The Downturn: This Is the Time to Invest in R&D/New Product Development


An April 2009 report in the McKinsey newsletter, “R&D in the downturn: McKinsey Global Survey Results,” reveals that many leading companies are not shredding their R&D budgets. These companies view R&D and new product development as a source of competitive advantage. Where R&D is clearly important for future success, many companies are actually expanding their programs. This is excellent strategy. During a downturn, a lot of great talent will be laid off by short-sighted competitors. This is the time to pickup the brains needed for the next wave of game-changing innovation. It is also a great time to take the steps needed to seize market share in the near future by building momentum as others are slowing.

At the same time, it is frustrating to watch some companies aggressively downsize their innovation staff and innovation efforts, even when it is definitely not needed. They may get a boost in stock price over the short term, but as the economy revives, those who pay the price now to build innovation momentum will rush to victory and leave the laggards in the dust. (That’s if the economy revives, which it certainly should–if we can resist the temptation to give it too much artificial help. Sometimes well-intentioned first aid, like over-zealous CPR on a patient whose heart is beating, can be worse than doing nothing.)

Economic downturns can seem like huge external fatigue factors, but for those who are prepared and wise enough, they can be great opportunities to change the balance of power in the market. Don’t forsake innovation, even when times are tough. Look for creative ways to expand your efforts and become more innovative.

One thing that can help is pursuit of low-cost intellectual assets (there are many creative things that can be done with defesive publications, for example) and more cost-effective innovation strategies such as the targeted “just in tune” innovation based in the “Horn of Innovation” model that we discuss in the book, Conquering Innovation Fatigue.


  1. Jeff Lindsay says:

    Thanks, Stacey and Allen. Look forward to further discussion.

  2. Allen Taylor says:

    Nice writing. You are on my RSS reader now so I can read more from you down the road.

    Allen Taylor

  3. I found your blog on google and read a few of your other posts. I just added you to my Google News Reader. Keep up the good work. Look forward to reading more from you in the future.

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