Darwin Selects Innovation During a Recession

Recently, on his blog, Design Thinking, the CEO of IDEO, Tim Brown, posted several questions regarding successful innovations during turbulent times in lieu of an Eskimo proverb saying, "the storm is the time to fish." Before coming upon his post I had been doing some research for EngineRoom about marketing, innovating and small businesses in a recession. Everything I came across said that it should be done(marketing/innovating in a recession), but no one was really discussing specific examples. Hence his question asking for real examples of innovation in turbulent times caught my attention.

I gave his post some thought and some research and came upon this answer.

I believe the best way to think about successful innovation is to equate it to Darwin's theory of natural selection.
"Darwin captured the only way that apparent design can arise without a designer: relentless selection on random variation." -Helena Cronin, Darwinian philosopher, London School of Economics.

However, innovation in business is not random variation, it is the biological equivalent of the cross insemination and mutation of ideas, (mostly) informed and strategically developed. While the market can shift and still select relentlessly, there is a lower degree of failure (we'd like to hope).

There was an article some time back that highlighted Sharper Image's failure, claiming that innovation is not the answer. This struck me for a moment, yet after entering the store's going out of business sale a few days later, I realized there was something vital the author failed to notice. Sharper Image's products were innovative for innovation's sake. In other words, they offered superfluous items for an extravagant era, unfortunately that era had passed. A few years back there were people who had everything reasonable (and unreasonable), so what could you get them as a present? Something from Sharper Image.

While this had been successful in the past, the economy shifted and they were selected out of the business gene pool because they were not nimble enough to evolve.
On the other hand, in a recent study by the Kauffman Foundation, they found that companies formed during a recession (excluding the Great Depression and World War II) were actually slightly more likely to go public than those formed during non-recessionary times. This makes sense within the Darwinian model because it is during a recession that people can more accurately gauge what traits have worked in the past, which have failed, and where the necessities will be.

For example, some successful business traits that are being passed down to new companies include the proper treatment of employees and a focus on the environment. Many businesses and industries are in turmoil during this recession, as old methodologies are being dropped by the way side. What traits or business models will emerge from this upheaval? I could name a few. However, it seems clear that it is up to innovation to determine the final outcome and eventual turnaround of the economy. Furthermore, it is the innovation during rocky times that yields the most rewards. Both Microsoft and Southwest Airlines were started in a recession and they both disrupted their industries by offering industry innovations.

I plan to expand on these ideas. What do you think?