Chartered Management Institute: In my Opinion

A downturn is just the time for creativity and innovation, argues Jonathan Kestenbaum, CEO of the National Endowment of Science, Technology and the Arts (Nesta), and a Chartered Management Institute Companion.

A major economic downturn evokes a range of responses from business leaders and senior managers. It would be easy for companies to retreat to safety in such conditions and just focus on cutting costs. I saw in the last recession how some businesses tried to weather the storm by battening down the hatches. But the truly far-sighted firms learnt to treat the instability not only as a dangerous time, but also as a period of opportunity.

The Czech economist Joseph Schumpeter wrote in the 1940s about the importance of what he called 'creative destruction' to drive economies. He argued that periods of economic turbulence can be associated with technological and procedural transformation - such as the spread of mass production between the wars.

Schumpeter had a strong case. Recessions can provide platforms for innovation and economic growth. Two decades ago, Finland was hit by what many regarded as the most severe economic downturn experienced in any OECD country since the second world war. Yet look at how the country responded, using the changes in its economy as a stimulus to turn around its fortunes. Today, Finland is one of the world's leading technology specialist economies.

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