Even though the economy today looks more like the green of gangrene than the green of profit, a brief look at history reveals that a recession-even a depression-is by no means a bad time to launch companies and products. Consider these examples from a recent report on CNN.
During the panic of 1837, candle maker William Procter and soap maker James Gamble joined forces in Cincinnati to start a small household goods business. Last year, Procter & Gamble had net earnings of $12.1 billion on $83.5 billion in revenue. A.G. Lafley, P&G’s chairman and CEO, recently said, “I think it’s essential to innovate through a recession.”
The panic of 1873 kicked off the long depression of 1873-1896. That year saw the founding of the Edison General Electric Co., the only survivor of the original 12 firms listed on the inaugural Dow Jones Industrial Average in 1896. The Tabulating Machine Co., the International Time Recording Co. and the Computing Scale Corp. were also launched during the long depression. The three merged in 1911 into what we know today as IBM. GM was born during the panic of 1907, United Technologies Corp. launched during the great depression in 1929, and FedEx-which shipped 186 packages to 25 U.S. cities on its first night of operations-took off during the oil crisis of 1973.
Andrew J. Razeghi, adjunct associate professor at the Kellogg School of Management at Northwestern University (Evanston, IL), says the evidence speaks for itself-there is no better time to innovate than now. One of many examples Razeghi cites as evidence in his white paperInnovating Through Recessionis Geophysical Service Inc., founded in the West Texas oil fields in 1930. That firm-which we know today as Texas Instruments Inc.-has amassed more than 15,000 patents leading to innovative products that have touched our lives profoundly. You can find his white paper atwww.andrewrazeghi.com/blogand it’s well worth your time.
Granted, it’s easy to pontificate about how your company, beset by plummeting sales and forced into making cuts and laying off personnel, should forge ahead. Nonetheless, the principle from which the late Robert Bartley, long-time editor ofThe Wall Street Journal, never wavered is perhaps more applicable today than ever: “Free markets; free people.” Free markets-not politicians and government bureaucrats-create opportunities for free people to turn innovations into products that improve our quality of life and earn profits.
Risky? Of course, and we all know that some of the companies mentioned here are facing crises today. But to paraphrase an old joke, when you’re up to your neck in alligators, forget about draining the swamp. Instead, remember there’s always a strong market for upscale leather goods-luggage, handbags, shoes and the like-made of alligator hides!
Think about opportunity.
P.S. Learn about taking profitable advantage of opportunity at The Assembly Summit.Click here for details.
Editorial: Think Opportunity
Looking for a reprint of this article?
From high-res PDFs to custom plaques, order your copy today!