by Andrew King
A calamity like the COVID-19 pandemic easily creates fearful uncertainty for us as individuals, the organizations upon which we rely, and our regional economies. When the future is unclear, we humans tend to conserve our energy, hunker down, and wait for better times to return. Companies often convulse when customers and suppliers go silent, which is what we are witnessing now as the mitigation efforts for the COVID-19 pandemic cause upheaval in most countries. Fortunately, though, we can count on entrepreneurs to innovate new solutions even as the world’s economy becomes increasingly chaotic.
For leaders who adopt an entrepreneurial mindset, these tumultuous times are full of fertile opportunities to innovate valuable services and products. Entrepreneurs and company leaders who act entrepreneurially can thrive during times like these—and those who are tenacious are well positioned for sustainable growth when bull markets return.
There’s a long history of successful companies emerging from recessions and depressions. Some of our nation’s behemoths were formed or were infants during exceptionally hard times. For example, GM emerged from the Panic of 1907 as the result of its founder buying up struggling firms like Cadillac and Oldsmobile. IBM got its start on the cusp of the next financial meltdown in 1914. More recently, digital powerhouses like Venmo, WhatsApp, and Uber arose from the 2008 financial crisis. The creators of these companies faced tight financial markets and beleaguered customers, yet these entrepreneurs found a niche where they could become indispensable. They focused on creating valuable products and services that customers were willing to use even in tough times.
Through a cursory assessment of these companies’ success, one might assume that some entrepreneurial leaders are exceptionally prescient while others aren’t as talented. In reality, what looks like an entrepreneur’s clairvoyance is actually a systematic use of tools that help uncover obscured patterns among diverse stakeholders.
Ultimately, entrepreneurs work like experimental scientists. They first develop hypotheses about their customers based on their own observational research. For example, Uber co-founders Garrett Camp and Travis Kalanick noticed the increase of social networking via smartphones along with the rise of unemployment from the 2008 recession. They matched people’s willingness to use their cars with a simple technological networking solution. Next, this new team built a few prototypes of their mobile app as experiments in their local market to prove whether or not their hypotheses were correct. These experiments gave Camp and Kalanick observational data which they used to iterate the next versions of their platform and launch quickly. The innovative duo’s propensity to iterate quickly and adapt to the needs of their many stakeholders has turned Uber into a global presence.
Those with the grit to start and operate during hard times are, contrary to popular lore, not always wild risk-takers. Successful entrepreneurs are masters at using their toolkit to de-risk their decisions. They start by assessing their resources and committing only what they can comfortably afford to lose. These innovators systematically evaluate their environment—the part of the environment where they have a little bit of expertise. Then, with the help of partners in their network, they use their resources to create and test prototypes with their customers.
Another case-in-point: Twinkies arose during the Great Depression when an entrepreneur’s strawberry pie company faced supply and demand shortages. The golden snack cake was an easy experiment that resulted in a product that remains with us today. Scant resources, cheap ingredients, a little creative thinking, and voila—a multigenerational icon in our snack aisle.