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Should you innovate during a recession?

That's the question that seems to be popping up in business media.

What a silly question. Yes we should. Customer, marketplace and competitive dynamics are moving too fast to make standing still anything less than a corporate death-wish. The recent issue of Business Week got the story right.

Great brands project a sense of infectious momentum that comes from continuous improvement and innovation. Innovation does not have to be whiz-bang, bet-the-ranch new products like a Wii or an iPhone. Innovation can take the form of small, but meaningful, improvements in the customer experience, such as Target's color-coded pharmacy bottles. It can be the result of continuous improvements in the customer experience as practiced by Google, Amazon and Toyota. (Toyota, while credited for the market-changing Prius, more often than not wins by innovating new business processes that improve its ability to meet customer wants and needs.) Or it can take the form of a smart cross-promotion, such at Tide with Febreze fabric softener.

Not investing in ongoing innovation is a recipe for failure. Think Sony Walkman. Or Ford Taurus. Or Motorola Razr.

From my collaboration with the Merage School of Business, which focuses its program on sustainable growth through strategic innovation, I've grown to believe that effective marketing innovations share these traits:
  1. They solve real customer needs. The demand, whether articulated by the customer or not, already exists.
  2. They are based on rigorous analytics and not blue sky brainstorming sessions. There must be an underlying business case to set the direction for truly fresh thinking. (Norman Berry, the creative head of Ogilvy when I joined years ago, used to say "Give me the freedom of a tightly defined strategy." How true.)
  3. They are inspired by truly creative and anthropological research. Customers can't tell you what's missing in their world. True innovation is inspired by authentic human insights.
  4. They often mesh disparate insights or trends into a single new idea. Running + Music = Nike Plus. Latchkey kids + Microwaves = Hot Pockets. Trend toward self-expression + small cars = Scion. The "we" generation + the web = MySpace.
  5. They are sustainable ideas and not one-off diversions that sap resources and focus. They have the ability to scale to something big and lasting.
  6. From an internal perspective, innovation is born within collaborative and multidisciplinary teams, executed with speed and efficiency. Markets are extremely complex and windows of opportunity tend to be short-lived.
  7. And, importantly, innovation demands the backing and the courage of the CEO. Corporate corridors are lined with idea-killers. The folks with the guts and stamina to innovate new ideas could use a little air cover.


Unknown said…
I would also highly recommend a book called "Creativity at Work" that looks at innovation within a company and it's implementations structurally and through leadership. Jeff DeGraff is the Dean of Innovation at the University of Michigan and is a phenomenal resource as to when and how companies implement innovation. Not surprisingly innovation tends to happen at the beginning of a company's history and at the tail end as it struggles to survive. Most companies tend to rest on their laurels and miss opportunities to be innovative because spending money on innovation eats into short-term profit at time when it doesn't "seem" to be necessary. I'm sure the same thing happens when investment in innovation drops during recessions because the risk of "wasting" money during hard times is a hard thing to defend at one's board meeting.

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