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Tuesday, September 07, 2010

THE POSTILLION: Innovate...Communicate...Survive...Thrive - Lessons from the Great Depression

The Postillion with Michael Phillips

Profiles in Innovation from Around the World

Bottom Line: (Why you will want to read this article)

• You are in a highly competitive business and want ideas on how to differentiate your emerging enterprise

• You would like to understand how some companies not only survive but thrive in a recession/depression.

The Postillion does not have to tell you that it is brutal out there. Recent indicators show that unemployment is still on the rise. The main place that jobs are being created is in government, adding to our ever growing tax burden and budget deficit. The last things we need are more government bureaucrats adding more obstacles to the success of our businesses! But, even in these hard times some companies are finding ways to succeed. How do they do it? What is their secret? To answer this question the Postillion turned to history…….. the Great Depression to find the answers.

So we think we have it bad now? At the height of the Great Depression unemployment was at 24.9%. The top tax rate was 91% and would stay at least at 88% until 1963. (Note: Taxes were dramatically dropped at that point resulting in one of the greatest economic booms ever known) In this dismal business climate some companies found ways to not only survive, but to thrive. How did they do it? Innovation, communication and the courage to change.


"It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change" - Charles Darwin

This may seem obvious but it is amazing that companies become paralyzed in hard times and refuse to consider change. They go into “survival” mode and stop all R and D, stop advertising, lay off staff and start praying. They feel they will be able to weather the storm by not taking on any risk or aggressive tactics. Instead of adopting proactive change they play dead, roll up in a ball and hope the bear does not eat them. The sad part is that once they come out of their self induced progress comma ….if they survive it....they discover a very different business landscape… where their less conservative competitors have made great strides forward. They may also discover that their company has become irrelevant. A lesson from successful companies during the Great Depression is that they were not afraid to change and take on risk.

Smart companies took advantage of their comatose competitors and found ways to gobble up market share……realizing that they had to play a numbers game. If less people are buying you must expose your product or service to more people to maintain and grow your revenues. These companies also knew they had to find new products and services that people wanted. Hard times created new inconveniences, pains, and concerns that translated into opportunities for companies who were observant, innovative and not afraid to act.


Necessity, who is the mother of invention.

Plato, The Republic
Greek author and philosopher in Athens (427 BC - 347 BC)

Innovation is a word that has been used freely. EVERY company seems to claim to be innovative. But, true innovators are obvious when they appear on the scene and blow away the innovation “wannabes”. For the purpose of this discussion true innovation must:
  • Fill a need not currently being filled
  • Greatly improve on an old way of doing something
  • Combine existing products / services in a way never done before that exponentially increases the value
  • Enlighten the consumer to a whole new paradigm of doing things they did not know existed
  • Establish a uniqueness that is a brand in itself

True innovation often becomes the nexus of many other innovations…….and imitations. During the Great Depression many companies observed their surroundings and stepped up their R and D to meet current needs and to create new markets. Many new technology companies—for instance, Hewlett-Packard and Polaroid......that became leading innovators later in the century.....were established as entrepreneurial start-ups during the 1930s.

Here is a surprising list of some depression era start-ups that had the courage to pursue innovation. These companies all started off as emerging enterprises in terrible economic times.

Texas Instruments
Interstate Bakeries - makers of Twinkies (Some say Twinkies made during the Great Depression are still edible)

Radio Corporation of America (RCA), the high-tech company whose stock was decimated in the Great Crash, returned to profitability in 1934 as it shifted its innovation efforts from radio to the fledgling television market. (A great example of change coupled with innovation) In total, US companies founded at least 73 in-house R and D labs each year from 1929 to 1936.

Innovation, at its most basic level, is truly driven by necessity. The market you compete in is in shambles. You are holding on by your fingernails while your competitors are going under. You must change, innovate or tank. Think of it as if your market has dried up and turned into a dessert. Your “plane” or business model has crashed into the sand. (Think “Flight of the Phoenix”) Supplies are running low...... it is time to act or perish. If this is your only way out of the desert, how would you reinvent/redesign the crashed plane (value proposition, channels of distribution, etc) to make it fly again? ...... to fly to a new market that is lush with new growth. An example of such a flight would be Circ de Soleil. They reviewed a dying market segment, the circus, and resurrected a truly new and innovative entertainment product that soared out of the ashes.

Another example of finding a new way to approach an old market comes from the spa business. This is close to home for the Postillion since this example comes from the Sol Serenity Spa in Plant City, Florida. This spa is owned by me and my wife Sol. We created our spa from scratch and did all of the remodeling and decorating ourselves. As with all spas, as the economy has worsened more and more clients have decided to stop coming. A massage and a facial is considered to be a luxury they cannot afford. So we had a choice. Do nothing and go out of business or find a way to innovate and survive. We knew we could not count on the amount of traffic currently coming into our single location to stay in business. We had to figure out a way to increase appointments quickly and cheaply. Out of this necessity the Sol Serenity Network™ was born. We gathered together a network of out of work Massage Therapists and Estheticians in metropolitan areas who were willing to take on demand work assignments. We then went to hotels that did not have an in-house spa and offered them a percentage of any appointments generated by their facility through our network. All they had to do was hand out our business card to guests as then checked in. Their guest could then go online or call to make an appointment that would be attended to by one of our local network service providers. During our research on this concept we found that 7 out of 10 hotels did not have their own spa services. We were surprised to see that no one was already doing what we are doing now. This opportunity became possible because of the bad economy. This freed up the good people we needed to be able to participate in the network and service the hotel customers. Now we have the equivalent of over 100 locations that can produce appointments. The appointments are indeed starting to come in. But, it is a numbers game. We now know we will need 1,000 hotels to ensure our success. This is a number that is certainly doable.

So…….innovation can result from observing the same situation from a different perspective. Donald Latumahina in the January 24th, 2008 issue of Featured Productivity identified a key to innovation. Become a great observer. By observing how we and other people do things, we will spot opportunities for improvements. The more we observe, the more opportunities we will find. We then can devise solutions for some of the problems. By becoming a good observer, we will recognize the problems before many people do and have first-mover advantage.

Here are ten things you can do to innovate through observation.

Don’t take things for granted

There are many things that which look usual on the surface but have some hidden opportunities behind them. So open your eyes to observe even the seemingly normal things. Observe how you and other people do routines, and discover the details you overlooked.

• Watch for inconveniences

Inconveniences are clear signs of problems. Are people waiting too long for something? Do they find it difficult to accomplish certain tasks? If you watch for inconveniences, either those experienced by you or by other people, you can easily find opportunities for innovation.

• Watch for possible gaps for improvement

Sometimes we are so accustomed to doing things in a certain way that we can no longer see it as inconvenient. In that case, it is up to your imagination to spot opportunities for improvements. Maybe the current process is already efficient, but you know of some technologies you can use to improve the process even more. The difference between the current situation and possible future situation creates a gap for improvement.

• Follow technology trends

To help with the previous step, you should closely follow the trends in technology. Familiarize yourself with the latest developments in relevant fields. This way you will expand your horizon of what is possible and make it easier to spot possible gaps for improvement

• Watch how your competitors work

You can get ideas from innovation not only by observing how people work, but also by observing how your competitors work. Is there something they do well that you can learn from? If yes, then don’t hesitate to learn from the idea, improve on it and then implement it.

• Observe different people at different places

To get a broader perspective of a problem, you should go to different places and observe how different people do things. By observing people from different backgrounds in different situations, you will see different dimensions and approaches to the problem. This way you will come up with better, more complete solutions

• Capture every idea

To avoid losing the ideas you get, you should write them down as soon as possible. Otherwise, it is likely that the idea will disappear and will never come back. So you should have a capture tool handy wherever you go.

• Create a master list of problems

By having one central place to collect all the problems you find, you can easily compare one problem to another to find which one is has potential. If you want to, you can also classify the problems to make them easier to sort through.

• Review your master list of problems

Every now and then you should review your master list of problems to see all of the opportunities you have. After reviewing the list, you can take one of two of the problems to work with. The best problems to work on are those which are both painful and solvable.

• Take Action

Now that you have found a solution to a problem you feel can turn into a revenue stream….take action! One hundred other people may have come to the same conclusion.


Another aspect of companies that survived during the Great Depression was their continued ability to communicate product brand and value recognition. Better known and advertising, this turned out to be a critical step for survival.

Anand Shah writes in Friday Reflections:

“To begin, not all was gloom and doom during the Great Depression. It was a time when those who knew what they were doing made great economic strides and the very nature of the depression itself was an economic boon for them. It was a time when several companies benefited from aggressive marketing while their rivals cut back. A good example of that would be Kellogg besting C.W. Post during that time. Consumers didn't totally stop spending during the depression, most just looked for better deals and the companies providing those better deals came out stronger after the depression ended. When spending picked up, consumer loyalty to those companies remained."

To state a generality, those companies who not only survived but did well and grew during the Great Depression are those who continued to act as though there were nothing wrong and that the public had money to spend. In other words, they advertised. These are industries who didn't wait for public demand for their products to rise, they created that demand even during the most difficult of times. Because so many companies cut spending during that era, advertising budgets were largely eliminated in many industries. Not only did spending decline, these companies actually dropped out of public sight because of short sighted decisions made about spending money to keep a high profile. These advertising cutbacks caused many customers to feel abandoned and associated the effected brands with a lack of staying power. This not only drove customers to more aggressive competitors but caused a certain amount of financial mistrust when it came to making additional investments in the no longer visible companies.

Both anecdotal and empirical evidence support the case that advertising was the main factor in the growth or downfall of companies during those years. To put it bluntly, the companies which demonstrated the most growth and which rang up the most sales were those which advertised heavily. The Great Depression offers classic examples of the power of brand advertising even during times of economic crisis.”

“As far as the end of your question as to what distinguished the companies that did well during the Depression? They were the companies that kept their name in front of the public and created brand name recognition even during the worst of times.”

Take Action Now

It is hoped that some of the insights of this article will inspire positive thought and actions for your emerging enterprise. Seek out and discover the opportunities for innovation your company can develop. Once you have overhauled your offerings and delivery model your “Phoenix" can take flight. Don’t be shy about what you have to offer. Grab your megaphone and go to the mountain top and start shouting. When you think you have shouted enough……shout some more.

It is time to establish innovation and communication strategies within your emerging enterprise to help weather the current economic challenges. TNNWC Group™ has services that can help.

News Releases, Publicity and Public Relations

Learn from the past. Communicate regularly to the world that you have exactly what your customers need. Now is not the time to cut back on advertising, announcements and public relations. Start making a big noise while your competition withdraws into survivor mode. The opportunity is yours. TNNWC Group™ will help you with your news releases, publicity and public relations. This team knows what it takes to get your emerging enterprise noticed and the orders coming in. Click on the following link to read more about TNNWC Group™ - Services - News Releases, Publicity and Public Relations.


Everyone uses the term “buzz.” At one time, years ago, it simply meant “gossip.” Today the term “buzz” covers gossip, visibility in the news, a grassroots groundswell of curiosity… and an ever-increasingly vast bunch of things. Some people think that buzz equates to advertising. Well…buzz is not advertising, but buzz is a critical ingredient in making your advertising work.

The folks at TNNWC Group™ and BUZZWORKS™ know that “Buzz” means a very specific three-part process.
  • The first part is cutting through all of the media noise and getting the attention of your prospective market, and of other allies who may help promote or distribute your product or service (even if the product is You, personally);
  • The second part is to get a message or an image across to that prospective market, and to use that special message or image (your “brand”) to symbolize and represent your company, product or service. It is your signature, your fingerprint, your essence – it is your identity at the conscious and subconscious levels;
  • The third part is to build sufficient curiosity, eagerness and credibility in that message or image that your market is attracted to your company, product or service.

Let the BUZZWORKS™ team work their magic and augment your traditional advertising campaign with the latest methods and techniques to convince the world that they just HAVE TO HAVE what you are offering…….NOW!

Click on the following link to read more about TNNWC Group™ - BUZZWORKS™ - Branding and Social Media Domination.

The Institute of Innovation

The newly formed Institute of Innovation is working to help organizations establish methods and procedures to proactively identify opportunities for innovation with your company and marketplace. A library of informative articles and white papers is being formed to help educate emerging enterprises regarding the art of innovation. A certification program is being established to train and develop individuals to become Chief Innovation Officers for their companies. This certification process will ensure that each cIo embraces the both methodical and imaginative steps needed to seek out and implement innovation. The Institute of Innovation is currently seeking out leaders to help launch this much needed service and certification program. Please contact the Postillion at and get involved.

For more information on company survival in the Great Depression please click on the following link “Lessons from the Great Depression (Bloomberg / Business Week)”


Michael Phillips, A.K.A. the Postillion, lives and works in Tampa Florida and has over 30 years of experience in leading development and trends within the information technology industry. Mr. Phillips has established a methodology for discovering, developing and implementing innovation. As the founder of the Institute of Innovation he provides organizations with education on innovation and encourages the addition of Chief Innovation Officers (cIo) into the "C" Suite. Mr. Phillips often speaks to organizations and conferences on the importance of innovation. Comments and suggestions for future articles can be emailed to

For more information, please visit Michael's TNNWC Bio.

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