Much has been written on the subject of what to do about innovation in lean times. Many writers and bloggers all have a general idea of what to do, and many advocate similar strategies such as cutting costs, focusing effort on quick-return productivity enhancements and aggressively cutting out low-potential innovations.
Marketing, sponsorship, bonuses, increases, R&D and other costs all find themselves in the firing line. It all leads to insular, short-term decision making, which can have disastrous consequences for growth in years to come. Constant reminders of recession, corruption and wildcat strikes can leave one with an overwhelming sense of gloom and doom.
Not so says innovator Jeff Cornwall, “You have two options: hole up in a bunker and hope it ends before you run out of tinned peas, or innovate and emerge stronger than when the economy took a hiding.”
There are many examples of companies that were launched in such recessionary times, like Microsoft, Hewlett Packard, Texas Instruments, Revlon and many others. Innovation under the vision of their leaders was relentless.
In global terms, South Africa has been fairly lucky, coming through recent world events relatively unscathed. The long-term effects of the enormous bailout packages and ‘quantitative easing’ measures will undoubtedly bring about long lasting changes in the dynamics of world economics.
As the the game changes, companies can either carry on business as usual or they can nimbly adapt their game plan to pave the way for success under a new set of rules.
Innovation in these lean times has become more, rather than less important. The new winners will be the companies who focus on innovation and efficiency during the downturns, and the ones who avoid the temptation to try and save themselves into growth.
To offset the obvious tension between cost and time pressures on one hand and the unfulfilled promises of innovation success on the other, we advocate approaching your innovation effort as if it were a business.
- Make a deal with executives to fund the innovation effort for a finite amount of time and allow all tangible short-term successes to fund the innovation effort first, before being applied elsewhere
- Convince executives that you can make innovation in your business pay on economic terms
- Get executives to commit to leave some of the innovation profits on the table to fund your effort further and possibly fund further innovation investments
- Treat innovation like a business – the more profitable you make it, the more funding it will attract, which will enable a longer term focus and a larger team
- Go with results not promises. Innovation is about Cash Payback and Collateral Benefits versus Good Intentions and Insufficient Action!
At the very least, during downturns like these, it is imperative to maintain the sanctity and culture of your team and your innovation effort. If you allow the team to be reabsorbed into your organisation, and one day the board decides to take their foot off the brakes, it will take you between 18 months and two years just to rebuild your innovation capability. If you allow this capability to lapse, you will struggle to catch up with the companies that did not capitulate.