What Would Iceland Do?
When you think of global innovation hubs, places like Silicon Valley, Tokyo, or Berlin might come to mind. But there’s a small Nordic island that consistently outpaces expectations when it comes to bold thinking and inventive problem solving: Iceland.
A lot of our friends and newsletter readers seem to be making Iceland a holiday vacation spot. That got us wondering, was it just the glaciers and geothermal lagoons calling, or was there something deeper at play? We decided to take a closer look to see if innovation had anything to do with it.
With a population of just over 370,000 and a landscape carved by volcanoes and glaciers, Iceland might seem like an unlikely innovation laboratory. Yet it’s precisely this combination of constraints, resilience, and culture that makes Iceland a masterclass in creative adaptation. Here’s what Iceland can teach the world about innovation:
1. Constraints Spark Creativity
Iceland is a land of extremes: harsh winters, limited arable land, and geographic isolation. Instead of seeing these limitations as barriers, Icelanders see them as creative prompts. When fossil fuels were impractical to import at scale, Iceland turned inward, becoming a global leader in geothermal and hydroelectric power. Today, nearly 100% of the country’s electricity is generated from renewable sources.
Takeaway: Constraints don’t kill innovation, they sharpen it. Scarcity forces clarity and inventiveness.
2. Resilience is a Launchpad
After the 2008 financial crisis, Iceland’s economy collapsed almost overnight. But instead of retreating, the country rebooted. It tightened financial regulations, leaned into its tech and tourism sectors, and emerged as a thriving hub for fintech, sustainable startups, and experience-based innovation.
Takeaway: Innovation thrives where failure is accepted as a starting point, not an endpoint.
3. Nature is a Business Partner
Iceland’s innovations are deeply intertwined with its natural landscape. From algae-based bioplastics to the world-famous Blue Lagoon (a luxury spa born from geothermal plant runoff), Iceland turns environmental challenges into business opportunities.
Takeaway: Your environment, literal or metaphorical, may hold hidden assets. Pay attention to the raw materials around you.
4. Collaboration Fuels Creation
With a small population and strong community ties, Iceland is a place where artists, engineers, researchers, and entrepreneurs regularly cross paths. This interdisciplinary mindset has birthed everything from world-renowned video games (like EVE Online) to biotech breakthroughs.
Takeaway: Innovation happens at the edges where disciplines, ideas, and industries collide.
5. Confidence is Contagious
There’s an Icelandic saying: Þetta reddast loosely translated as “It will all work out.” This cultural mindset fosters bold risk-taking and relentless experimentation, even when the odds seem stacked against success. Icelanders believe they can do almost anything and that belief becomes a self-fulfilling prophecy.
Takeaway: Confidence, especially in small or scrappy teams, is fuel for innovation.
What Iceland Teaches Us About Innovation
From building sustainable infrastructure in volcanic terrain to reinventing itself after economic collapse, Iceland proves that resilience, creativity, and community are more than values, they’re strategies. The next time you’re facing a challenge in your business or team, ask yourself: What would Iceland do?
