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How 4 Game-Changing Innovation Spaces Can End The Recession And Return The Economy To Growth.

Posted by: Bruce Nussbaum on March 14, 2008

As I feared, the recession is turning out to be much worse than expected. It is going to be sharper, deeper and probably longer than recent shallow recessions. We are just beginning to feel the pain, which will get worse through the Spring and Summer, and perhaps the Fall. Why? Because we are seeing the unwinding of an entire economic model—an economy based on highly leveraged credit-fueled consumption. A system that is not regulated by any government. The US built this economy over the past decade and it is virtually collapsing. Today’s news on the emergency rescue of Wall Street investment firm Bear Sterns is just the beginning.

They key question to ask today is how do we spark economic growth in the US and the world and pull it out of recession. And the answer, very clearly, is innovation. I am offering up four big game-changing areas

of innovation that I think could be engines of economic growth, if...
The big if is politics of course. Who wins the Presidential election will determine, in large degree, whether innovation is allowed to play the role of invigorating the economy.

Here are the four game-changing innovation spaces that I believe can be engines of economic growth to pull the US out of recession:

1) The iPhone platform. The iPhone is developing into the key mobile computing/communicating/connecting platform of the early 21st century and thousands upon thousands of developers are designing new applications for it. The next iterations of the iPhone, with deeper broadband, and, hopefully, a better keyboard, will enable it to fulfill many of the dreams of mobility. Innovation in the iPhone platform could be a key driver.

2) Health Care. This $2.1 billion industry is so ripe for innovation that enormous economic growth can be generated. A technological, organizational and cultural revolution in health care, as the boomers move through it, can transform the economy. This is a huge, pervasive space that can generate enormous growth. It is a game-changer.

3) Green Tech. For both economic and foreign policy reasons, the US and the world must get off carbon-based energy. A massive government-sponsored effort to move the economy and transportation away from oil could generate enormous growth. Again, this is a huge, pervasive space and would prove to be a game-changer.

4) Social Networking. AOL's buy of Bebo is just more proof that the tribalization of the world's population into online and real communities could drive economic growth--if the right advertising formula is found. IT is now generating millions of new online communities with their own cultures as well as connecting to millions of once-isolated village communities, opening up major new opportunities for business. Once the advertising puzzle for social networking is solved, social networking could boom as a driver of economic growth. It could be another game-changer.

Reader Comments


March 14, 2008 4:18 PM

Health Care - Industry; Green Tech - Industry; Social Networking - approaching the status of being its own industry; but the iPhone platform? It seems the focus is too narrow to truly be an engine of economic growth.

My hunch is the engine is really the whole "mobile computing/communicating/connecting" space which includes iPhone's competitors - and it will have legitimate competitors - as well as devices like the Kindle.


March 14, 2008 7:26 PM

Agreed that investments in health care and green tech could provide a meaningful economic stimulus. But there the iPhone and social networking are WAY too small to move the needle on the macroeconomy.


March 14, 2008 10:27 PM

I can't believe you said iPhone and social networking!


March 15, 2008 1:28 AM

iphone... lame, must be an apple fan

too narrow

go read up on Google's Android


March 15, 2008 9:15 AM

Thats it! You just explained how Hillary can secure a victory! An iphone for every American! That is a top priority along with healthcare and 'tribalization'. Genius.


March 15, 2008 12:59 PM

The point about social networking and the iPhone is more about the broader aspect of communications, friendly user interfaces, and comfort in people moving online. The resultant is a paradigm shift in how we think about economics (supply/demand), what consumers purchase and the creation of new markets through new consumer demands.


March 15, 2008 8:57 PM

Agreed. Social roaming + iPhone/iPod Touch mobile platform + free agency-style heathcare reform = liberation of creative engine that could fuel lots of innovation down the road. And lots we need.

Rick S

March 16, 2008 6:26 AM

Given that overall US debt now exceeds the total net worth of US citizens, the only way to pull the US out of recession is to sell to other countries and increase GDP.

depends on "an economy based on highly leveraged credit-fueled consumption".

services are consumed, not exported; zero-sum game.

Green tech?
spending more money to benefit the environment becomes politically irrelevent once there's high unemployment.

social networking?
zero-sum game, a drain on overall productivity.

You're not going to fix an economy driven by it's own consumption by creating more things to be consumed by the same population.

"an economy based on highly leveraged credit-fueled consumption...that is not regulated by any government" -

Aamir Jan

March 16, 2008 4:28 PM

What about good old-fashioned public sector spending on infrastructure (roads/railways/ports) improvements and education? Healthcare is certainly a high priority too. Weaning the economy away from carbon fuels is still a long shot, and iPhone and social networking are at best "nice-to-have" but certainly not "must-have" gadgets (I mean technologies)!

Shailendra Vaidya

March 17, 2008 6:39 PM

If the tone of your writing is sardonic, I had a good laugh! But if you indeed feel that these are the innovations that can pull us out of recession, I must stop reading BW. iPhone, social networking, give me a break!


March 17, 2008 10:02 PM


I know you strive to be the curator of conversation and not necessarily the authority, but can you give us more on why you think the iPhone platform and social networking can move the needle?

It could help make this one-sided conversation more interesting...

bruce nussbaum

March 17, 2008 10:11 PM

Sorry for not being in this conversation. I'm racing to get the next Inside Innovation out.

The reason why I singled out the iPhone and social networking as potential ares of high innovation and growth is that they are both platforms. Indeed, the one is the technological manifestation of the other.
Platform innovation has the greatest social and economic impact. It's the game-changing kind of innovation, as opposed to the more incremental kind.
I understand that Intel has an iPhone-type of device under development and, of course, Nokia and the other players are pouring into the space.
When I say "iPhone," I really mean mobile computing and communicating. The iPhone really broke out that space and, inevitably, other players and products will invade it.
Social networking is a big, broad trend in society and in the economy. Like mobile computer--or healthcare--changing it via innovation can have dramatic economic effects. It is ripe for commercial development.
Thanks for jogging me.


March 18, 2008 1:06 PM

Agreed on all four predictions, but it's not just advertising that needs to be figured out for Social Networking. Citing the comments to this entry as an example, most digital communities are still unproductive and immature, both in the literal and economic sense.

PS Some of you dropouts need to learn how to read and/or get over your boring resentments for Apple. Bruce predicts these innovations will be "engines of economic growth," not necessarily the economic growth itself. Do any of you seriously think mobile computing and social networking (especially when put together) won't have massive economic effects for our nation?

Rick S

March 19, 2008 3:29 AM

The best potential economic benefit of mobile computing and social networking is connecting buyers and sellers more efficiently, including geographically targeted advertising.

However, that trend started long ago - while most in the US only use their phones for calls and instant messaging, Asian countries have been doing that since the late 90's. Sure, phones continue to get better at that over time, but it's an established market controlled by the major manufacturers in China (i.e. HTC), not the U.S.

In any case, from an economic standpoint, increasing market efficiency doesn't increase productivity (i.e. GDP); only lowering marginal cost of production can do that.


March 22, 2008 8:20 PM

The key question here like you stated is: "How do we spark economic growth in the US and the world and pull it out of recession."

I agree with you in the sense that the answer is in innovativeness and more specifically developing new technologies to act as solutions to the recession vivid in today's world.

The world is in need of major change...change in foreign policy, change in the economy, and most of all change in values.

I don't know if the iPhone and AOL is as effective as you've made it seem.


March 25, 2008 7:51 AM

Social networking naturally identifies & segments markets & interest groups. Just trawl through Facebook & MySpace for about 5 minutes & you will come across communities who want new things & systems. And what a great new mechanism for asking engaged & mainly cashed-up people for their wish lists of things that will make their lives better (or help them think they are better). Could be very good for business & for politics as well as for self-empowerment. Could be bad too, but hey.


March 29, 2008 2:22 PM

I agree." Socials" are a single segment of personas using cell phones. We conducted a deep dive into their motivations and aspirations. I agree it could be good for all but, how could it could enough. That would only occur if we are smart enough to inspire the other market segments as well.

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Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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