Often, we think recessions are bad. But, if viewed from Schumpeter's "creative destruction" perspective, it is a hotbed for innovation and revolution. This article recounts how past recessions shaped companies who took advantage of it into industry leaders. One way to view a recession is that it weeds out the weak, leaving the strong who will only get stronger.
In the current recession, there are three groups of winners:
1. Firms that went into the recession strong, with a lot of cash and a competitive advantage.
2. Firms that are innovative.
3. Firms that will use the recession to reposition their business.
The main reason why these three groups will succeed is because they ultimately embrace "creative destruction", rather than fearing change.
2 comments:
Nice article and interesting view. I amazed that many of the great companies in the US were born during recessions in the past. Also, I agree that the companies can spend a lot of budgets for R&D expenses will succeed in near future. Competitors are struggling in recession and not willing to spend for R&D, therefore innovative companies can get a lot of advantages against them.
This is definitely a refreshing perspective on the recession. Of course as this one is worse than others in the past, this view of creative destruction (especially when the destruction is of giant companies and banks) doesn't sound as appealing to Americans as in less exaggerated recessions of the past. The article does point out that a failing business, if it is inefficient, is not necessarily a bad thing. This is opposite of most American opinions, but could be an important change in mindset to overcome the negativity of our current situation.
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