Here's me and Nick having a drink at the W after work. Continuing on my one city a day trip, I landed tonight in New Jersey Newark from Minneapolis via Chicago, not a bad flight at all given I know sometimes how bad it could get in Chicago. Everywhere I go these days, people asked me the question when will this slump end? And will this go on forever? The taxi driver in Minneapolis today was talking to me non-stop for 30 minutes about how bad it already is and the new US administration will not make it better anytime soon. He suggested we should let things fall and let the market correct itself. Good idea in theory but dangerous in real life. Again, not knowing what I do for a living, he asked me when this slump would eventually end.
My simple answer is soon but not too soon. The early seeds of eventual recovery are now being planted and the system is painfully adjusting to it. Housing starts have fallen to their lowest level in 50 years. Translation, the supply of houses is lagging behind population growth and demand will dice hours’ price up or stabilize it at the minimum. It will a be weak and fragile recovery this time.
For companies, you cannot manage your way out of this by thinking recession, you need to switch gear and look for new ways to create and deliver value. We cannot manage based on pessimism and fear. Our friends from Best Buy today walked us the through the history of the company how twice the company almost went out of business but eventfully emerged stronger. What a great story about the spirit of the American enterprises.
Innovation has become critical for organizations. I often remind my clients every business model has an expiry date except management board don’t check them often enough. What about economies? Do they have expiry dates too?
Technology innovation has been the number one driving force behind the past two centuries of enormous improvements in the productivity and standard of living. Technology and productivity and standard of living are closely intertwined. This means, for fuller understanding of the process of economic growth, we need to understand how those innovations came about, or more broadly, the process of advance in technology. There are a lot of myths about innovation and many organizations still not seeing it’s central role in strategy making. Government money can only provide some relief but cannot get us out of this slump. Technological innovation is the only answer. We need an equivalent of another personal computer revolution to jump start the world's economy and create new industries. America's future is in technology.
Outside of technologies, what the human sciences bring to a strategy for innovation? Technology is linked to human behavior. Any technological breakthroughs always bring along the need to adjust to them, and quite often, give rise to heated debate. Just think for a second about the intensity of feeling and argument over genetically modified oranges, over DNA based biometric system, or genome mapping for life insurance policies.
Canadian political scientist Thomas Homer-Dixon believes that our human society faces a growing shortfall between the rising number of difficult human issues and the supply of new ideas on how to deal with them—a phenomenon he refers to as the “ingenuity gap.” His book, The Ingenuity Gap: Can We Solve the Problems of the Future? He provides many example of problems that only ground-breaking innovation and ingenuity in the social sciences and humanities will be able to resolve.
Here are a few of these big challenges:
- How can we make sure that inevitable cycles of economic transition and “creative destruction” of firms and industries do not force many less privileged people into deep poverty?
- How can we leverage the unused capacities and/or infrastructures of larger global corporations to create social value as part of their corporate social responsibilities?
- How can we benefit from the wisdom and knowledge of an aging Boomers workforce while still creating the room for bright and inexperience young people to fully apply their talents?
- How can we govern ourselves – our cities, towns and states and nations – when many of the major economic, environmental and political forces that affect us operate supra-nationally?
- How should we reform our financial systems to include microfinancing and allow it to be fully integrated in the much broader world of mainstream capital markets and financial systems?
