Businesses that use recessionary periods to innovate and adopt new ways of doing business can build a foundation for long-term growth, according to research by McKinsey & Company.

A review of industry trends during the 2000-01 recession found that nearly 40 percent of leading U.S. industrial companies fell from the top quartile of their sectors, as did a third of leading U.S. banks. In many cases, these reversals of fortune resulted from disruptive innovations rather than from economic impacts.

"The history of recession is also the story of technology advances that overturned the existing competitive order," write Jacques Bughin, Angela Hung Byers and Michael Chui in a paper titled Using Technology to Turbocharge Innovation in a Downturn. "Digital computers were born during the Great Depression, the Ethernet during the 1970s oil crisis, the IBM personal computer in the early 1980s recession, and the World Wide Web [during] the recession of the early 1990s. And it was during the last recession, in the early 2000s, that innovative companies began staking out new leadership positions via the Internet."

The authors foresee the Internet enabling new innovations, including the expansion of broadband data networks and social applications and the development of powerful analytic software, that will lead to dramatic growth. Broadband technology, for example, is enabling business professionals to connect with peers and colleagues, share knowledge, and collaborate on work projects. These "digital workplaces" can be highly efficient, providing a virtual marketplace that matches specific individual effort to the tasks at hand (a specialist, for example, signing on to create a challenging software component). As a result, they increase the possibility of radically reducing the cost of innovation and allowing much more talent to be brought to bear in creative work.