Innovate! E-Book

Thomas A. Meyer

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 280

Veröffentlichungsjahr: 2010

Beschreibung

Learn the lessons of how great companies began in the worst economic times

Eli Lilly. IBM. Medtronic, Procter & Gamble. Hewlett-Packard and Marvel Entertainment. All great companies and all made their start during the worst economic times.

Innovate!: How Great Companies Get Started in Terrible Times is first and foremost a source of true inspiration based on history. But it goes much further than that. It captures the lessons of these great innovative individuals and companies that began in the worst economic times, identifying the philosohies, strategies, and essential keys to success during your own challenging economic times.

• Provides a compass to navigate troubled economic waters though innovation
• Explains the creative sources of innovation possessed by every individual
• Harnesses the power of innovation of the individual and the organization

Innovate!: How Great Companies Get Started in Terrible Times shows you the strides you and your organization can take toward thriving in the worst of times. And it just might be your road map to building the next great American business success story.

Leseprobe

Table of Contents

Title Page

Copyright Page

Dedication

Acknowledgements

I AM, THEREFORE I INNOVATE

Introduction

Chapter 1 - RECESSION

PANIC OF 1797 (1797-1800)

DEPRESSION OF 1807 (1807-1814)

PANIC OF 1819 (1819-1824)

PANIC OF 1837 (1837-1843)

PANIC OF 1857 (1857-1858)

THE LONG DEPRESSION (1873-1879)

PANIC OF 1893 (1893-1896)

PANIC OF 1907 (1907-1908)

POST-WORLD WAR I RECESSION (1918-1922)

RECESSION OF 1926 (1926-1927)

THE GREAT DEPRESSION (1929-1939)

POST-WORLD WAR II RECESSION (1945)

LATE 1940S RECESSION (1948-1949)

POST-KOREAN WAR RECESSION (1953-1954)

RECESSION OF 1957 (1957-1958)

RECESSION OF 1960 (1960-1961)

RECESSION OF 1969 (1969-1970)

OIL CRISIS OF 1973 (1973-1975)

RECESSION OF 1980 (1980-1982)

RECESSION OF 1990 (1990)

RECESSION OF 2001 (2001)

RECESSION OF 2008 (2008-TBD)

Chapter 2 - PERSEVERANCE

THE LESSON: THE POWER OF CURIOSITY

THE LESSON: THE POWER OF COMMUNICATION

THE LESSON: FOUR TIPS FOR A SUCCESSFUL MOONLIGHTER

MODERN PARALLEL: RANDY COPELAND, VELOCITY MICRO

THE LESSON: GO TO WHERE THE BUSINESS IS

THE LESSON: CREATE YOUR OWN LUCK

THE LESSON: THE POWER OF COMPETITION

THE LESSON: THE POWER OF INCORPORATING

Chapter 3 - PAIN

THE LESSON: THE POWER OF PATIENCE

THE LESSON: THE POWER OF A NAME

MODERN PARALLEL: JOE JACOBSON, E INK CORPORATION

THE LESSON: THE POWER OF BRANDING

Chapter 4 - INTUITION

THE LESSON: THE POWER OF EMPLOYEES WHO BELIEVE

THE LESSON: THE POWER OF NEGOTIATION

MODERN PARALLEL: DR. JAMES ANDREWS, ANDREWS SPORTS MEDICINE AND ORTHOPAEDIC CENTER

THE LESSON: THE POWER OF DESIGN

THE LESSON: THE POWER OF FACE TIME

THE LESSON: WHAT KIND OF COMPANY ARE YOU?

Chapter 5 - SIMPLICITY

THE LESSON: THE POWER OF A COPYWRITER

THE LESSON: THE POWER OF LEARNING THE ROPES

THE LESSON: THE POWER OF CREATING A SOCIAL NORM

THE LESSON: THE POWER OF MANAGING DISASTER

MODERN PARALLELS: SIMPLE PROBLEMS, SIMPLE SOLUTIONS, SIMPLE PRODUCTS

Chapter 6 - FAILURE

THE LESSON: THE POWER OF QUITTING SCHOOL

THE LESSON: THE POWER OF ASKING FOR HELP

THE LESSON: THE POWER OF REJECTION

THE LESSON: THE POWER OF A SINGLE CUSTOMER

THE LESSON: THE POWER OF SCALABILITY

MODERN PARALLEL: BRIAN WELLINGHOFF, BARRY-WEHMILLER

THE LESSON: THE FALLACY OF “IT’LL SELL ITSELF”

THE LESSON: THE POWER OF R&D

Chapter 7 - FAITH

THE LESSON: INNOVATION IS ABOUT MORE THAN JUST A PRODUCT

THE LESSON: THE POWER OF SHARING YOUR PASSION... WITH EVERYONE

MODERN PARALLEL: ADAM SMITH, TWITTER COMMUNITY CHOREOGRAPHY (DANCE THEATER WORKSHOP)

THE LESSON: THE POWER OF INCENTIVES

THE LESSON: THE POWER OF KEEPING THE FAITH DURING UPHILL BATTLES

Chapter 8 - INSIGNIFICANCE

THE LESSON: THE POWER OF IMPRACTICALITY

THE LESSON: THE POWER OF ORGANIC DESIGN

MODERN PARALLEL: PATRICK LOCKLEY, SIX BY SIX GALLERY

Chapter 9 - PARADOX

THE LESSON: HELPING PEOPLE AT THE POINT OF NEED

THE LESSON: HOW TO KEEP EMPLOYEES IN TOUGH TIMES

THE LESSON: THE POWER OF NOT FRANCHISING

MODERN PARALLEL: ROBIN SLOAN, ROBIN WRITES A BOOK (VIA KICKSTARTER)

THE LESSON: DICTATE GROWTH BASED ON YOUR EMPLOYEES

THE LESSON: BECOMING RECESSION-PROOF

Chapter 10 - LUCK

THE LESSON: THE POWER OF LOCATION, LOCATION, LOCATION

THE LESSON: THE POWER OF A LOGO

MODERN PARALLEL: ALMA M. LUGTU, COVER MY BUM™

THE LESSON: THE POWER OF BARK AND BITE

THE LESSON: THE POWER OF EMPLOYEE LOYALTY

THE LESSON: THE POWER OF FORESIGHT

THE LESSON: THE POWER OF DIVERGENT REVENUE STREAMS

THE LESSON: THE POWER OF ACADEMIC COLLABORATION

Chapter 11 - GREED

Chapter 12 - INTEGRITY

MODERN PARALLEL: TOM PHILLIPS, WEEKENDS ONLY

Chapter 13 - THE INNOVATION GENERATION

UNTYING KNOTS

ILLUSTRATIVE COMMUNICATION

CONNECTING THE DOTS

SIMPLIFYING COMPLEXITIES

Chapter 14 - THE SANDBOX UNIVERSE

INTEGRITY

INSPIRATION

IMAGINATION

INNOVATION DEVELOPMENT

INDUSTRIALIZATION

THE SANDBOX UNIVERSE AT ST. LOUIS UNIVERSITY: A CASE STUDY

EPILOGUE

NOTES

ABOUT THE AUTHOR

INDEX

Copyright © 2010 by Thomas A. Meyer. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Meyer, Thomas A.

Innovate! : how great companies get started in terrible times alliances / Thomas A. Meyer.

p. cm.

Includes index.

eISBN : 978-0-470-64079-1

1. New business enterprises—United States. 2. Financial crises—United States. I. Title.

HD62.5.M48 2010

658.1’10973—dc22

2010003130

The power of Innovation is within everybody’s reach. The power of creation is reserved for God and women. To Miriam, my beloved wife of 29 years, the most wonderful mother of our eight children, and the only individual who has been by my side through thick and thin. Living with a dreamer means contending with the inevitable nightmares as well. I love you, thank you, and God Bless You.

P.S. I love you Robert, Jonathon, Erika, Alexandra,Ursula, Georgianna, Sophia, and Luke . . .with each child, a new, unique, and wonderful inspiration.

ACKNOWLEDGMENTS

The Power of Three . . . these are three very special people.

First, I would like to thank Susan McDermott, my Senior Editor at John Wiley & Sons. She was the one who gave me many chances to answer the compelling question: What do people need to know during these terrible times? Thank you for your faith and patience.

Second is Jamey Stegmaier. Without his help, this book would not have happened. Jamey stepped up at a time of need to research, interview, and write the Modern Parallels, discover and compose the Lessons, edit the general content, and refine the page proofs. He is a brilliant young writer whose contributions to the book and persistance to keep me on pace has been nothing short of amazing. Jamey is currently involved with two startups: TypeTribe, an online resource for writers seeking targeted audiences and feedback, and Blank Slate Press, a new St. Louis-based publishing company. He balances those two ventures with his full-time position as the Director of Operations at the Catholic Student Center at Washington University in St. Louis, and writes fiction in his spare time. You can follow Jamey’s exploits and insights at www.jameystegmaier.com. Thank you for your contributions and your dedication.

Finally is Father Robert Xavier Albert, a black Catholic priest who has been my secret weapon. He has shown me the power of prayer. Father died the day that Susan informed me Wiley wanted to do the book. Thank you for your love and pray for all of us.

I AM, THEREFORE I INNOVATE

Innovation is an individual sport. At the heart of each idea is an individual’s mind and soul. This mind and soul have developed in a unique way by being exposed to many different variables contributing to their formation. Some of these are genetic, some are environmental, but the sum of the parts of this most intricate process is unique to each person and one of the most profound mysteries of life.

One of the important variables in my formation was my father. He was a Depression kid, a World War II vet, and a gold-watch employee for Western Union Co. He was always thinking and tinkering. A couple of his inventions remain vivid in my memory. The famed lawnmower umbrella was a neighborhood classic. He used an old broken umbrella and fastened it to the lawnmower so that he would be shielded from the sun. Then there was my first hockey stick. When the St. Louis Blues hockey team started in our town, hockey was the craze. A real hockey stick was hard to find, so my father made me one out of some wood scraps.

After working 50 years for Western Union, he spent part of his last year on disability because of a heart condition. My father had lived through many employee retirements at Western Union and had never missed a funeral for the many former employees who died over the years. He was a storeroom manager, not an executive, but every day he would wear a white shirt and tie out of respect for his job.

Then one day, while at the dinner table, the doorbell rang and I ran to the door. A delivery person handed me a package with my father’s name on it. I brought it in and he opened it. It was a watch, a parting gift for working 50 years at Western Union. My father was a kind man, a happy man, but that day, I saw a very sad look in his eyes despite the smile on his face. He had worked 50 years for a company and they sent him a watch in the mail.

When I was barely 20 years old, my father passed away. I was away at college at the time and returned home for the funeral. As the family grieved the loss of my father, his funeral would teach me a wonderful lesson regarding the spirit of innovation in tough times.

At the Western Union storeroom my father had managed, there were messenger boys who would deliver telegrams on bicycle. Sometimes a bike would break down and the company would buy a new one. My father would always save the pieces from the old bike in a back room. He would then patiently wait for enough pieces to collect until he had enough parts to build a complete bike. He would give it to a kid in the downtown neighborhood who couldn’t afford to buy a bike. Over the 50 years he worked at Western Union, my father constructed and gave away so many secondhand bikes that he lost count.

At his funeral, as I stood by his coffin, I met for the first time more than 50 people who had received their first bike from my father. I realized how many lives and futures he had touched by putting together these innovative “recycles” one piece at a time.

My father managed inventory for a living, but he taught me a profound lesson about innovation: The most valuable type of inventories in life are the ideas that you store in your mind and treasure in your soul.

Thomas Meyer Chief Innovation Officer St. Louis University

INTRODUCTION

This book is not about the innovation mind-set, the type of mental behavior necessary to create an environment conducive to innovation. Nor is it about a process, plan, or playbook for innovation. These management guidelines work well in product development and business-planning environments, but innovation is a talent, not a skill. Innovation is a raw ability that needs space and nurturing. Most importantly, it’s an individual exercise, not a groupthink or management committee.

Innovation operates on the quantum level; that is, the smallest but most powerful end of the intellectual spectrum. This is why an apparently insignificant innovation can revolutionize the world for better or worse.

Throughout this book, I explore the powerful sources of innovation and demonstrate through empirical examples how innovation has thrived in terrible economic conditions throughout U.S. history. Innovation has played an important role in improving the state of the economy and will be integral in changing the face of the world as it recovers from the recession that began in September 2008.

During terrible times, innovation becomes more apparent to the casual observer because during the darkness of economic panic, like a lighthouse shining on a lost ship, problems are exposed and innovation begins to emerge.

Innovation is an irrepressible, ever-present force within individuals. It cannot be extinguished in the human spirit. As the speed of change increases due to numerous and disparate variables, innovation will remain the catalytic generator that determines an organization’s ability to compete in a volatile environment.

I hope to liberate and inspire you to innovate at the quantum level. Consider this book as a “Get Out of Jail Free” card for your brain. You may be surprised to learn of the many ironic twists and turns that inspired individuals to innovate and change the course of history.

The book is organized in a manner that I hope is easy to follow and explore in any order you wish. To force you into a straight-line progression of knowledge would defeat the whole purpose of the book. I have made each chapter self-contained so that you can finish your train of thought before jumping around to other chapters that catch your eye.

Although innovation can pull people and economies out of tough times, it can also have a negative impact on the masses if implemented with unbridled selfishness. Enjoy your newfound freedom to innovate, but use your new powers with integrity.

Chapter 1

RECESSION

Take a moment to look back on economic history in America through the rose-tinted glasses of innovation. You will see the same history, but with a softer tone and a vision of hope. The story is told with a clear focus on innovation. Once you experience the economic tides of innovation, you will understand the ocean of opportunity in a new light.

Terrible times are no match for innovation. A number of great companies have been started during economic downturns. For the purposes of this book, I limited my criteria for what I call a great company to those that have continued operations or brand equity through 2009. This eliminates many great innovations, but nevertheless provides a substantial list of companies for the purposes of demonstrating the powers of innovation.

Before we begin our excursion, let’s develop a semantic guide to the evolution of the terminology of terrible times. As America has matured, so has the economic language we use to describe bad economic times. The softening of the language is an effort to calm and restore the confidence of people, which plays a huge part in the ebbs and flows of the economy.

In the 1700s, the preferred description of terrible times was panic. It’s a word that describes the frenzied scramble to keep the economy afloat. This term stayed in vogue for a while, but lost ground to the dual terms of depression and recession. These terms have varying degrees of difference, but describe the same kind of economic disaster. That is, until you precede the word depression with the adjective great. At that point, you have reached the pinnacle of terrible times terminology.

There can and will only be one period in U.S. history described as the Great Depression (1929 -1939). This term should describe the worst of the terrible times. It is the standard by which all terrible times terminology will be compared in the future.

Accordingly, we have retreated to the reliable term recession, but have introduced even more palatable, situation-specific expressions such as oil crisis or bursting the dot-com bubble.

Furthermore, if we must admit that there is a recession, we tend to understate the label in a sort of economic optimism. You might hear terms like downturn or slowdown. We even find terms that refuse to admit the downward trend, such as a sideways movement.

For the purposes of this book, I really don’t care what you call it. Whatever term gives you more comfort is the one I recommend, but please understand there is not a dime’s bit of difference between them as it relates to innovation.

(Note: Unemployment rates weren’t calculated by the U.S. Bureau of Labor Statistics prior to 1929. All sections on post-1929 recessions will include that data.)

PANIC OF 1797 (1797-1800)

Sailing back to 1797 allows us to experience the first recession in the United States. America was a new nation back then and this turbulent time wreaked havoc on its young economy. The major culprit was the Bank of England. The Bank was already reeling from the effects of the French Revolutionary War between England and France. This war had caused deflationary repercussions in England. The bank was tied into American commercial and real estate markets and caused the first major disruptions in America’s fledgling economic system.

As the American economy began its first battle with a recession, innovations and start-up companies were flourishing. Of course, this young country needed financial services—specifically, banking and investment assistance—to fund and foster business growth. Two companies would emerge from this recession to create financial forces that would impact the American economy for generations to come.

Great companies that started during this panic include what would eventually become the largest American bank, Chase Manhattan; and the first company to organize an IPO, Alex, Brown & Sons.

DEPRESSION OF 1807 (1807-1814)

In 1807, U.S. President Thomas Jefferson and Congress passed the Embargo Act. This bill barred trade between the United States and other nations. Eventually the bill was proved unenforceable and was repealed in 1808, but not before it had devastated the shipping industry and caused serious stress to the economy. Many people who worked in the shipping industry were unemployed and the businesses associated with the industry were devastated.

Innovation was introduced into industries ranging from publishing to textiles, home appliances, insurance, pottery, and liquor, to name a few.

Great companies that began during the depression of 1807 include John Wiley & Sons, The Hartford, Rogers Orchards, Roper Industries, Bybee Pottery, and Woodford Reserve.

PANIC OF 1819 (1819-1824)

The panic of 1819 is considered the first major financial crisis in American history, and for good reason. After the War of 1812, the U.S. economy saw an enormous and robust expansion. However, as the panic of 1819 began to have its full impact, the United States began to experience a crisis that would be pervasive and damaging. It spanned the areas of real estate, banks, manufacturing, and agriculture. Unemployment rates reached levels never before seen in this young country.

This panic produced giants in the fields of manufacturing, food processing, publishing, and energy.

Great companies that began during the panic of 1819 include William Underwood Company, Consolidated Edison, Fairbanks Morse, and HarperCollins.

PANIC OF 1837 (1837-1843)

The introduction—or rather, innovation—of paper currency initially had a devastating effect on the U.S. economy. Speculation was widespread at this time, but the realization that the banks would be circulating paper instead of gold and silver coins created a panic. Confidence in the banking system collapsed and the result was the failure of many banks across the country.

This panic may have frightened the faint of heart, but for innovators this period produced a banner crop of companies that remain today as icons of innovation.

Great companies that started during the panic of 1837 include Procter & Gamble, Tiffany & Co., Berkshire Hathaway, Dun & Bradstreet, Motts, and Stanley.

PANIC OF 1857 (1857-1858)

The failure of the New York branch of the huge Ohio Life Insurance and Trust Company sent shock waves throughout America and Europe. This resulted in a drastic decrease in European speculation for U.S. railroads, consequently crippling many railroad-related businesses and putting great pressure on U.S. banks, which lost consumer confidence. The jobless rate soared all over the United States and brought with it regular protests by laid-off workers. This was the first recession that was fueled by a reactive European influence, and the first to demonstrate the interrelated effects that a world economy can cause.

Nonetheless, new inventions and companies sprouted up across America that would become part of Americana forever. Great companies that started in the panic of 1857 include Macy’s, Bemis Company, Fifth Third Bank, Cooper Chemical Company, and First Hawaiian Bank.

THE LONG DEPRESSION (1873-1879)

The Long Depression, resulting in a nationwide downturn, was caused by two significant economic events. First, on May 9, 1873, the Vienna Stock Exchange in Austria crashed. This had a crushing effect on the largest American Bank, Jay Cooke & Company in Philadelphia, which eventually declared bankruptcy on September 18, 1873. Second was the adoption of the Coinage Act of 1873, which embraced gold as the standard and demonetized silver. Together, these events had a rippling negative effect through the U.S. economy that lasted seven years.

The Long Depression produced an even longer list of innovators that would build companies that would stand the test of time. Great companies that started in the Long Depression include Adolph Coors Company, Barnes & Noble, Cincinnati Bell, Kohler Company, Puget Sound Energy, Ralphs, Zions Bancorporation, ADT Security Services, Bank of America, Pacific Press Publishing Association, R.J. Reynolds Tobacco, Chagrin Falls Popcorn Shop, Conoco Inc., Performance Food Group, Prudential Financial, Stacy Adams Shoe Company, Thomas Organ Company, A. Schwab, BVD, BernzOmatic, Diebold, Eli Lilly and Company, Hendrick Manufacturing Company, Jockey International, Ladenburg Thalmann, Spalding, Bee Group Newspapers, Burpee Seeds, E.W. Scripps Company, F.W. Woolworth Company, Geiger, Menen, Mohawk, St. Louis Refrigerator Car Company, Bankers Life and Casualty, Chattem, Chevron Corporation, General Electric, Inglenook Winery, McNeil Laboratories, I. Magnin, Principal Financial Group, and Scott Paper Company.

PANIC OF 1893 (1893-1896)

Railroads were the speculators’ choice of investment in the late 1800s. When they went bad, they had a crippling effect on the economy. The Reading Railroad (yes, it was an actual railroad before the PBS show) of the United States failed, which influenced European investors to withdraw their investments, which in turn crushed the economy.

The broad-based effects of this bankruptcy caused the loss of many jobs, and it also affected the stock market as investors began to pull their money out of the markets. In addition, many banks failed. These major activities also caused a run on gold and incited panic throughout the financial markets.

As you now might suspect, this depression did not keep the innovators down; in fact, many would say this crop of companies might be the sweetest of them all.

Great companies that started in the 1890s recession include IBM; The Hershey Company; Maytag; Weber-Stephen Products Co.; Popular, Inc.; Tootsie Roll Industries; Stags’ Leap Winery; Stewart Information Services Corporation; Eckrich; G.R. Kinney Company; Gelco; Cowles Publishing Company; Melville Shoe Corporation; Stromberg-Carlson, Tutor Perini Corporation; DePuy; Elliott Company; Harris Corporation; Lennox International; Lincoln Electric; Malheur Bell; J.C. Newman Cigar Company; Post Foods; Schwinn Bicycle Company; Anchor Brewing Company; Church and Dwight; Macmillan Publishers; New York Telephone; Schmitt Music; T. Marzetti Company; and the Wisconsin Energy Corporation.

PANIC OF 1907 (1907-1908)

The first major financial crisis of the nineteenth century was precipitated by the failure of several Wall Street brokerages and the collapse of the Knickerbocker Trust Company. This resulted in a contracted money supply, which led to the failure of many businesses and financial institutions.

The Cleveland administration worked closely with J.P. Morgan to restore order by channeling money from larger institutions to smaller ones. This crisis led the country to eventually pass financial reforms and establish the Federal Reserve System, an innovation in itself.

The woes of Wall Street had little impact on the surging innovation and entrepreneurial spirit in America at the turn of the century, as demonstrated by the many new ideas and companies that were created during this period.

Great companies that started during the panic of 1907 include Bessemer Trust, Block Drug, Blue Bell Creameries, Böwe Bell & Howell, Dairylea Cooperative Inc., Dr. Scholl’s, Dutch Boy, Faygo, Integrys Energy, Leupold & Stevens, Moody National Bank, Neiman Marcus, Praxair, The Hoover Company, UPS, Western Publishing, Briggs and Stratton, Bush Brothers & Company, CIT Group Inc., Converse, Filene’s Basement, Fisher Body, General Motors, Harley Ellis Deveraux, Holler House, Pero Vegetable Company, Speed Queen, Williams Companies, and Yale University Press.

POST-WORLD WAR I RECESSION (1918-1922)

The end of World War I brought with it extremely high employment and inflation. This reflected the decrease in manufacturing production that was no longer necessary during peacetime. Not only did people who had jobs during the war lose them, but troops returning from war struggled to find employment as well. This combination drove unemployment to record highs. With no precedent with which to compare, America was unprepared to deal with this confluence of negative factors in the economy.

This adjustment may have caused the increase in the amount of innovative activity that was demonstrated by the many new ideas and companies that sprouted up during this period.

Great companies that were started in the post-World War I recession include A-Treat Bottling Company, AgStar Financial Services, Brookville Equipment Corporation, Celanese, Cowen Group, Dominick’s, Houchens Industries, Peragallo Pipe Organ Company, Ritz Camera Centers, TIAA-CREF, The Timberland Company, Universal Corporation, West Coast Shoe Company, Woodman’s Food Market, Zenith Electronics, Allen Family Foods, Boone Drug, Charles of the Ritz, Columbia Pictures, Columbus Tubing, Community Coffee, ConAgra Foods, Cornwell Tools, Cummins, Fanny Farmer, Ferro Corporation, Foster Grant, Great Western Bank, Gr iffith Laborator ies, Haliburton, Hess Corporation, Hilton Hotels, Holdings of American International Group, Jervis B. Webb Company, KitchenAid, Malt-O-Meal Company, Musso & Frank Grill, Ovson Egg, Peter Paul Candy Manufacturing Company, Pioneer Instrument Company, RCA, Red Ball Corporation, Rosendin Electric, Shaw’s Star Market, Tandy Corporation, Toro, United Artist, AMC Theatres, Arizona Public Service, Ben Franklin Stores, CR England, Cameron International Corporation, CoorsTek, Dobson Cellular, Dorrance Publishing, and White Castle.

RECESSION OF 1926 (1926-1927)

Arguably the most forgotten recession in the United States because it came before the Great Depression, the recession of 1926 caused much pain to many people as business activity dropped 12.2 percent and trade/industrial activity went down by 10 percent. The recession was caused primarily by labor strikes in Britain and Germany, as well as the widespread effect of Henry Ford halting production for six months to switch over from the Model T to the Model A (innovation can cause recessions just as much as it can pull economies out of them).

This period was a foreshadowing of devastation to come and provided insight on how the world economy was becoming more interdependent.

Even though this period lasted only 13 months, many new companies were born from innovative ideas and inventions. Great companies started during the recession of 1926 include Catawissa Bottling Company; Container Corporation of America; Cooper Tire & Rubber Company; Crane Merchandising Systems; David Sunflower Seeds; Haggar Clothing; Howard Miller Clock Company; IGA Supermarkets; Jel Sert; Maid-Rite; McKinsey & Company; Mt. Olive Pickle Company; NBC; Nationwide Mutual Insurance Company; Nocona Athletic Goods Company; Orange Julius; Oregon Steel Mills; Paul K. Guillow, Inc.; Selective Insurance Group; Spring Air Company; Swiss Colony; Trailways of New York; UAL Corporation; Quick Tires; 7-Eleven; American Family Insurance; Arthur J. Gallagher & Co.; Bali; Blue Bird Corporation; Bonne Bell; Browning Arms Company; CBS; Community Supermarkets; The Derrydale Press; Eaton Harbors Corporation; Fairchild Camera and Instrument; Georgia-Pacific; Gerber Products Company; Growmark; Herberger’s; Jays Foods; Kinder Morgan; La-Z-Boy; Marriott International; Mutual Savings Life; Northrop; Oberweis Dairy; Resistol; Ted’s Hot Dogs; Theisen’s; Zaro’s Bakery; Ziff Davis; and Zimmer Holdings.

THE GREAT DEPRESSION (1929-1939)

Unemployment rates: 1929, 3.2 percent; 1933, 24.9 percent; 1939, 17.2 percent.

Starting with the stock market crash on October 29, 1929 (Black Tuesday), the Great Depression would become the largest economic disruption in the history of the world.

Beginning in the stock market, moving to the banks and to agriculture, this period wreaked havoc around the world for a period of nearly 10 years. The global downward spiral would devastate individuals and businesses at an alarming rate.

Most agree that it did not end until the beginning of World War II.

It is a testament to the power of innovation that even during the most terrible depression in U.S. history, hundreds of innovators founded companies that would eventually become world-class corporations.

Great companies started in the Great Depression include Acme Boots; Ampco Pittsburgh; Andronico’s; Buehler Food Markets, Inc.; Carvel; First Jersey Credit Union; General Foods; Grumman; Home Federal Banks; Macy’s, Inc.; Masco; Mooney Airplane Company; ServiceMaster; United Technologies; Walter Lantz Productions; AMETEK; Benco Dental; Bendicks; CenturyTel; Dewey’s Bakery; Dodge & Cox; Fisher-Price; Geophysical Services Inc.; Markel; Nat Sherman; Parr Lumber; Publix; Rodale, Inc.; Starwood Hotels & Resorts Worldwide; Texas Instruments; Allstate; Baxter International; Clifton’s Cafeteria; Estes Express Lines; Giant Eagle; John L. Scott; Marsh Supermarkets; Maur ices; Mobil; PerkinElmer; Serta; Sleepy’s; Southwest Gas Corporation; Tyson Foods; Zondervan; Advance Auto Parts; Bashas’; Beloit Civic Theatre; Bruno’s; Deb Shops; Doeren Mayhew; Ethan Allen; Goodman & Company; Greene Plastics Corp.; High’s Dairy Store; Kansas City Steak Company; Krystal; Noble Energy; Mrs. Fisher’s, Inc.; Olan Mills; Or iental Trading Company; Pioneer Services; Quil Ceda Leather; Revlon; Rocky Brands, Inc.; Smith’s Food and Drug; Toddle House; Willis & Gieger Outfitters; Yarnell Ice Cream Co.; Zippo; ATW Assembly & Test Worldwide; E & J Gallo Winery; Federal Deposit Insurance Corporation; Felpausch; Frankoma Pottery; Giant Foods; Global Partners; Global Van Lines; Gorman-Rupp Company; Guadalupe-Blanco River Authority; Haggen Food & Pharmacy; IC Bus; Knight Ridder; Marvel Entertainment; Mayfran International; Navy Federal Credit Union; Peter Pan Bus Lines; Rockwell Collins; Ryder; Trinity Industries; Waldenbooks; Warner Bros. Cartoons; Amana Corporation; Associated Grocers; DC Comics; East Bay Restaurant Supply; Eimac; Ferguson Company; Gulf+Western; Meijer; Mutual Broadcasting System; Muzak Holdings; Old Dutch Foods; Parker Drilling Company; RaceTrac; Service Merchandise; Steak ’n Shake; Towers Perrin; Zabar’s; 20th Century Fox; ADC Telecommunications; Allen Press; Avery Dennison; Beckman Coulter; CUNA Mutual Group; D.A. Davidson & Co.; Friendly’s; General Nutrition Centers; Holiday House; Invesco; Leo Burnett; Lucky Stores; Morgan Stanley; Orange Belt Stages; Owens Corning; Penguin Books; Pentagon Federal Credit Union; Perkins and Will; Republic Pictures; Schneider National; Van Dyne Crotty; American Media; Ar izona Federal Credit Union; Big Boy; Brooklyn Bottling Group; Gertrude Hawk Chocolates; Glen Glenn Sound; Gordmans; New Directions Publishing; Skidmore, Owings and Merrill; Smithfield Foods; Stater Bros.; Telex Communications; Trailways Transportation System; Fantasy Publishing Company, Inc.; BHDP Architecture; Brown Derby; Citizens Equity First Credit Union; Colonial Life & Accident Insurance Company; Conlin’s Furniture; Dart Container; GEHA; Harrah’s Entertainment; Hensel Phelps Construction; Key Food; Krispy Kreme; Osco Drug; Pepperidge Farm; Polaroid Corporation; Red Lion Hotels Corporation; Ritz-Carlton; Sheraton Hotels and Resorts; Stuckey’s; T. Rowe Price; Ukrop’s Super Market; Academy Sports and Outdoors; Hewlett-Packard; Bridgeport Machines, Inc.; Carlson Companies; Choptank Electric Cooperative; Columbia Sportswear; Cumberland Farms; Dillards; Du-par’s; Edlebrock; Guys Snack Foods; Jersey Shore Steel; Kaplan, Inc.; Longs Drugs; Mac Tools; Molex; Pinnacle Entertainment; REI; Restonic Mattress; Science Research Associates; Tractor Supply Company; United Dairy Farmers; Vivitar; Allen Organ; Blue Shield of California; Choice Hotels; Cly-Del Manufactur ing; Dollar General; Ferrellgas; Foster Farms; GMAC; Gerber Legendary Blades; Home of Economy; Jack Morton Worldwide; KFC; Marshall Farms; New Albertsons; Roberts Aircraft; Sara Lee Corporation; Schnucks; Vita Craft Corporation; and Wachusett Potato Chip Company.

POST-WORLD WAR II RECESSION (1945)

Unemployment rate: 1.9 percent.

Like its predecessor, World War II created an increased demand in the economy that began to decrease after the conclusion of the war. Certain manufacturers were exclusively dedicated to wartime production, and some could not withstand the unused capacity long enough to evolve to other types of production.

Additionally, the eligible workforce grew substantially as soldiers returned to civilian life and now had to compete for jobs in a contracting economy. This recession was much milder than the previous postwar recession and lasted for a shorter period of time.

Although it lasted only a year, this was sufficient time for a substantial number of innovative companies to rise up.

Great companies that started in the post-World War II recession include Ashley Furniture Industries, Bantam Books, Baskin-Robbins, Cantor Fitzgerald, Circle Line Sightseeing Cruises, Constellation Brands, Do It Best, Factory Motor Parts, Fisher Electronics, Liberty Films, Mattel, Mutual of America, Rich Products, Schreiber Foods, Stewart’s Shops, Sub-Zero Refrigerator, U-Haul, United Hardware, and Walter E. Smithe.

LATE 1940S RECESSION (1948-1949)

Unemployment rate: 1948, 3.8 percent; 1949, 6.6 percent.

After the Great Depression, the United States economy settled into a pattern of routine business cycles affected primarily by three factors: interest rates, money supply, and inflation.

The economic balancing act of the Federal Reserve was key in the post- Great Depression economic structure. As in previous recessions, unemployment rates rose to 6 percent as money became tight and businesses began to fail.

By that point, the innovative engine room had established years of counterintuitive results, and this recession was no different.

Great companies