How to innovate in a downturn

Written by ProfitGuide

R&D might not be your biggest priority when you’re coping with an economy that changes daily and hardly seems to be improving. But according to business strategist and bestselling author Ram Charan, there’s no time better than now to reinvent and reorganize your business and its activities. In Leadership in the Era of Economic Uncertainty: The New Rules for Getting the Right Things Done in Difficult Times he offers advice that could vault you ahead of your competition when the economy returns to normal.

Rethink your R&D budget: Financial strain might mean reduced funding for R&D. But while some cutting is likely necessary, cutting the wrong projects can cripple your company. Redirect available finances towards areas that have a viable place in today’s market. For instance, projects that focus on the basic functionality of a product will likely hold more importance to your customers today than will extra features—especially if that means you can offer reduced prices.

Strengthen your ties to sales and marketing: Your sales and marketing people are the experts on what your customers need and want. Bring them into the process of evaluating which projects to continue, accelerate or cut. And don’t forget to get out there and talk to your customers, too.

Make sure your research priorities are balanced: To sustain your business, play to your strengths and continue to develop, reformulate and create new variations of your bestselling products. But try not to neglect disruptive research—the kind that’s aimed at developing cutting-edge products or processes that can create a new market or turn an existing one upside down. In downturns, most companies focus solely on research to improve existing products. Put their weakness to your advantage.

Optimize your resources: Your most valuable R&D resources are good people with good ideas. If you need to cut some projects, make sure to redirect your stars to projects where they can really make a difference. Also, consider developing partnerships with similar but non-competing (e.g., foreign) companies in your industry to maximize available technologies and resources without extra spending.

Avoid becoming obsolete: Make sure you’re up-to-date with relevant technologies. Use the Internet to get current on published research in areas important to your company. Consider bringing on university professors or other industry experts as consultants.

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