RECESSION-PROOF YOUR BUSINESS WITH INNOVATION

2.2.2009

As the economy continues to tumble, it is tempting to cut back on your investments in innovation. But now is the perfect time to increase your innovation efforts. Here are seven creative ways that innovation can help you recession-proof your business.

1. Use Open Innovation to Reduce R&D Costs

Sometimes it can be less expensive to have others do your innovating for you. This moves innovation from an unpredictable cost (infrastructure, the cost of researchers, and other hidden costs) to a predictable cost (the posting fee and reward). This is a perfect way to reduce costs while growing the business.

2. Use Process Innovation to Reduce Operating Costs

Innovation is not just about new products or new business models. It can also be focused on ways of reducing operating costs. A process innovation is the implementation of a new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software. If you can increase service while increasing margins, you are sure to recession-proof your business.

3. Use Innovation to Match Supply and Demand

Sometimes you only want temporary measures to help you ride out tough times. There are patterns to recessions. Each time the pattern is the same: the economy tanks, customers reduce spending on consulting, companies lays off employees, the economy picks up, companies scramble to hire talent. During the 2001 dot-com bubble burst, some companies used a different approach. Instead of handing out pink slips, they offered a leave of absence for a period of time. The employee on sabbatical would get around 20% of their salary (plus benefits) and would be assured a job upon their return. This helped match supply with demand, while keeping morale relatively high. Sometimes a creative solution can help you smooth the ups and downs of the economy.

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