As the old-world leaders at DAVOS continue to broadcast their gloomy state of mind, the best entrepreneurs around the world will have one word in their mind: Opportunity. Those with the best products, the timely solutions and the best business models will now have the chance to overtake the pack.
But where, exactly, will their advantage come from? If nobody is buying, what can you sell? There is truth in those questions for industries that are in a state of oversupply like the car industry. In many cases this will be a painful correction, and probably an overcorrection. But even there, there is room for innovation.
Innovation in a downturn
Innovation in a downturn can take several forms. But many of the most significant innovations will come, in my view, from the way organisations restructure their labour market for greater agility, and then generate high motivation and attract discretionary effort from talented people across their whole business ecosystem.
There are some remarkable examples that are now starting to gain attention:
In the motor industry, Japan’s Honda is facing its toughest challenge in 30 years. Yet their four month shut-down at their UK Swindon plant, which starts tomorrow, is being achieved without any compulsory redundancies.
Amongst professional-level workers, these are not just emergency measures but long-term ways to increase agility. KPMG has just launched a Flexible Futures scheme that allows partners and staff to reduce their work-time (and pay) on an opt-in basis when the there’s a drop in workload. These kind of flexible practices can work for individual workers as well as for businesses. They are bound to increase.
More radical business models are also starting to gain popularity and scale. In the software industry, TopCoder sells solutions just like any other company, but the work is done by a community of almost 200,000 developers who are not directly employed. Code is developed through a series of ‘competitions’ which generate high levels of engagement and the ultimate meritocracy.
Similar impressive examples of ‘crowdsourcing’, ‘fractional working’ and game-based work practices are emerging in other industries too. They can lead to high-value, low-cost solutions, but they don’t explicitly question and redesign the underlying models of employment, or the assumptions that underpin them.
For that we need to dig deeper and ask questions about the purpose of business, its relationship with people, and the nature of work. And in my view these lead to another focal point for innovation in a downturn: The most successful, agile and sustainable companies in future will create value through the relationships they have, not through the control they exert.
This is the essence of ‘open innovation’; it is the essence of employee engagement; it is the essence of building trusted brands; and it requires new behaviours from all workers, especially from leaders. As an executive in one well-known US company announcing huge layoffs said to me yesterday: “Our response to the downturn is macho, theory X, ‘just hunker down and get on with it’, but as a woman my instinct is totally different: I want to collaborate.”
Some companies will find it too difficult to make that shift. So my best hopes are on the best new entrepreneurs to show us the way. Collaborative, purposeful people – like those described by Richard Branson, interviewed by the BBC in Davos today – who in a downturn think of only one thing: Here is an opportunity to build a better business, and to build one that is a force for good.
Jonathan Winter is Founder of The Career Innovation Company (Ci) who are retained by some of the world’s best-known employers to help them increase business agility and gain recognition as inspiring places to work. Practical solutions are based on research and publications such as the Manifesto for the New Agile Workplace. Ci is a partner in the Tomorrow's Global Talent programme.