Innovation does not relate to patented products, or to branded services alone. Indeed, some of the most productive creativity within an organization resides in its processes, away from the public eye. Even senior executives may be guilty of neglecting significant symbols of innovation during times of rapid business expansion. Acute adversity brings creativity to the surface. Stock market conditions during the first half of 2008 are the sort that foster innovation. That is why we find just a few gems of stock price advances in growing swells of declines.
Most cases of positive Beta relate to structured innovation in organizations. These movements tend to generate their own energies and become self-sustained once ignited by capable management teams. Creativity, contrary to popular misconceptions of individual brain-waves, is a continuous and team effort in professionally-run organizations. Innovation applies to all levels of hierarchy, and no extremity should escape its searching inspection. Some of the most productive innovations start out in small ways and in unexpected corners of a remote office or factory.
Inflation and recession tend to hunt in pairs. They attack stocks like pincers, taking great swathes of value away in weeks. Panic is a poor though common response. Innovation tends to be resource-intensive, so the best executives will distinguish between the transient and the irreversible when adversity hits the stock prices for which they are accountable. Zero-Based Budgeting is a transparent way of putting everyone on a level playing-field in terms of innovation for better business results.
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