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Winnipeg Free Press - PRINT EDITION

Downturns are a good time for innovation

By: Martin Cash

Posted: 12/11/2008 1:00 AM | Comments: 0 (including replies)

Industry experts and legislators on both sides of the border are clamouring to see commitments for product innovation included in any government bailout package for the North American auto industry.

The ability of the Big Three to finally get their hybrid and electric cars fully developed is seen by many as crucial to the survival of the industry.

The fact they are going cap in hand to governments to help them accomplish that is seen by some as an anathema to the power of innovation within the free market system.

But Melanie O'Gorman, an economist at the University of Winnipeg, said this is exactly the right time for governments to provide fiscal support to stimulate innovation.

It also underlines another phenomenon: When economic downturns occur, especially ones that shake the underpinning of the business infrastructure, it ends up being a good breeding ground for business innovation.

Rob Warren, director of the Stu Clark Centre for Entrepreneurship at the University of Manitoba, noted the Great Depression spawned such innovations as the jet engine, television and radar.

"Necessity is the mother of invention," Warren said. "Smart companies use down times to come up with new products to be ready to compete when the cycle turns."

Tom Tessier did not need an economic downturn to prompt him to develop the world's first automatic GPS (global positioning system) tracking and text-messaging device that is functional in the most remote parts of the world.

He started Solara Remote Data Delivery Inc. from his Winnipeg home a couple of years ago and formally launched the product at the beginning of December. While the timing had nothing to do with the economy, he has developed an innovative niche product that isn't intended to be mass marketed in any case.

"We had some interest in our product from people in the B.C. forestry industry and I made some calls recently but found that they just weren't there anymore," Tessier said.

While some potential customers may be cost cutting, Tessier said his Field Tracker 2000 (at $1,100 each) can provide enough safety for solo back-country patrols for customers who might otherwise have had to send two people on patrol.

Then there are the opportunities that might come about because the business downturn has disrupted normal affairs.

For Daniel Madrid, the opportunity for him to start his own specialty vitamin and nutritional supplement store on Corydon Avenue called Thrive Nutrition, came about because another business, a clothing store, closed.

"I wanted to open in that neighbourhood and all through the summer I could not find space and then this came up and even though most people might want to open in the summer, I knew this is what I wanted to do so I decided to go for it," said Madrid. The economic downturn will not disrupt Madrid's business plan. He was planning to work hard to market the store's presence on a limited budget, which would be the case regardless of the economy.

Tessier and his partners, including Epic Information Systems, have invested about $1 million in cash and sweat equity. He helps fund the company's development doing consulting on the side (he was one of the key members of Bristol Aerospace's science satellite project earlier this decade).

The company is already designed to be scaled to demand. Winnipeg precision metal fabricator E.H. Price assembles the device and overhead is kept low. That ought to put Tessier's company in excellent shape for when customers become more flush and free to spend on products like his remote GPS transmitter/text-messager. And if that doesn't happen, he can try to persuade an increasing number of customers looking to cut costs that his innovative product can save them money.

martin.cash@freepress.mb.ca

Republished from the Winnipeg Free Press print edition December 11, 2008 B5

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