Innovating out of a recession

Indeed, the customer can drive much of the innovation. Infosys research lab personnel, for example, meet with customers.

What are some of the methods used in the downturn?

Some companies turn to diversity and sharing knowledge. Indian IT specialist HCL Infosystems, which manufactures laptops and devises networking solutions for a variety of industries such as telecommunications and power companies, has an annual HCL Innovation Day, where groups huddle together and try and come up with new technology solutions for businesses. One idea at the last event involved iris and fingerprint recognition. It gave birth to a whole new security solutions division.

Consumer-products giant Procter and Gamble has a "Connect and Develop" strategy, where managers seek to identify and team up with other companies, universities, academics, retirees and individual inventors who have ideas or expertise that could help the company develop new products, technologies, packaging, design, business models or manufacturing processes. More than 40 per cent of its products have an externally sourced component.

There are strong echoes here of C.K. Prahalad and Venkat Ramaswamy's excellent 2004 book The Future of Competition, which introduced us to the concept of "co-creation", where more companies and consumers were working together, Diversity is important because the combined intelligence and input of a group of people always beats the experts.

The other key is to keep focusing on research. Melbourne based nanotechnology specialist Micronisers, for example, has a deliberate strategy of keeping a lid on its profits so that it can keep investing in the company’s research and development for its unique product lines. “Depending on what stage your business is at, you’re either at the investment stage, the milking stage or the plateau stage,” Micronisers chief executive officer Ken King says. “We’re still in investment. Nanotechnology is evolving so fast that you have to continue to spend.”

Innovation, whether it’s of management systems or products, is more critical now than ever before. For many companies, it will be the only way companies to ride out the storm.