With the world's economies apparently snowballing into a deep recession, it feels uncomfortably Pollyannish to see signs of hope. But for the bravest inventors and entrepreneurs, conditions are ideal to pounce on a business opportunity. In periods of economic turmoil, people are hungry and work cheap, and entrenched companies often concentrate on in-house cost-cutting instead of exploring new markets, which can explode with the next turn of the business cycle.We normally think of entrepreneurs as volatile types that shatter the status quo, but they can also help the economy move back into equilibrium by creating new jobs through the innovative use of slack resources.
[...] This doesn't mean that big new ideas emerge because of turmoil—in fact, the data shows no relationship between major breakthroughs and economic conditions. But the benefit of a global money drought is that competition tends to vaporize. And for some, the stress of tough times has an amazing way of concentrating the mind on the way forward. Bill Hewlett of HP committed to building the pocket calculator—at the time, a supposedly impossible task—during the 1969-70 recession; the 2001 dotcom-led downturn presented the perfect launching pad not just for risk-taking, fresh-thinking startups like discount airline JetBlue and blogging juggernaut Six Apart, but also for Apple's iPod-fueled resurgence.
Saturday, December 6, 2008
Entrepreneurial Opportunity and the Economic Downturn