What I Learned: R&D Doesn't Mean Restructure and Downsize in a Down Economy

What I learned this week … came from and article titled

Innovate out of the Economic Downturn in BusinessWeek by
Sami Mahroum. Mr. Mahroum is a Research Director of
Britain’s National Endowment for Science, Technology & the Arts
and a Visiting Reader at the School of Management, Birkbeck
College, University of London. What really struck me about the
article is his views on “turning the crisis into an
opportunity” through innovation. I have to wonder what
precious few companies can take that strategic view given the
tactical challenges facing them (budget cuts, possible layoffs,
etc.). I think this is article is good reading for anybody trying
to understand the current market dynamics and setting public
policy, but I also wonder how each of you can help
your particular business.

Note: Giving credit where credit is due, I took my title from a
comment made by Arun Mujumdar in response to the
BusinessWeek article, so all credit goes to him for the punny title
of the post.

Could the Downturn be Good for Innovation?
Mr. Mahroum starts his article off with a quote from Josef
Schumpeter. According the article, the Austrian economist 
once declared that economic downturns are “a good cold
shower for the economic system.” Sami than says himself
that “economic downturns can have positive effects; they force
companies to increase their efficiency, cut waste, and strive to do
things in smarter ways.” While this may be true for the economy and
for industry as a whole, within most of the companies I am
speaking with are viewing the downturn as a crisis as
opposed to an opportunity. Why? All politics are local.
While the article is (rightfully) pointing to solutions on a
national scale, most of the people I am talking to are trying to
find out how to keep their individual company afloat.

Who can Help?
Interestingly, I picked this article up from BQF Innovation, under
the post
What the government can do to boost innovation. The article
itself calls for a turn to governmental sources to fund innovation.
The four ways the article suggests are:

• Inject capital
• Think global
• Focus on public programs
• Support talent

Read the article for more detail. The article points to a
supporting case studies from Finland and Sweden where
R&D activities were significantly increased during harsh
economic times, resulting in industry leadership through
innovation (for example spell that N-O-K-I-A if you
will).

What Can You do for Your Company?
Is government the answer? Potentially on a macro scale. While the
article focuses more broadly on the economy, what can an
individual company do? Macro economics are harsh at a micro
level, how do you make sure your company isn’t washed down the
drain during the “cold shower?” Here are my thoughts based
on the research I have been doing and the companies I have been
talking to:

1. Look for new sources of innovation.
   Crowdsourcing, open innovation, and other innovation processes can
   help to feed the innovation funnel. These methods help get more
   innovation from less investment.
2. Make sure you don’t squander the innovation you
   find. Companies can no longer afford a leaky innovation
   pipeline. Once new innovations are targeted, they need to be turned
   into profitable products. I am not suggesting a “tunnel” where no
   product ideas die, because we all know that some product ideas
   don’t pan out (due to changes in the market, competitive actions,
   technology limitations, cost, etc.) and should be killed. That is
   different from a leaky funnel that is overfilled with projects that
   should be killed but aren’t, or wasted time and effort due to poor
   processes and tools. In this scenario, good ideas are not able to
   move through the process quickly to turn into profitable market
   offerings.

Focusing on these two disciplines can help each individual
company survive the tough economic winter and prepare themselves
with new buds of innovation that can blossom when the economic sun
starts to shine again.

So that is what I learned this week, sorry for the overuse of
metaphors. I hope you found it interesting. What is your company
doing?