Archive for October 7th, 2008
Innovator’s dilemmas: can you be bullish in a bear market? (2)
“Because innovation loves a crisis (…) we have a big opportunity to stand apart from our peers, to be better connected to the market, even if it’s in turmoil. Yes, our customers are going to be under stress, but that’s simply another way of saying “open to change.”
Read Jonathan Schwartz’s blog. Jonathan is SUN’s CEO.
“What I told our company was that we were just going to invest our way through the [dot-com bubble] downturn, that we weren’t going to lay off people, that we’d taken a tremendous amount of effort to get them into Apple in the first place- the last thing we were going to do is lay them off (…) so that we would be ahead of our competitors when the downturn was over. And that’s exactly what we did.”
Steve Jobs as quoted in this year’s March issue of Fortune.
The IMF just issued a severe downturn warning. The world’s economy is facing high commodity prices, a troubled housing market and a far reaching financial crisis. Inflation could follow the current credit crunch. My generation had not experienced anything like this so far. Most references discuss the great depression, which takes us back to 1929.
If necessity turns out to be the mother of invention, then the opportunity just presented itself. Today I listened to Silicon Valley VCs sharing that adversity will force us to innovate. The thinking is that good ideas will continue attract they kind of nurturing and smart money can provide.
The fact is that most entrepreneurs are just trying to weather the storm. We are going to see a redistribution of market share. Unable to find funding to keep going, weaker competitors will be driven out of business. Dysfunctional value chains will collapse. Some industries are already facing consolidation by means of vertical and horizontal integration.
I’m also hearing that digital content and entertainment could do relatively well in a bear economy. As shared in my previous post on this subject, this is an opportunity for new media to re-energize the web. This means transitioning from being the recipient of secondary ad spending to tapping into mainstream advertising budgets. A pressing need for innovation could deliver more focus on quality and relevant engagements with web users, instead of quantity and mere eyeball counting.
As shared by Jonathan in his blog, there is renewed interest in technologies that deliver cost efficiencies and simplification. Open source, 2.0 services for the enterprise and greener technologies are part of his answer to today’s business conditions.
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