In midst of economic maelstrom, some are seeking, will find next wave

Editor’s note: John Warner, a venture capitalist and economic developer, blogs about innovation and education. He also puts on a venture and innovation conference each year in South Carolina called InnoVenture. His comments apply to entrepreneurs and leaders not just inside the Swamp Fox community, which he helped create.

GREENVILLE, S.C. - Except for the handful of us who remember the 1930s, there has never been a time in our lives when Joseph Schumpeter's famous observation has ever been more relevant:

“The opening up of new markets and the organizational development from the craft shop and factory... illustrate the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.... [The process] must be seen in its role in the perennial gale of creative destruction; it cannot be understood on the hypothesis that there is a perennial lull.”

Well, none of us now are complacent about a perennial lull. Especially this week as many of us are feeling the full destructive force of the economic category five hurricane, the entrepreneurs among us across industry and academia are already focusing on the creative side of this storm, knowing that some of the greatest fortunes in human history will emerge from the ashes of this debacle.

Many of the institutions that we live with today, from social security to the securities and exchange commission, are legacies of the Great Depression. Many of the greatest fortunes of the next several decades will be built by recombining components of the old economic structure into new business models.

John Hagel, co-chairman of the Deloitte Center for Edge Innovation, has an interesting blog post about how successful forms of organization will emerge. He first notes that we have been through an extraordinary time of financial leverage, which for the foreseeable future is over. It is incredibly difficult today to execute business strategies that require attracting large amounts of capital.

He further observes:

“But, as we begin to see the very real downsides of financial leverage, we might want to explore other forms of leverage that are far more robust in times of economic downturn. For example, capability leverage—the ability to access and mobilize the resources of other companies to add more value to customers—is a powerful force for creating value in markets. Rather than one company trying to do everything, it can mobilize a broader network of participants to deliver highly specialized and flexibly tailored value to individual customers.”

This has been an underlying premise of the Swamp Fox Community and InnoVenture, our annual innovation conference, for years. Connecting organizations in a broad network of specialized collaborators is also the fundamental value proposition of our new web-based Jute Network Relationship Manager. Hagel identifies a more powerful force that has also been at the heart of Swamp Fox, InnoVenture, and (recently merged with) Jute:

“Yet there’s an even more powerful form of leverage for companies to tap into: learning leverage. Learning leverage seeks to build relationships with other companies that help each company get better faster by working with others. Rather than treating existing resources as fixed, learning leverage recognizes the value for everyone in finding ways to continually push the performance envelope for all participants. In rapidly changing global markets, learning leverage provides a powerful approach to increase value delivered to customers. Learning leverage introduces a powerful compounding effect – not only does the value delivered increase with the number and diversity of participants, but more value is created by each participant over time.”

For those considering where the next fortune will come from, a good place to start is reviewing the 2,200+ people with online profiles in the Swamp Fox Community, who collectively represent an incredibly deep pool of talent and capabilities. The best entrepreneurs among us, both inside major corporations and universities and in independent companies, will figure out how to combine the capabilities in the Swamp Fox Community into powerful new business models.