Scarcity: The Real Father of Innovation?

Ever since we are young, we have been told different adages on who the real father of innovation is. The choices are between curiosity and necessity. Although these two can make a lot of sense, the bottom line is that they are anchored on more important thing: scarcity. Something that has driven disruptive innovations over the centuries. Scarcity has always been an instrument of control, so any innovation that overcomes scarcity is often frowned upon by incumbents. Recent examples include the tension between innovation and the record companies or film production houses.

In the past the price of music and movies was driven through the deliberate control of scarcity. Part by infrastructure and part commercially. When the production and consumption of movies and music become ubiquitous through the advent of new technologies and mastery, the inherent production value of films and music came under threat. Causing great tension, and efforts by the large incumbents to protect their status quo.

Every time I try to talk about scarcity, I can always feel the tension and anxiety in the room and from the person in front of me. At the back of their minds, I can be talking about doom, famine, lack of natural resources, and poverty. After all, when we say scarce, it means that resources may already have been depleted. The word has now been associated with “lack,” and nobody wants to have something important missing in their lives. Scarcity, however, is a very essential economic concept; and if you know how to look at it in a completely different way can offer a lot of opportunities for you.

There once was a time in history where the scarcity of gold and salt saw them both have the same value. But over time salt become more abundant, and hence its value dropped.

Scarcity of resources

Making the Best Choice

Scarcity helps you see the many different choices available. Online sellers have a lot of options when it comes to promoting their products and services, and yet many online sellers are now in social media such as Facebook and Twitter. Why? They are not only trying to maximize exposure but also to take advantage of a much cheaper Internet marketing tool. In the process, we are able to innovate traditional marketing strategies, including offline ones such as brochures and flyers.

It lets us allocate whatever limited resources we have, from capital to human resource, to the efforts that generate the best results. Otherwise, we become more creative and ingenious on how to make the most of them.

Scarcity Breeds Some of the Best Inventions

Every time I think about scarcity, I am almost always reminded about electric and hybrid cars. These brand-new vehicle models are designed to minimize greenhouse effect, yes, but they are also badly driven by scarcity: prices of fuel have been increasing because the actual resource is decreasing.

Or perhaps you may want to look into e-mail and web access through mobile phones. Most people do not have much time anymore to work or sit in a workstation. Thus, mobile devices and apps came about to facilitate convenient access. In health care, 3D printing is now being studied to create not only models but actual body organs for transplant.

Scarcity Forces Companies to Think and Make More

Companies these days are faced with intense competition in many different ways, from imitated business models to prices and different types of products and services. And this could mean one thing: you’re also sharing your market with them, which, in turn, can also become scarce. Nevertheless, it’s when you become aware of scarcity that a new door can open for you, including the creation of a new market where you can take the lead.

It’s not easy to change one’s psychology about scarcity, but once you start seeing things as a glass half full, that’s when innovation is given the time to shine.

References

http://www.economicliberty.net/scarcity.htm

http://answers.yahoo.com/question/index?qid=20090212210256AAqYJwO

http://blogs.hbr.org/2011/01/the-number-one-key-to-innovati/

http://iveybusinessjournal.com/topics/innovation/the-invisible-hand-of-time-how-attention-scarcity-creates-innovation-opportunity#.UyB4wD-SxcM

http://www.vineetnayar.com/leadership-and-business-lessons/when-scarcity-fuels-innovation/