Circa 350 BC, A bust of the Greek philosopher Plato, (c428 - c348 BC), one of the most important ... [+]
It was the Ancient Greek philosopher Plato who first observed that necessity is the mother of invention. Economic and social history teaches us that this proverb is often most relevant in the wake of disruptive events that sow chaos and disorder. Time and again, it is out of chaos that innovation and social, political, and economic transformation arise. The aftermath of the U.S. Civil War and the collapse of the southern agrarian economy contributed to the accelerated industrialization of America and the consequent expansion of vast railroad systems that expanded the nation’s trade and frontiers. The economic Depression of the 1920’s and 1930’s proved to be a catalyst for development of new government programs and the modern social structure. The economic stagnation and global energy crises of the 1970’s preceded the emergence of the tech boom.
In a recent Wall Street Journal column, An Unlikely Hero for 1906, 1929, and Today, Jason Zweig tells the story of Bank of America founder A.P. Giannini, drawing parallels to the present day. In 1906, in response ot the Great San Francisco earthquake, A.P. Giannini opened what became Bank of America to provide cash so that home and business owners could rebuild. As Giannini noted at the time, “we had money to sell and we went direct to the people to sell it”. Zweig opines, “A century ago, one banker was the lender of first resort when disaster hit. With coronavirus crippling the economy, we could use far more financial entrepreneurs like him today”.
Zwieg sees lessons for today from the story of Giannini, noting, “His story shows that innovation often comes when unlikely people and unusual events collide”. Zweig notes how Giannini “hated other people’s rules” and was a pioneer in branch banking – establishing offices in many towns to smooth out booms and busts across agricultural and industry sectors. He continues, “In times of crisis, those who can most afford to take risks are often the least willing to take them”, noting that innovation often originates from outsiders, as established institutions are often set in their ways, making them averse to taking chances.
A recent Washington Post article discusses how today we face a new period of deep and profound disruption. According to The Post, “A global pandemic has now killed more than 100,000 Americans and left 40 million unemployed in its wake”. Reflecting on the George Floyd killing on May 25, 2020, The Post observes, “These events present a grim tableau of a nation in crisis – one seared by violence against its citizens, plagued by a deadly disease that remains uncontained and rattled by a devastating blow to its economy”. The Post concludes, “The twin health and economic emergencies could make a rupture as dramatic as signature turning points in the country’s history”.
During a period of disruption, when date and science can shed light, we face skepticism. Just this week, Dr. Anthony Fauci, commented, “One of the problems we face in the United States is that unfortunately there is a combination of anti-science bias that people are – for reasons that sometimes are inconceivable and not understandable — they just don’t believe science and they don’t believe authority”.
For business, the outlook for data and analytics has grown increasingly uncertain in response to economic conditions. A new MIT Sloan Management Review article, The Recession’s Impact on Analytics and Data Science, co-authored by Tom Davenport, asks, “Will the current recession slow the growth in demand for analytics and data science”? The article goes on to note that “ROI is one of the first metrics used when companies turn to cost cutting in a recession”, and that “ROI is a tough standard for data investment”. Davenport and his academic colleagues recognize that investments in data and analytics initiatives often “don’t show a clear return on investment”. To paraphrase Dr. Fauci, now is not the moment to turn away from investment in data and science.
History teaches us that hard times have in the past served as a catalyst for societal, economic, and business transformation, and innovation, as was the case for Bank of America’s Giannani. From chaos comes change. Zweig concludes his article on Bank of America’s Giannini by noting that, “Periods of prosperity often favor the incumbents, but hard times can bring forth the upstarts who will help fuel the next boom”. Who among us will rise to meet the challenge of the present moment — to create the next wave of innovation and transformation — and in doing so, generate greater economic and social opportunity and inclusion for the betterment of all?
