Indutech Blog

When complaining to my father-in-law about the fuel consumption of my new car, he responded: "Son it was like that all the ages"

It is indeed possible to learn from the past.  McKinsey Quarterly, number 1 of 2009, p82 presents "Innovation Lessons from the 1930's". An interesting comparison of patent growth rate indicated that companies hesitated significantly to innovate after the start of the depression. It was due to a "wait and see" approach to all R&D investments.

What is more revealing is that the successful companies did not follow the same conservative pattern regarding innovation. Examples of successes by DuPont, Hewlett-Packard and Polaroid are presented.

The real challenge in the tough times of the current recession is to balance the efforts of saving and getting by with less turnover, with continued efforts to also innovate in the disruptive domain of product, enterprise and technology renewals. This balance in my own mind can only be achieved with a well structured innovation strategy that can sustain the good as well as the bad times.

What should this strategy contain? In my mind some fundamental ratios are required to guide tactical decisions in a company. We all know that a large percentage of innovation projects do not succeed. We also know that a disruptive innovation project has less likelihood of success than an incremental one.

CEO's should therefore balance the ration of incremental versus disruptive projects. Similarly the ration of spending on product/service innovation, process/enterprise innovation and technology innovation should be stipulated.   

How much of the turnover of the company to invest in Innovation? How does this figure change when the economic environment turns dark? By providing explicit guidelines to the managers of a company, it should be possible to have a sustained source of competitive innovation initiatives irrespective of the economic climate.

Downturns should and can be exploited and could provide both the urgency and the appropriate resources for moving "back to the future". The guiding principles should be part of your  innovation strategy