Every dark cloud has a silver lining. This saying goes in tandem with recession scenario. Once the dust finally settles down, one can see that recession actually gives a chance to innovate. It’s like, if a product is doing well, company will keep on manufacturing the same product for eternity. But if the sales of the product start shrinking, the management think-tank starts working overtime. The downturn scenario will force the company to think out of box, in short to “innovate”. It’s just like a medicine which might be tough to take in the beginning but will cure you entirely in the end.

Innovation is the way to go for coming out of a downturn…….

The Indian IT industry was hit by a slowdown and the dotcom bust transpired between 2000 and 2002, yet the period also saw mammoth growth in terms of technical innovations.  Web 2.0, MySpace, Facebook and other products and services were launched between 2001 and 2008. After the dotcom debacle, 30 per cent of the companies in the US went bankrupt, 60 per cent managed to survive and 10 per cent became breakout performers.

What did the 10 per cent do that others did not? They did not cry on spilt milk, but invested in innovation during the downturn instead of just focusing on the present—cutting costs. If you focus only on cutting costs, you only become part of the 60 per cent companies which survived.

Google’s search engine and eBay’s online auction model both arose from the debris of the dot-com crash. Microsoft’s PC-focused software emerged during the mid ‘70s stock market crash. Hewlett-Packard was formed in a California garage at the end of the Great Depression. Digital Equipment was born during a recession in the 1950s.  However, even when times are tough, the tough gets innovative. Look at some of the great companies that were founded during a time of recession – IBM, Apple and Microsoft are a few examples – and you quickly realize that hard times can fuel innovation.

The need of the hour….. Mold to the changing market condition while innovating

The best example of adapting to the changing market scenario and innovating is of Starbucks. Starbucks had recently entered into instant coffee category & launched Via (Instant Coffee) brand of coffee. Now instant coffee business is considered to be a wasteland for Premium coffee business. So why did Starbucks entered into this arena.  One thing can be that in times like these, people start consuming less coffee, so instead of reducing the price of current offering, it had to innovate & look for new market/consumers where it can add maximum value through current offerings & instant coffee market was exactly that.

In today’s times it is imperative for the companies to face the recession with vigor. It’s impractical for companies to defer their innovation plans until the worst of the storm blows over. To do so is to lose precious ground to competitors who found creative ways to keep their innovation initiatives moving during the darkest days of the downturn. New players emerge during the recession, pull up the small players and put a pressure on the big players.

Few ways in which company can combat the recessionary woes are:

Investing in R&D.
Re-evaluating the consumer needs
Strengthen the customer loyalty
Think out of the box
Focus on its core areas of expertise and spin off its non core areas
Take a fresh look at supplier relationships
Evaluate the changing market scenario and try and adopt to it
Optimum utilization of the current resources
Promoting Your Product’s/Service’s Value in a Recession
As the saying goes, “necessity is the mother of invention”. On the same lines we can say that “innovation is born out of recession”.