There has been talk of being in a recession most of 2008. With the credit crises and stock market swan dive, the debate should have been over. Yesterday’s news made it official – two quarters in a row of declining growth.
Earlier this year, Business Week published an article on the 10 Worst Innovation Mistakes In A Recession. #4 was to stop New Product Development under the assumption that it would save money. In fact, it doesnÔÇÖt save money, it simply reduces the chances for new revenue streams downstream.
Research conducted by Robert Cooper, President of the Product Development Institute, in 2004 found that new product sales fell from 32.6 percent of total company sales in the mid-1990s to 28 percent. More importantly, the same study showed that profits derived from new products were down from 33.2 percent of business profits to 28.3 percent over the same period. Why? What did companies do differently? Quite simply, companies stopped taking risks ÔÇö new to world product innovations fell nearly 50% during that same time period accounting for the drop in revenues and profits.
What lessons can you learn from these past mistakes? I hope you will decide that now is not the time to slow down innovation. Your approach to innovation needs to become more productive and efficient. ItÔÇÖs not simply about being more creative but about being brilliant in your execution. How do you mobilize people and keep them focused? How do you explore technical feasibility? How do you identify what will drive adoption? How do you determine who best to partner or align yourself with to realize your vision? And most of all, how do you manage risk?
I wish you great success in these interesting times for new opportunities.