29 Aug 2017
Finding breakthrough solutions to industrial decline
‘Unreasonable behaviour’ could be a compelling answer to the persistent issue of economic decline in regions affected by declining industries.
This is the view of Julian Birkinshaw, Professor of Strategy and Entrepreneurship at London Business School.
“Government subsidies to support old businesses, training and education schemes, and incentives for start-ups – all these approaches have some merits, but they lack imagination and they tend to perpetuate old failings,” says Professor Birkinshaw.
“Sometimes fresh thinking, expressed by unreasonable people and unreasonable behaviour, is the only way forward. With daring and a new perspective, unreasonable people may discover ways to use a city or region’s existing resources in a new way.”
Professor Birkinshaw is the of Fast/Forward: Make Your Company Fit for the Future which points to conservatism and inertia inside large organisationswhere “the rate of change outside is usually much greater than the rate of change inside.”
“Corporate generals,” the book says, “continue to fight the last war, using structures and methods that were designed for the previous era, and endorsing plans that are linear extrapolations of what worked before.” The challenge is “how to make the rate of change inside at least as rapid as the rate of change outside.”
Challenging this type of sclerotic behaviour can also be found in communities afflicted by declining industries and markets where often the only antidote to such decline is the arrival unreasonable people who disrupt the status quo and introduce a blast of fresh thinking.
“Consider uber-entrepeneur Elon Musk. He recently discovered his own rust belt community, a showcase platform for new energy in the unlikely location of South Australia where he hopes to promote (impose some might argue) his vision of a post fossil fuel world,” says Professor Birkinshaw.
South Australia has been struggling with industrial decline for decades, with its biggest employer (GM’s Holden) recently closing its car manufacturing facility. It also has an energy problem, suffering a series of severe brown outs during the latter half of 2016 and early 2017. South Australia’s Labor Government made a substantial investment in renewable energy, principally wind power, without having adequate back-up, or energy storage solutions and the results have been close to disastrous.
Musk’s answer to South Australia’s energy problems is to agree to build the world’s largest lithium ion battery farm to store renewable energy in partnership with French energy utility Neon. The 129MWh battery, which will be paired with a Neon wind farm, is designed to improve the security of electricity supplies across South Australia.
South Australia’s government and Musk have now signed a deal and the new battery farm is set to be located in Jamestown in the state’s mid-north. Not only will it stabilise the grid, but it will help bring down prices for consumers.
While this venture is at an early stage of development, Birkinshaw argues that it has every chance of succeeding. “It just needs Musk’s state-of-the-art battery technology, state-level funding and support, and lots of continued wind power. You need an entrepreneur like Elon Musk to think the unthinkable, and to pull the necessary resources together to make it happen.”
Unreasonable people, says Professor Birkinshaw, are frequently at odds with the establishment, and seeking to bend others to their will. “They are sometimes the greatest asset businesses and crumbling communities can have to jump-start positive change.”