Back to the Garage: How Economic Turmoil Breeds Innovation

An article in Wired Magazine by Daniel Roth explains a bad economy might be a good thing for innovation. The article said, “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.”

Lots of companies lay low and cut corners but work on new and innovative ideas when the market get rolling again.

The article talks about the Great Depression and how many companies made big gambles and became some of the most crucial business moves in modern history. The article said, “Du Pont told one of its star scientists, Wallace Carothers, to set aside basic research and pursue potentially profitable innovation.” The article went on to say, “What he came up with was nylon, the first synthetic fabric, revolutionizing the way Americans parachuted, carpeted, and panty-hosed.” The article talked about other great inventers such as, Thomas Watson built a new research center, Douglas Aircraft debuted the DC-3, and the creation of television.
"The wonderful growth of the post-World War II period was due largely to the tremendous backlog of innovation developed in the late years of the Great Depression," says Rick Szostak, an economics and technology historian at the University of Alberta.

The article made it clear that this doesn't mean that big new ideas emerge because of turmoil and data does not show a link between the two. The article does say there is something about tuff economic times that forces people to think more about there futures. But the benefit of a global money drought is that competition tends to vaporize. The article said, “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.”

For me personally It lets me know its the time to start getting into the stock market and the housing market. By the time I get older things should be back on top and one can buy in for less. It seems the new trend is not the consumer market anymore. The money is in conservation.


It this a recession or depression? I think its an American wake up call.

http://www.wired.com/culture/culturereviews/magazine/16-12/st_essay