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Innovation During A Downturn

Belt tightening is the first instinct of many companies entering a recession, often with deep cuts to R&D and innovation budgets. However, history favors those who invest strategically rather than hold back. Vijay Govindarajan and Anup Srivastava note that recessions are typically short-lived relative to the periods of growth and prosperity thereafter.  For example, the OPEC oil embargo recession (1973 to 1975), the energy crisis recession (1981 to 1982), the Gulf War recession (1990 to 1991), the dotcom bust (2000 to 2002), and the Great Recession (2008 to 2009) were each followed by a longer period of growth.

Aspire and Invest

During economically challenging conditions, the development or review of your innovation strategy is critical.  What is your company’s winning aspiration?  How does innovation align with this goal? By working with top management, find ways in which innovation can support the future vision and leapfrog your competitors.

Furthermore, double down on what’s most important. McKinsey reports that organizations that invested strategically in innovation during the 2009 crisis outperformed the market average by 30% and their growth continued to accelerate the following years as well.

Prioritize and Mobilize

Once there is alignment to the company’s north star, ruthlessly review the innovation portfolio.  Remove off-strategy and zombie projects to free up scarce resources for projects that will align to the business trajectory.  In this context, innovation is not an end to itself; it’s a means to an end.

Once the strategic priorities are clear, deploy resources toward the most important work.  Review these priorities regularly, perhaps quarterly, and move resources dynamically as they change.

Sweat Assets and Experiment

There are many seemingly sleepy product categories that boom in a recession with proper investment.  Consider the performance of Arm & Hammer products during the last recession.  In the 2008 downturn, thrifty consumers responded to an uptick in advertising for household cleaners and laundry products which helped deliver double-digit sales gains over more than 12 months. Moreover, Bain & Company reports nine out of 10 companies that successfully renewed themselves found the solution in mining hidden or underutilized assets.

Do you have underutilized assets that could be working harder for you? Ask yourself the following:

  • Can you sell existing technology/service to a new market?   For example, Groupon, launched during the downturn of 2008, introduced many local companies to new consumers via their prepaid coupon platform.
  • Can you sell your offering in a new channel?  Your consumers may channel switch during a recession.
  • Is there new news, a feature or a claim that is more relevant now?  What about adding a value line, smaller packs, price-fixed service?
  • Is it time to accelerate the patent process for a premium technology in preparation for the next upswing? Does your portfolio include patents that could be out-licensed?

Once opportunities have been identified, experiment strategically and measure outcomes. Consider the HOPE framework to guide your planning – hypothesis, objective, prediction, execution plan.

Share Risk and Reward

Finally, consider this:  The 2008 recession was followed by a sharp rise in transformative startups including Dropbox (2008), Uber (2009), Venmo (2009), and WhatsApp (2009), now well-known brands.  All these former startups disrupted their competitive set, forcing established companies to catch up.  By tapping into start up accelerators now, it may be possible to develop partnering relationships that allow you to share the risk and later reward of offering new, transformative offerings to the market.

Fortune Favors the Prepared

Just when your competitors are pulling back spend, investments in innovation of product, process or partnership could maximize opportunities to increase ROI, market share, or efficiencies now or soon. Take full advantage of the turmoil to reflect on your core business and its north star – this might be the right time to move out of the status quo. As history shows, history rewards the bold and fortune favors the prepared.

Thought Starters

Whether you are in R&D, marketing or another innovation role, here are some thought starters to help you develop your ideas about how to plan during a recession.

  • What would I do differently if I thought that a recession was the best thing that could have happened to the business?
  • What are my consumers doing and thinking that’s different now? Is there an opportunity to simplify or offer a lower cost option?
  • Are there products in my pipeline that could be accelerated to leapfrog my competition?
  • Write your future press release:  When the recession is over, what do I want people to say about how the company acted during a downturn?
  • How did we innovate our process, service, or product offerings to protect the business and accelerate recovery?


  • Gail Martino

    Gail Martino, Ph.D is a thought leader and global innovation leader in the fast-moving consumer goods industry, having worked with billion-dollar brands at Unilever and previously at Gillette. With a background spanning both corporate and academic roles, Gail has a proven track record in developing and executing highly effective innovation ecosystems, driving value through strategic partnerships and internal product development. Notably, she has been a valued member of the advisory board for the Front End of Innovation conference since 2015.


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