No crisis wasted

Economist Cover - Oh FuckOne of the most compelling, and commented on, phrases that has emerged from the new Obama administration is that ‘no crisis should be allowed to go to waste’. There’s some not very subtle code in here, regarding redistribution, and of course some powerful rhetoric (as we heard in inaugaration) about a new era of responsibility.

Similarly, most of the building blocks for the current surge in web usage came from the post-meltdown era for .coms in 2001/2002. What is the combination of conditions that make recessionary or post-recessionary periods so fruitful?

Part of it must be the better allocation of funds to ideas. In 1999 and again in 2007, every startup with a stupid and unpronoucable name was scooping millions from VCs fairly indiscriminantly, which began to make some people nervous about bubble 1.0 (which arrived)  and bubble 2.0 (which may still be as bad but hasn’t been yet).

Now all these megzutulu.coms are quietly shutting their doors, perhaps we are in better shape to nurture the new YouTube; the new ideas that have value.

The same seems true of individuals. In the good times, our companies might be full of people saying ‘bollocks to the revenue, let’s just do lots of stuff’. Recessions favour the pragmatic who will make something of the best ideas that have come out so far.

Whatever you get told in the introduction to brainstorms, there is such a thing as a bad idea. And, in a very real sense, when the filter is removed, the bad ones can crowd out the good ones. A positive effect of recession is to stop for one second the constant drive for the adoption of every new ideas and to try and make the old ones work a bit.

Like Lehmans, the collapse of the should be met with a solemn and slightly-disappointed cheer of approval.

From a more technical perspective, a lot of consolidation in the early noughties drove business agility – in architectures, in standards and in thinking. Standardisation of systems and interchanges on many levels opened the door for faster business change. A similar drive for price efficiency is what’s driving the architectural revolution of virtualisation and, now, ‘in the cloud’ application development. Today’s speculative new technologies like Google’s app engine, Amazon’s EC3 and Microsoft’s Azure will be tomorrow’s everyday development springboards.

There are risks in the clensing effect of these disruptions:

1. Good ideas get snuffed out prematurely

2. The tyranny of ‘consistency’ and ‘efficiency‘ thinking. Anyone who has worked in or with a large company will know how negative and thought-free a drive for ‘consistency’ and ‘efficiency’ can be. Companies that describe themselves as ‘entrepreneurial’ in good times often seem to lose their nerve entirely in bad. I’ve started to refer to consistency as ‘the c* word’, as it is so often used mindlessly to justify low-value (and high-cost) consolidation programmes.

In this setting, many companies seem to forget that they employ people, not resources. And that no good idea has ever been created in Excel (Umair Haque: ‘spreadsheets are not strategy’). There seems to be an active effort to forget that the lowest common denominator is always less than the highest common multiple. When we are talking about costs, we are rarely talking about value for business or customers.

Where it makes sense to create ‘efficiency’ is in the ability to be more creative, not less. It is not creativity which incurs costs, it is bad or lazy thinking. We all know intuitively the difference between pointless ‘make work’ schemes and teams that are genuinely trying to drive the business forward – they should not both be stubbed out together.

The recipe, therefore, to come out of all of this on top, should be an agility agenda, combined with rewards for innovation and frameworks for creativity, rather than 1,000,001 cost saving ‘initiatives’.