Jeffrey Baumgartner

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Innovation during a recession &is about more than just cutting your operational costs. Learn why...&


As the world dips into what is now being described as the worst recession since the 1930s, many businesses are revisiting their innovation strategies. Some, sadly, have decided to drop innovation activities all together. This strategy will only work -- and to a limited extent at that -- if their competitors adopt the same strategy. On the other hand if a company stops innovating while one or more of their competitors continue to do so, it's clear who will come out of this recession more successful.

The most obvious innovation strategy for hard times is a classic one: cutting costs. Indeed, we (as an idea management service provider) have seen a growth in business this year from companies investing in cost cutting innovation. After all, innovation is not exclusively about sexy new products and services. It's also about operational and logistical efficiency. But there are other approaches that should be included in your recessionary innovation strategy. Let's look at some of them.

1. Promoting Your Product's/Service's Value in a Recession

The very first thing you need to do is to communicate to your clients how important your product or service is and how buying from you will help your customers survive the economic slow down better than not buying from you. If your customers are slashing their budgets, that means less money to spend on your products as well as other products. As a result, not only are your competitors trying to get a piece of that dwindling budget, but so too are many companies you would not consider competitors. You need to ensure that your customers know your products and services are more important than other products and services.

For instance, the advertising industry always takes a hit in times of economic slow down. As a result, whenever times are tough, the ad industry reminds their clients that it is critical to continue to advertise and ensure their advertisements are widely seen by the buying public. The ad agencies can also point to research demonstrating that firms that keep up their advertising spend during a recession can expect to come out of the recession in better shape than their competitors who slash advertising budgets.

How about your business? Are orders down? Are clients harder to find? If so, the very first thing you need to be innovative about is a marketing argument for why your products and services are essential during this recession. You know your clients need to buy from you. But do your clients? Making this clear requires marketing communication innovation.

2. Better Utilise Your Resources

I am always amazed at the amount of wastage I find in the average office. Lights are kept on all night, people print out e-mails in order to read them once - and then throw them away. Large company cars are used to make trips that could be done just as well by public transportation (allowing the employee to be more productive as well) and little effort seems to go into separating rubbish for recycling.

Look deeper and you find that employees are cc'd into e-mails that they never read, but are not informed of critical issues. Meetings take up the time of your most expensive employees, but most of those meetings are unnecessary.

The list goes on. Many of these problems have easy and not particularly innovative solutions. Other problems are more industry specific and require innovation. One of the most profitable sequence of ideas campaigns (or other idea generating events such as brainstorming) you can run is one designed to identify areas of wastage and then generate ideas to reduce that wastage -- or possibly even profit from exploiting the wastage.

In doing so, it is important to remember that people in your firm are highly valuable assets. If their time is being wasted, that is costing you money. But the issue of time efficiency needs to be balanced against employee satisfaction. If you become overly strict about how employees use their time, there is a danger of igniting employee dissatisfaction, which will lead to a hard-working, yet unproductive and less than happy workforce. And that will do your innovation activities no good at all.

3. Deliver More Value to Customers

If there is one thing your customers desperately want now it is more value for their money. Ideally, they would like to derive that value without investing more in your products. Fortunately, it is likely that there are many ways your products can be used - ways that are not described in your instruction manuals. As a result, your products can often deliver additional value without any modification. You just need to communicate these new uses to your customers. But before you do that, you need to identify new uses for your products.

There are several ways to generate innovative ideas about deriving additional value from your products. Consider the screw driver. Its main purpose is to insert and remove screws. Yet a screw driver can be used as an ice pick, a nail removal device, a small crow bar, a weapon, a drink stirring stick and much more. Indeed, if you were to spend 30 minutes brainstorming ideas on creative uses for a screwdriver, a creative thinker like you could almost certainly come up with 50 or 100. You can also do the same for your products - and indeed you should on a regular basis. If you can demonstrate to your prospective customers that your product can do much more than the competitors', you will soon be selling much more than your competitors too.

In other cases, modest changes to your products enable them to deliver significant additional value at a minimal additional cost. A screwdriver with interchangeable heads only costs a little more than a fixed head screw driver, yet enables people to use it on a wider variety of screws.

Running ideas campaigns or brainstorming events to generate ideas on new product features can generate lots of ideas. But a better approach might be to run an ideas campaign on what wild and crazy things you could do with your products. Ensure that participants understand that ideas may incorporate any product changes they wish (you can worry about practicalities of implementing those changes later).

Even if you are selling a service, the chances are that you can find ways that enable your service to generate more value to your clients. For instance, a training business might provide additional course material at a discount, so that the client can distribute this material more widely. A trainer might also widen her repertoire of training packages, allowing the client to derive more value with minimal increase in investment.

Nevertheless, since services are priced on time rather than item, the degree to which you can offer additional value with minimal additional cost is limited. However, if you can deliver your services in different ways, for instance a long term contract that generates cashflow or on-line delivery of your service, you can give your customers additional value at comparatively low cost.

4. Creative Partnerships with other Struggling Companies

With many companies struggling to stay afloat and buyers looking to reduce cost or get additional value at the same price, this is a great time to build partnerships with firms offering complementary products and services to yours. This is particularly true in the B2B environment. If you can offer a package of useful services this provides benefits to your customers who do not need to source all of the varied services from different suppliers. Moreover, you can exploit each others' sales teams and marketing communications to build business faster.

But don't just look for obvious partnerships. Your less innovative competitors are doing that already. Instead look for unusual partnerships that will provide unusual value. For example,if you run a coffee shop, don't just look at the obvious partnerships to serve food or additional drinks in your shop. Think about partnering with private language schools (that could offer lessons in your shop and in whose school you could serve coffee), secretarial services (that could provide telephone answering, faxing and photocopying services to all the independent professionals who work out of laptops in your coffee shop) and so on.

5. Establish Better Ways to Collaborate

In large service industries, collaboration is important. But it can also be expensive. Flying highly paid professionals from one office to another isn't cheap. Maintaining video conferencing facilities is a substantial investment. Sharing MS Word and Excel documents with a dozen people via e-mail, asking each person to give feedback is a horrendously inefficient means of collaborating on a document.

There are better ways of collaborating and many great tools that facilitate collaboration (I like to think we make one of those tools! - see advert below). But tools don't solve the problem unless you have a methodology and structure to govern their use. In the early 2000s, I saw a number of companies invest in collaborative knowledge management tools without giving a thought to how the tools would be used. Not surprisingly, they simply weren't used!

So, the first step is not to buy the tools. Rather it is to do some creative thinking and generate innovative new ways that you and your colleagues can collaborate effectively within the confines of your needs, limitations and culture. Once you've established the method and define the structure. Then you can look into developing or buying tools.

6. Keep It Simple Sweetheart (KISS)

Simplification almost always reduces costs. Simpler to make products are also less costly to make. Moreover, they are typically more reliable as there are fewer bits to break down. Simple operational structures are less costly to run. Simple to use products keep your customers happy.

For more on this topic, read Keep Innovation Simple, Sweetheart in the Tuesday, 22 November 2005 issue of Report 103.

Putting It All Together

A comprehensive approach to innovation is the best way to innovate - always. But in times like these, when the economy is slowing down and the future is uncertain, a comprehensive approach to innovation is critical to your survival. Remember: your cleverest competitors will certainly be trying to innovate their way through the recession. If you don't do the same - but better than them - you could be in trouble!

© 2009 Jeffrey Baumgartner

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Jeffrey Baumgartner
Bwiti bvba

Erps-Kwerps (near Leuven & Brussels) Belgium




My other web projects

My other web projects 100s of articles, videos and cartoons on creativity - possibly useful things I have learned over the years. reflections on international living and travel. - paintings, drawings, photographs and cartoons by Jeffrey