Inventive thought and innovation are usually seen as a prerogative reserved for markets in times of growth, while, in fact, during slowdowns and recessions, there are plenty of good reasons to be creative, to invest in innovation, develop innovative strategies and even launch new products.

Past recessions have proven themselves as times of opportunity for growth and new product launching (Kimberly-Clark Corp.’s Pull-Ups Training Pants, Axe body spray, Crest Whitestrips, the soap opera genre, etc.). In previous posts we explained why it is worthwhile to implement creative thought (and actions), especially in turbulent times. Moreover, during slowdowns and recessions, there are plenty of good reasons to apply SYSTEMATIC inventive thinking. After all, thought-specific guidelines help us overcome our fixednesses and eliminate knee-jerk reactions, creating products that differ from what we have become accustomed to.

The steps companies take during economic crises tend to be, as mentioned, instinctive. If we were to display the common responses on a graph where the X axis is the severity of the crisis and the Y axis is the intensity of our instinctive actions, we would get something that looks like this:

As the recession worsens, more layoffs are evident, wages are cut, welfare benefits are withheld, training is put on hold etc. But what would happen if we would artificially create or visualize a graph displaying the opposite trend, or with a straight line?

If we try to change the graph, and even if it is only for the exercise, it would force us to think in a different way and be more creative. In reality, this would possibly make us think and, in turn, act differently. Let us take, for example, the action: “employee layoffs”. The reverse line depicts a reality in which as the crisis worsens, fewer employees are laid off, and manpower might even be recruited; the straight line depicts a situation where the severity of the crisis has no affect on manpower. It is true that such a reality is not always possible, but could we imagine a reality in which a company recruits more workers as the slowdown becomes more severe (and I am not talking about a company that specializes in going bankrupt)?

Let us imagine that we own a somewhat exclusive chain of cafés with average distribution of branches. Intuitively, our brains tell us not to open more branches during a recession. That is to say, as the crisis worsens, fewer branches are opened and, possibly, existing branches are closed. But let’s force ourselves to imagine the opposite scenario. The more severe the crisis, the more branches we open. Of course this is not always possible, but would it be to our advantage?

We could open new branches that do not share the same chain characteristics as the existing branches. Instead, we could use mobile coffee stands, functioning each a mini branch of the chain. What would the advantages of such a move be? We could significantly improve chain distribution, at a much lower cost than opening new branches that stand up to the elegant standards of the chain. We thereby increase customers’ awareness of the brand. Another idea could be to limit the move and declare that stands are positioned in each neighborhood for as long as the recession continues, suggesting that quality coffee is a necessity and not a luxury for our customers. We would probably not be able to afford such a step in normal times as it damages the stylish branding of the chain. But the time limitation as well as linking it to the recession and identifying with the customers’ needs, enables us to implement the idea. We could reinforce the idea by hiring people who have lost their jobs in the current crisis, thereby boosting our brand’s image and esteem.

The entire concept - mobile stands, the time limit, and employing ‘victims’ of the crisis—is not trivial for turbulent times. Like many good ideas, it is specific: it is a good idea for the time, during the recession and for the specific industry – coffee chains. It does not mean that any business owner should open more branches during a recession. For this reason, when trying to think of non-trivial solutions to a problem, it is important to be specific and not to think of generic solutions which need to be right perpetually and across the board.

The thinking tool used here is called Attribute Dependency. The idea is to force us to imagine a different – sometimes opposite – relationship between the variables. In this case we reversed the relationship between the variable “severity of crisis” and the variable “number of layoffs”. Can you come up with non-trivial solutions for the economic crisis in a specific field? Can you think of other variables whose relationship should be reversed to come up with non-trivial ways of surviving the situation?

We explain that when our customers want us to innovate and bring them something new and exciting, this doesn’t necessarily have to be a product. It could be a new promise, new usages or new packaging for an existing product. A classic example comes from Orbit: Remember when chewing a gum was something you did just to freshen your breathe? Orbit reinvented the chewing gum category by promoting the anti decay benefit of its chewing gum.

We believe that developing new promises is always a great way to innovate, but in a time of recession we may need new promises even more.

Think about the way consumers’ behavior changes during a recession:
- We eat less outside, and we prefer to stay in
- If we do eat outside, we may order less than usual
- Because we don’t go out as much, we host more often
- We think twice before spending money and we look for a rationale for our purchases
- We may still buy presents for our kids, but fewer ones
- We tend to compare prices more than ever
- If we can, we put more money aside for a rainy day.

If I were a company in the food and beverages industry, I could launch an innovative product that is new to the market. This move could provide many advantages: demonstrating leadership during a downturn benefits the company’s reputation; the new product could help the company acquire new consumers looking for feel-good factor and excitement; it helps the company cheer up and motivate employees by conveying the message of good business.

Yet, I want to offer another option. Instead of focusing on new products, we may want to try focusing on new promises. Let me explain:
- If people eat out less – we can launch a new kit that “brings the restaurant to your home”. We could try bringing them the experience of eating out – inside.
- If people host more often, let’s help them be proud of themselves.
- We could launch new packaging that creates new “eating” experiences
- We could collaborate with other companies to create a complete meal pack.

We could probably think of many other ideas, but the principle is that we can really extract the best out of this time, not as a cliché but in reality.

One of SIT’s main principles says that constraints foster innovation. People usually agree with this principle but we have learnt from our experience, that when we have many constraints we don’t usually say something like: “Cool! We have lots of constraints, we can be really innovative! Let’s use them and make a difference!” Usually the opposite is true: we feel depressed, we feel anxious, we don’t like ambiguity and we don’t feel safe enough to innovate.

Maybe the development of new promises could open the new window that we are searching for: a way to bring more opportunities for growth without needing long development processes. We can achieve this growth by focusing our attention on innovating the way we “package” and “present” our existing products, in a way that transforms them into a new offer that brings real value, a new message and hope to the market.

If you have any examples for such products, I will be happy if you can share them with us.

Since the company is not a client of ours, I wasn’t directly affected by this decision, but still, I was curious to understand what stood behind it. Another victim of “the Situation”, I said to myself, but to my surprise he went on to explain: “We have so many good ideas now that we need to pause with innovation and focus on implementation.”

This approach is, in my eyes, a symptom of one of the biggest and most common misconceptions in the field; that innovation is all about coming up with ideas of what to do (products, services, whatever it is you do). The corollary is, obviously, that once you have these ideas you don’t need to be bothered with innovation any longer, all you need is to “just” implement.

In reality, the situation is nearly the opposite. The level of innovation invested in implementation is not lower, and very often higher, than required for coming up with the ideas in the first place. But this is hardly news for anyone, such as the manager mentioned above, who is involved in the day-to-day of innovation.

So why is the mistake so common? It is due, I think, to the fact that people tend to see innovation as a type of activity rather than a quality of performing activities; people see innovation as an answer to the question “what are you doing?” while in fact it is the answer to “how are you doing, whatever it is that you are engaged in?”

In September, I was talking to a lady who is a director-level manager in a large company. “The last thing I need now is innovation,” she said, ” We’ve just finished a successful innovation project, resulting in an amazing new product idea, which I’ve been trying to convince my VP for the past 3 months to OK, but with no success. What’s the use of innovating if they are going to kill your ideas anyway?”

To me, it sounded like what she most needed was innovation. From our point of view, this was a classical case of an urgent need for some problem solving, the problem obviously being the need to convince a stubborn VP. And examples of this type are abundant: a VP who doesn’t need innovation, because he “just” needs to get his division organized since they keep failing at implementing the great ideas in their pipeline; and of course, the innumerable CEOs who can’t talk about innovation now, because due to “the Situation” they see a decrease in sales, profits disappearing, and immediate danger to cash flow.

My conclusion: all those people who are too _______ [busy, overworked, full of ideas, engaged in a huge project] to innovate, are precisely those who are most in need of a change in the way they are handling whichever “too” they are immersed in, i.e. they are in dire need of innovation.

This phenomenon is quite logical. Innovation’s ultimate goal in any organization is to spur growth. In a period when growth is pretty much out of the question, investment in innovation seems capricious. Companies need to become more insular, stop the bleeding, cut the “luxuries” they have become accustomed to in times of plenty, and weather the storm. Not to mention the shareholders breathing down the Board’s neck to show some sort of profit margin, even if it means letting go a few hundred or thousand “salaries” or “headcount” that they will inevitably rehire a few months later once the R-word has passed.

These companies, however, overlook two essential aspects of innovation. Firstly, while the output of innovation should always be value-add (usually equivalent to “growth”), innovation should never be applied to issues that are not strategic to the company at that time. This is one of the ways that many companies inadvertently marginalize innovation: they imply that while the current projects circulating in the company are there to keep profits steady, these extra projects are for growth. “Innovation projects” are then perceived as nice-to-have additions to one’s everyday work (unless you happen to be the unfortunate one who received the extra work brought on by these projects. Then they are not-so-nice-to-have). Thereby, management separates innovation from the core activities of the company and only innovates when people have time and the company has excess resources to invest. Or – even worse – when they panic due to a need to react to a bold competitor move.

But this is not where innovation efforts should be placed. Innovation should be applied to tough projects and processes that are already occurring in the organization. It should be used to improve them – to make them more efficient, more effective, or to leverage them for growth. Innovation should not be invasive, it should be a tool for getting the most out of what is already happening or what you already have. I doubt that this becomes irrelevant in times of a recession.

Secondly, when done right, innovation changes the way people think (one of the reasons that Brainstorming doesn’t really work, since it works on creating an “innovation environment” rather than changing how people think and approach the topic). And changing the way people think, changes how they act. Since recession is a time when things absolutely need to be approached differently and DONE differently, I can not imagine a better time to make sure that your employees are doing this. Counter-intuitively, this makes times like now the BEST time to invest in training your people, and particularly in innovation skills.

And if logic doesn’t convince you, then maybe some empirical proof will…

Professor Jacob Goldenberg of Columbia University Graduate School of Business and Hebrew University also pointed out to me that research shows that times of recession are when true change happens in the marketplace. When the market is strong, the large companies and small companies typically both grow by gaining more customers – but at a rate proportional to their current market share. When the market is small is when there is an opportunity to convert just a small group of customers from the competitor’s offering, thereby having a large effect on market share. Those small companies who had increased their marketing expenditures during a downturn, taking an aggressive approach, are those who were able to come out of the recession market leaders. This implies that market leaders must take a similar approach simply to ward off their competition and retain their position in the future.

We are entering now the final months of the year, which is the time when departments and companies decide how to spend their remaining budget. Interestingly, in times of recession, this budget does not disappear – it is usually just diverted elsewhere. Using it for innovation might just be your ticket to market leadership.

a. Everyone is worried
b. No one knows what will happen
c. Their CEO had just emailed to stop all expenses immediately so they don’t know if they will be allowed to engage in a project
d. Next year all their clients will probably advertise less, so they are afraid that billings will drop and they will have to fire people.

But then we moved on to some other points, some obvious as well and some less (to me, at least) about the opportunities (no cynicism, this time) inherent in the crisis:
a. Clients will be more in need than ever to get ideas and help from anyone, including their agency. This is the time to start offering more brains to the clients.
b. Some agencies may not survive, so this is an opportunity to win clients, even if at the moment they will not spend much.
c. For a while there may be less work, so finally there will be time to dedicate to thinking and training and all the good important less-urgent stuff that in regular times no one has time to do.
d. They may need to fire people, but the people who do stay will form the nucleus of the agency’s future. In these people they should invest seriously to make sure they stay when good times return.
e. Since they probably can’t afford to keep working exactly as they did before, this is the time to apply innovation to see how they can innovate on their own processes. This may be crucial for their survival if times change dramatically.
f. There will probably be fewer pitches for new business in the coming months. This means that each pitch will be more important and thus will justify a bigger investment to make sure they win it.
g. Clients will have smaller budgets to spend, but competition on consumer’s money will become fiercer (since their budgets will also shrink). This means that there will be a strong need for alternative ways of communicating, and for communications that grab the attention of an even more suspicious public.

After the conversation ended, I thought about all this both from the specific point of view of our offering, and through the prism of a manager of any business.
For us, in SIT. We help people make themselves and their companies more innovative. So it is obvious, from everything mentioned above, that the need for our services rises in terms of crisis, rather than declining. This doesn’t mean necessarily that those in need will be aware of the fact, or, if conscious, have the guts to admit it and invest in learning to change their way of doing business. But it does mean that we are in a good position to help.
For businesses in general. The main learning for me, as manager of a business is the need to control the (hysterical) reflex of curling up and entering into defensive, cost-cutting, lets-wait-and-see mode. Not easy, when all the advice you hear is cautionary, but so important if one wants to come out of this crisis better and stronger.

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