Innovation as a Recipe for Overcoming Crises and the Key to Post-crisis Growth
by: Aleksandar Vekić, Assistant Master at Faculty of Technical Sciences Novi Sad, Department for Industrial Engineering and Management
Fostering innovation and change is one of the basic tasks of modern societies, as they can be the most effective response to crisis periods both in individual communities and societies, and on a global scale. Their special importance lies in creating conditions for post-crisis growth and development, through the creation of opportunities to improve the business of companies and human lives. As innovation is emerging as a leading driver of competitiveness, economic dynamism and economic growth are at the center of economic changes caused by the “creative destruction” of the existing, which leads to the creation of new products and methods, as well as completely new markets. [1].
Crises differ in many areas, amongst which are, the factors causing them and the scope of their effects. The most prominent current global crisis, for instance, is at first a health crisis caused by the COVID-19 virus, but it is increasingly spilling over into the economy , leading to most projected growth plans and goals being called into question. Within the first weeks of the pandemic declaration by the WHO (World Health Organization), major changes already came to pass in the way of life in most countries, along with a slowdown of economic activity. This conditioned the creation of special policies aimed at mitigating the impact of this unprecedented crisis, causing an impact on the global economy in a short period of time and led to the creation of unforeseeable consequences. Some of the issues caused by the introduced changes are so big and harmful that they have surpassed in scope many of the problems that had previously occurred throughout history, especially since the existence of a market economy. Economists explain this crisis in terms of the “Black swan theory” which describes unexpected, disruptive events in history — like global pandemics, financial crises, and wars — that unsettle, uproot, and change governments and economies [2].
A historic match between the world’s leading powers is currently being played, as they race against time to find an appropriate innovative solution, a cure that will quickly change everything, reverse negative trends towards positive ones and enable a gradual return of life to normal flows.
Even with all the almost superhuman efforts invested by scientists and researchers, and the vast financial resources allocated for these purposes, the process itself is not advancing nearly as fast as the world expects it to. Scientists and inventors are not only working to create a cure, but they are also creating favourable conditions for new business opportunities, investment, growth and employment. Based on this example, it can be seen that continuous investment in science, technology and innovation is always a pledge for the future of humanity, and its progress in all areas. In the example of the current crisis, the speed of change in societies and economies is incredible: It is often necessary to make decisions based on very little information, and they are the result of previous experience and intuitive activities. Conditions are very difficult even for companies that are amongst the main carriers of innovation activities, and the consequences that the economic recession caused by COVID-19 leaves on their investment in R&D activities [3], and their ability to launch new products and services is difficult to predict. The negative repercussions are that many global companies have already announced their withdrawal from certain markets and have reduced their business activities, such as Zara, while a large number of them are facing bankruptcy, such as Pizza Hut or Hertz. It should be noted here that among the aggravating circumstances is the intensity of the crisis, which simultaneously affects all functions in companies. So far, the biggest negative effects have been observed in tourism, the aviation industry, the automotive industry, the hotel and restaurant industry, etc.
Innovative companies must rely heavily on available resources and modern technologies, which should enable their survival and further progress in these specific conditions. On this path, they cannot stand alone, needing the strong support from economic policy makers in the form of adequate solutions and programs for preserving business activity, and post-crisis recovery based on further encouragement of innovation. These solutions must be efficient and adaptable enough to achieve positive effects. It can be said that the business of companies will be faced with a crucial decision to innovate or die. We should not forget that human creativity is boundless, and it is the main driver of innovation. Together with modern available technologies, a huge base of human knowledge and experience is a powerful engine for further development of mankind and industry.
Despite all the current difficulties, the light at the end of the tunnel is noticeable and humanity should hope for a brighter future in which innovations will always amaze us. So, can you revive your innovative spirit and co-create a new reality, making the world an extraordinary place to live?
Sources:
[1] SCHUMPETER, J.A. 1934, The theory of economic development: an inquiry into profits, capital, credit, interest and the business cycle, Harvard Economic Studies, Vol. 46, Harvard College, Cambridge, MA.
[2] Maddyness 2020, How will innovation change society after this current crisis?, from: https://www.maddyness.com/uk/2020/03/30/how-will-innovation-change-society-after-this-current-crisis/
[3] Santiago, F, Dachs, B, Peters, B. 2020, Foster recovery from COVID-19 through sciences, technology and innovation, IAP Unido, from: https://iap.unido.org/articles/foster-recovery-covid-19-through-science-technology-and-innovation.
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