Innovation in the Great Depression
One of the items that jumped out at me was the discussion of products and services that did not seem to be impacted by the Great Depression. According to the authors, products from industries like food processing, chemicals and tobacco were relatively recession proof even in the Great Depression. You can understand this - chemicals are the basis of a wide range of products, while food is necessary for survival and tobacco..well let's just say that the consumers needed their cigarettes.
The report goes on to say that industries with highly innovative products withstood the Great Depression fairly well. The report states that the sale of refrigerators, considered an innovative product at the time, grew by 30% from 1929 to 1933. So in the face of rising unemployment, dramatic sales declines in most industries and product categories, innovative products not only held their own, their sales grew! You can chart this to the desire to be the first on the block with a refrigerator, or the fact that over time refrigerators save money by keeping food fresher, or a number of other attributes. But in the face of the worst economy we've faced in this country, people were spending money on innovative products and services.
What could that say about our situation now? Will people in 2009 pay for useful innovative products and services when they are clearly cutting their spending while waiting for the bottom of the downturn? Does a strategy of belt tightening make sense from a larger company's perspective? Sure, but those that tighten their belts and create new innovative products or services that meet needs created by the downturn or align with evolving trends are going to see their fortunes increase. Even though we are in a downturn, there is still a tremendous amount of interest in new products and services from consumers, especially those that address new challenges in the downturn.