TheThreePercent

Lou Gerstner once said that hard times are when winners are made. 

It is also when the relentless innovators are separated from the people who like to talk about innovation.  I marked a few dates when game-changing companies like Apple, Microsoft, Xerox and others were started (or reinvented) against periods of economic downturn.  It appears that many of the best examples of innovation got their start during hard times.  (This warrants a more scientific study, but my general sense is that the ratio of long-lived innovative companies to short-lived “justify-their-existence-on-shallow-claims-of-being-innovative” companies goes favorably up in times of economic stress.)

Once again, we’re talking about innovation, not improvement and not “coolness”.  We’re talking about companies that change how people organize themselves and live their lives – companies that fundamentally change themselves. 

The pain and suffering that true innovation wreaks on the innovator can be so intense that we only attempt the real thing when we have no other choice.  In my experience, a company is innovative at only three times in its life cycle:

1. When it is begun (if it is carving out new territory instead of simply following a crowd of previous entrants)
2. When it is so large that it can no longer grow organically or by same-line acquisition
3. When it is in danger of going out of business

With yesterday’s market downturn and the prospect of a real recession on the doorstep, innovation source #3 is back in play, and that means the pain and suffering of not innovating and being crushed by bad times is going to exceed the pain of embracing new directions and committing everything to them. 

 It is true that in times of mild economic restriction a smart play is to go conservative for a while, pull in the horns and weather it.  And, of course, that is what most leaders will do this time around.  But when the pain doesn’t go away soon, and the walls start coming down, then watch them start to re-think everything.

In a previous post, I wrote briefly about the notion of the “relentless innovator”.  This is a person who never stops morphing his or her own intentions to do something new against harsh realities.  (This separates the relentless innovator from the stubborn innovator, who just pounds on the same bad idea ad nauseum until he is murdered by his co-workers.) 

The advantage to the relentless innovator in times like these is lower inertia.  The relentless innovator is in shape, well-practiced in dancing through the minefield of change, and less prone to the stages of denial and disbelief that are already paralyzing the guardians of the status quo (who talk about innovation, because the market likes the word, but who are really focused on conservative improvement and stable, in-line growth). 

Relentless innovators are already used to being one misstep from unemployment – the terror of failure has become the almost pleasurable burn of a good workout.

So!  Relentless Innovators, you ThreePercenters!  It’s go-time.  You have a head-start while the other 97% stare blankly into space wondering if that chasm that has opened up in front of their feet is just a trick of the light.