Five Lessons from Busts in Houston and Seattle that Could Be Applied in Michigan

5/3/10

I lived in Houston when the Oil Bust hit in the 1980s. With it came crushing unemployment. Yet Houston led the nation for the next several years in new business start-ups. Now large numbers of people work in a more diverse economy, including biotechnology, alternative energy, and information technology.

Seattle, where I live today, has a similar story with the Boeing Bust of the early 1970s. Michigan may be at the nadir of its fortunes now, but that could actually be the best time to reconfigure and explode in new directions.

Here are five things I observed at organizations in Houston and Seattle that could be applied today in positive way in Michigan.

1. Be adaptable. The best companies have the ability to change their course, often quite rapidly. In many cases, the ideas that get a company started are not the ones that actually create revenue. Follow the history of AMF, which changed from producing cigarette-making machines to producing recreational equipment, becoming one of the largest along the way.

2. Perseverance. Working at the cutting edge holds tremendous opportunities but also many pitfalls. There is a definite curve of excitement all companies follow—the initial rise is wonderful but the inevitable valley can be a brutal slog. It requires a special ability to overcome the inevitable disappointments almost all innovative companies must cross.

3. Destroy silos. Slow information flow kills companies. Never let silos develop and keep the organization flat. Encourage openness and transparency. You never know where the killer idea will come from.

4. Identify mediators. The biggest problem preventing innovation from becoming a commercial reality is the inability to identify and leverage the strengths of those few people who can translate great ideas into viable products. They mediate between the creativity of the lab and riches of the mass market. Find them and nurture them.

5. Learn to love constraints. Curiously, the best time for innovation is often when things are the most confining. Innovation can die if there is too much money to throw around. Some of the most creative works came about because of a lack of resources. Take advantage of this process, realizing that an emergent property of constraints can lead to incredible creativity.

[Editor's note: To help launch Xconomy Detroit, we've queried our network of Xconomists and other innovation leaders around the country for their list of the most important things that entrepreneurs and innovators in Michigan can do to reinvigorate their regional economy.]

Richard Gayle is the founder and president of SpreadingScience. Follow @

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  • Linda Shillingburg

    GREAT article. I love the application of the learning. Hoping that someone uses this to help Michigan.