When markets soar and profits gush in, it's easy to invest in innovation. It's tougher to spend money to seed new ideas when recession looms.
Yet innovation doesn't take a holiday just because the economy falters. Opportunistic leaders find ways to spur creative breakthroughs even when tempted to retrench.
"Companies that continue to invest in innovation in a crisis experience more growth after a crisis than those that don't invest in innovation," said Tendayi Viki, associate partner at Strategyzer, a Switzerland-based innovation consulting firm.
The trick is to make every dollar count. By its nature, innovation involves trial and error. Leaders will inevitably plow funds into risky projects, so limiting their losses while advancing new ideas requires a delicate balancing act.
To spur innovation in a rocky economy, seek to squeeze value from your limited budget. How do you maximize your investment in innovation?
Nab Short-Term Wins
Some visionaries set lofty, long-term goals. They equate innovation with developing game-changing products or services.
In a downturn, however, it pays to set your sights on more immediate gains. Rather than shoot for entirely new growth engines, enhance your existing business model.
"Make a distinction between transformative innovation and efficiency innovation," said Viki, author of "Pirates in the Navy." In fragile economic times, aim for creative ways to improve processes and tweak operations and distribution to produce immediate return on investment. Shift your focus — and most of your innovation budget — away from ambitious, longer-term transformative initiatives, at least until the economy stabilizes.
Proceed In Steps For Innovation
Invest in innovation without going overboard. Set milestones along the way and, as you attain each one, allocate more resources.
"Make bets incrementally," Viki said. "Make multiple small bets across a range of ideas and then make them earn the next level of investment based on evidence." He credits author and entrepreneur Eric Ries for devising the "metered funding" model in which leaders track metrics to justify the next stage of investment.
Innovation: Recruit Newbies
Labor costs can cripple innovation. You may keep investing in top technologists with a track record for cutting-edge thinking, even as you need to prune payroll.
"When money gets tight, it's temping to say, 'Bring in more core people' to help innovate," said Fran Rosch, chief executive of ForgeRock, a San Francisco-based provider of digital identity solutions. "But I say, 'Bring in young interns.' "
He has recruited college students to work at his firm during the school year — and in the summer between their junior and senior year — as software engineers and in other roles. They earn a competitive hourly wage and infuse the company with fresh ideas.
Tap Your Workforce
Within many organizations, potential innovators in support roles lack the motivation to share their ideas. They may feel overlooked, disengaged or disgruntled.
You're more apt to innovate on the cheap when every employee adopts an entrepreneurial mindset. They will suggest smart ideas if they know higher-ups will listen.
"Give them the opportunity to have a voice," said Alex Tapper, head of innovation at Frogslayer, a custom software professional services firm in College Station, Texas. "Harness their abilities that are already there, but that you might not see day to day."
Ask Three Questions For Innovation
Before you invest in innovation, clarify your goal. Prioritize what matters most and why you're trying to innovate.
"We look to find a solid business case and go through a rigorous investigation phase first," Tapper said. His team poses questions about an innovative idea: Where will we use it? How much will it cost? What's the simplest way to test our base line assumptions?
"That way, you know what you want to get out of it," he said.
