In light of the dire state of global economics, we have received a number of inquiries asking how Blue Ocean Strategy can help. While during the short-term the situation may seem gloomy, Blue Ocean Strategy is especially important and relevant during such times -- because it looks for sources of innovation and cost savings simultaneously.
In fact, a recent BusinessWeek article along this same theme describes why companies and governments should “Innovate Out of the Economic Downturn”:
The Austrian economist Josef Schumpeter once declared that economic downturns are "a good cold shower for the economic system." Economic downturns can have positive effects; they force companies to increase their efficiency, cut waste, and strive to do things in smarter ways.
All companies have to cut costs, and deciding what should stay and what should go is the first challenge that faces them. One of the early victims of downsizing is often spending on innovation activities such as R&D, training, or education budgets. Long-term projects are shelved, hiring is frozen, and workers are made redundant. Worse, risk capital evaporates. Unfortunately, this is akin to patients deciding to reduce expenditure by not spending money on medication (as, indeed, has been reported recently).
During economic downturns, innovation is the single most important condition for transforming the crisis into an opportunity. And while many businesses simply won't be able to afford further investment in innovation, governments should recognize that innovation systems, with all their academic, industrial, and public components, are strategic national assets that need to be protected, just like the financial and housing sectors. Times such as these call for government intervention to prevent the contraction of the knowledge bases upon which economies are now more than ever dependent.
All companies have to cut costs, and deciding what should stay and what should go is the first challenge that faces them. One of the early victims of downsizing is often spending on innovation activities such as R&D, training, or education budgets. Long-term projects are shelved, hiring is frozen, and workers are made redundant. Worse, risk capital evaporates. Unfortunately, this is akin to patients deciding to reduce expenditure by not spending money on medication (as, indeed, has been reported recently).
During economic downturns, innovation is the single most important condition for transforming the crisis into an opportunity. And while many businesses simply won't be able to afford further investment in innovation, governments should recognize that innovation systems, with all their academic, industrial, and public components, are strategic national assets that need to be protected, just like the financial and housing sectors. Times such as these call for government intervention to prevent the contraction of the knowledge bases upon which economies are now more than ever dependent.
Continue to the full article here.
[Image via Quandarie.]
