The Silver Lining to Scarcity: It Drives Innovation (HBR)

When times are good, businesses tend to stick with what's working. "It's served us well so far," goes the reasoning, "so why mess with success?" We fall into ruts where we don't question whether the approach we're using is truly the best one—we just work to push it further. It's during these periods that needless layers are piled on: product lines expand, often without good reason; processes become more detailed and entrenched; project teams grow larger; and more people are involved in approving and completing every task. Companies, like households, accumulate stuff in times of abundance.

When an economic downturn hits, the first response is to keep doing all the same things, but faster, with fewer people. To a certain point, this is good. It forces us to jettison extraneous expenses and activities and become more efficient. But in a long downturn like the one we're currently living through, we eventually run out of things to cut or streamline.

That's when smart companies shift focus. Instead of trying desperately to get more efficient, they realize they have to get more effective. They seek out fundamental change. They question core assumptions: how and why they pursue every activity, who their customers are, even why they exist as a company in the first place. They treat planning efforts as creative opportunities for real improvement. They put lean, focused teams on each project, involving only the most necessary people. They urge these teams to make bold decisions, and move forward. They behave, in other words, like innovators.

I know this because, in the 27 years I've been the president of Ziba, our studio has weathered three major recessions. All three were times of exceptional innovation and creativity, for our clients and us. In fact, I'd argue that most of the great technology and design advances of the past few decades had their roots in recessions. Social media and Web 2.0 emerged from the dot-com collapse of the early 2000s, and the web itself took form in the recession of the early 90s. The personal computers that enabled both of them were born in labs and garages during the slump of the mid 70s. When it comes to inventiveness, a downturn can be a beautiful thing.

What has really surprised me is the discovery that creative professionals and businesspeople often love working under conditions of scarcity. Before sitting down to write this piece I asked the directors and senior designers at Ziba to share their stories and feelings about tight-schedule, tight-budget projects. The responses were almost entirely positive.

One studio director recalled a branded environment project for a new residential tower in Portland—usually a 6 to 9 month project—that was forced by market realities to launch in 3 months. "Instead of hyper-designing a sales space," she explained, "we created an art gallery, and spent that time writing briefs for artists, to have them populate rotating shows there. And we didn't have time to build an architectural model, so we hacked together an 'arcade' out of four display screens and Mac minis, depicting a virtual model. It ended up working perfectly." The building, called The Civic, sold out all of its units in less than 18 months, even going into 2008's massive real estate crash.

A creative director told the story of a rush project for Microsoft, on an extremely constrained budget, to create a general purpose interface for managing media and content in just three weeks. Yet it was ultimately a resounding success. A single "swarm" session of graphic and interaction designers kicked it off, and the four-person core team moved on to motion studies and prototypes by the second day. The interface they produced at the end of those frenetic weeks ended up as part of the interactive wall for Microsoft Home, and continues to serve as a reference for media projects at Ziba to this day.

How does innovation manage to flourish under such time and budget constraints? For one thing, as these examples demonstrate, scarcity forces focus. Instead of exploring every avenue, consulting every possible collaborator, and blindly pursuing established "innovation processes" because they once worked for someone else, we make tough decisions about where to apply our efforts. This means leaving things out and taking risks—two actions we avoid in times of abundance. In times of scarcity, innovation is less risky than stagnation, especially when it's pursued with focus, clear expectations, and a creative problem-solving approach.

Scarcity also gives us an excuse to get on with it. With limitless time and resources, it's always easy to ask for more tests and get more data. "We'd like to get going on this concept," we find ourselves saying, "but maybe we should run it by one more review committee." Everyone has an opinion, and in times of plenty, everyone wants to be involved. But this is exactly where our tendency to design by committee takes over. Scarcity gives us the freedom to say "It'd be nice to go over it again, but we simply don't have the time/money."

Most important, scarcity forces us to be genuinely creative. The branded environment project described above didn't have the resources to do a "proper" sales office, so the team had to start from scratch. Given enough time and money, any competent organization can emulate something that succeeded in the past. But when limited resources take the tried-and-true off the table, the only option is to come up with something new.

All this may serve to explain a common characteristic of continually innovative organizations: that they operate with a scarcity mindset, even in times of plenty. The renowned and highly inventive chef Thomas Keller puts a sign reading "Sense of Urgency" beneath the kitchen clock in every restaurant he runs. When Steve Jobs led the development of the first Macintosh, he sequestered his design team in its own building and assigned them complex tasks with unreasonably short deadlines. Even where there is time and money to spare, it can be valuable to act otherwise.

Now, none of this quite convinces me that we should deliberately withhold resources that are available when a team says it needs them. But it does take some of the pain out of the current economic slump, and the knowledge that it won't be the last. Yes, given the choice, any of us taking on a challenge would rather be given plenty of resources to throw at it. But at Ziba, we've also learned to see recessions and other tight circumstances for what they are: one of the finest learning opportunities an innovation-driven business can have.

Source : Harvard Business Review