5 Ways to Keep Innovation Alive In a Recession

By Brian T. Horowitz

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As we enter 2009 in a financial crisis, companies may be tempted to scale back and wait for a better day. Is this the right approach?

Perhaps not, according to Bobby Cameron, vice president and principal analyst at Cambridge, Mass.-based Forrester Research. Cameron, who predicts the recession will end in the second half of 2009, advises CIOs to seek growth opportunities now. He says many firms maintain a sizable percentage of funding for innovation even in an recession. "Companies want to be moving ahead," Cameron says.

Dave Newbold, distinguished engineer in IBM's CIO Technology and Innovation organization, and a member of the IBM Academy, agreed: "As our chairman has noted, times of economic uncertainty are excellent periods to be more aggressive and often offer more opportunity for change."

Here, Cameron, Newbold and other experts provide tips on how to stay on the innovation track during an economic meltdown.

1. Focus on value

In a recession, the projects that will survive are those that offer real value to customers. Vet the value of projects before pushing them through the organization, suggests Alan Cullop, CIO of NetJets, a leading private aircraft company. "This process ensures that innovative projects are well understood and there is significant commitment from the business in regards to their value and need."

Serena Software, an application development company that aims to increase productivity in enterprises, performed a study on how aggressive CIOs are when promoting innovation. Of the 100 CIOs surveyed, 54 percent said that return on investment was among the top business priorities.

2. Keep innovation steady and visible

According to Cameron, a recession is no time to slow down. "If you hunker down and roll up in a ball, by the time you get out of the ball it may be the second part of next year, the sun's shining, and you should get to work." He says that companies such as Intel and SAP remain steady on the innovation front and plan to keep developing new products despite the downturn.

Newbold says IBM promotes innovation by holding a twice-yearly Hack Day to demo new projects in a competitive atmosphere. At the most recent event, 388 projects were submitted, he says.

Meanwhile, NetJets has a process to ensure the visibility of innovation projects within the company, according to Cullop. "The leader of the business area from which the innovation originated provides an overview of the innovation project and its value to the senior leadership team [their peers]," Cullop explains. "With this model, we have innovation projects that are continually coming and being prioritized by the business. As a result IT is viewed as a strategic enabler."

At Serena, project visibility is essential to yielding a return on investment, the company reports. According to Rene Bonvanie, Serena's senior vice president, Serena's survey of CIOs found that many advocated experimentation and allowing innovation to happen.

3. Cut upfront costs and save for innovation

As IT companies cut costs, new opportunities for innovation are created, IBM's Newbold says. "It continues to provide the impetus to reconsider just about all aspects of IT, from server virtualization, to use of alternative desktop tools like the free Lotus Symphony, to Web-only provisioning of our communication and application suites, to cloud computing solutions," he says. "This environment is wide open for innovation as business managers are now actively seeking creative solutions beyond basic expense control; they are demanding new business models and complete solutions."

"Save money first and foremost, and then build the platform to make money," Forrester's Cameron advises.

According to Bonvanie, a CIO's responsibility is to look at saving money. "We've started to go down the cost reduction [route] very aggressively, embracing software as a service [SaaS]," Bonvanie said. SaaS apps such as Google Docs and Salesforce.com's automation provide room for innovation and save the company a significant amount of money within a year, according to Bonvanie. "My business will be in the cloud," Bonvanie added. "I will be a serverless CIO."

Bonvanie says that at Serena, the company tries to avoid upfront costs.

"If you do that you can actually improve innovation," he says. "If so much of your costs are related to infrastructure, very little money remains for innovation."

Serena reports that 55 percent of CIO respondents in the company's survey thought reducing upfront costs would help to lessen the financial risks of trying new applications. At the same time, CIOs reported that budget cuts were the biggest hindrance to new projects.

4. Use the social and the virtual

IBM's Newbold suggests that as companies reduce travel expenses, meetings on new projects can still take place in a new dimension: the virtual world. "We have seen new interest in making virtual worlds more suitable for team meetings as more businesses seek to reduce travel expenses and the related environmental impact," he explains. According to Newbold, virtual worlds can provide high-fidelity sound, avatars, and collaborative spaces that engage new ideas. "It has also inspired lots of new solutions," he says.

In addition to the virtual world, social networking sites foster collaboration and innovation, Newbold says. In its CIO Report, Serena advised that CIOs frequent tech news sites such as Slashdot, community sites such as Experts Exchange, and networking sites such as LinkedIn to foster new ideas.

"I always encourage my colleagues to collaborate, especially with remote team members and especially when there is uncertainty," Newbold says. "The best way to demonstrate your value and to ensure you are building positive value is to be a leading collaborator; its a skill and a temperament that always brings rewards."

Bonvanie agrees: "A smart CIO will allow the innovation," he says. In Serena's study of 100 IT leaders, 69 percent believed social networking will be a useful business tool within two years. Despite security concerns raised by CIOs in the survey, Bonvanie advocates communicating new ideas via blogs and wikis.

5. Go green

According to IBM's Newbold, focusing on environment-friendly projects can help keep innovation at the forefront of your company's business plan. IBM is focused on energy-efficient data centers and smart-control systems to reduce consumption," he says. "When leveraged appropriately, 'green' strategy, innovations, solutions and services can constitute a competitive edge for enterprise and for industries -- making it possible to take care of business while taking care of the planet," IBM states in a December 2008 white paper.

Focus on new business models that reward low environmental impact, Newbold advises. "We are also engaged in social computing as a way to get employees thinking and innovating about green solutions and being more mindful about their own impact," he adds.