselves afloat and keep their people employed.
“It gives you hope that, ultimately, we’ll be able to get through this.”