Innovation Thrives in Difficult Times

Innovation thrives in difficult times.

HP, the original garage start up, launched in the middle of the Great Depression. Television, nylon and many of the fundamental technologies that led to computers also had their beginnings in those times - partly because the times were so unfavorable to traditional business. If companies and entrepreneurs could find it within themselves to innovate then - when things were much, much worse than they are today, what's your excuse for holding back now?

The entire lean movement grew out of a severe economic crisis. In post-World War II Japan, Toyota had to figure out how to make cars when the money wasn't there to invest in mass production manufacturing processes. The creative means they developed to eliminate cash-consuming inventory from their production system became the foundations of the Toyota Production System, which became Lean.

Difficult times bring out the scrappiness - the "let's go down to Fry's and see what we can put together" spirit - that creates breakthroughs by forcing people to challenge their assumptions if they want to see their ideas come to fruition.

Right now, good people are available who were too busy two years ago. Office space is easier to get. Vendors are more willing to give good deals to secure customers. A little cash can go a lot farther.

Is this time to launch the skunkworks you've always dreamed of, but couldn't afford the distraction? Is this time to take advantage of the need to slow production to decommission inefficient equipment and bring in new green technology? What opportunities do you have now that you don't have during boom times? What can you do today that will drive your personal recovery?

If you need inspiration, here is an article from December's Wired Magazine"" Back to the Garage: How Economic Turmoil Breeds Innovation.

When Co-Brand Partners Go Bad

How healthy are your co-branding partners? If they are not healthy, what will be the impact on your customers? Add one more thing to the to-do list for shepherding the company's product lines through this downturn: watch your partners to ensure that they treat your loyal customers with the same care that you do.

JPMorgan Chase® is struggling financially, and it has decided to increase revenues by squeezing its credit card holders: increasing credit card rates and making its terms more onerous for people who either don't charge frequently or who carry a balance.

Until today, I was a happy Chase customer with two credit card accounts: one Amazon.com® co-branded account and one Marriott Rewards® account. Today, in my post office box, there was a message saying that my terms had changed: my interest rate was going up and the other changes were unfavorable to me and not competitive with my other credit card accounts. I had not done anything to trigger this action that I have been able to identify. Fortunately, they did offer an "opt out" option to close the accounts, so I took them up on it.

I know that Amazon and Marriott have no control over Chase's behavior. They have done nothing but license their brand to Chase and link up their rewards programs. But that doesn't get them in the clear.

Here is the problem for Amazon and especially Marriott: their brands are now linked with a distasteful experience in my mind. I travel at least half the time in a given month, and until now, I had preferred Marriott hotels. But the Hilton hotel across the street doesn't remind me of the hassle I had to go through to cancel my rewards credit card. That's enough to change a frequent traveler's behavior, at least some of the time, when the hotel chain can least afford to lose a loyal guest.

From news accounts, this is happening to a lot of people all over the country - the kind of people who would normally be considered model customers in normal times. Given that the people who have taken the trouble to get a hotel chain's rewards card are probably in the upper quartile of frequent travelers, this has the potential to hit Marriott where it hurts.

What safeguards are in place to ensure that your company's loyal customers will be treated well, and your brand will be protected from this sort of harm?

Product Portfolios in Tough Economic Times

As promised, here is the first in a series of articles and interviews about product development during this recession.

Pam Harper of Business Advancement, Inc. recently interviewed me on the topic "How to Build a Product Development Portfolio in Tough Economic Times" for her podcast.

I produced a companion knowledge brief for Pam's audience, Product Development Portfolios for Difficult Times.

Listen to the 45 minute podcast on Pam's blog, Accelerating Progress.

Please leave comments either there or here with your feedback!

One Healthy Company's Response to the Recession: Invest $7 Billion in New Technology

Intel just announced a major investment in new facilities to produce the next-generation chip technology, and is encouraging others to follow suit.

This is exactly what the healthy companies need to do: invest in the long-term projects that will position them for leadership during the recovery. Intel's fabs are long lead time items - if Intel waits until the economy looks like it's going to improve, they will miss the window of opportunity.

In the meantime, there are a lot of good people available today who were not available two years ago, and may not be in a year. The "Innovation Economy" is going through a rare period when long-term growth plans are not hampered by the available talent.

Intel has this opportunity because they have limited exposure to the problems other companies have right now to raise capital: they have billions in cash reserves. Still, it takes a lot of courage to seize the moment when everyone else has hunkered down.

What are you doing to take advantage of the opportunities that this recession has created for you?

Product Development in the Economic Crisis

In the last few months, I have received a number of speaking and writing assignments about how this economic crisis has helped product development.
I'll post the audio from the interviews and the articles that have been published as they are available. In the meantime, I'd like to share with you some ideas that have formed a common thread through all of this work:

• Managing product development through this crisis requires you to manage ALL of your company's product development activities - current product and process support as well as new product development - no matter who does them. You need to get a complete picture of all the activity that's going on so that you can allocate resources appropriately.


• Your best opportunities may lie with strengthening your base. For example, an organization who needs immediate cash flow may benefit from applying engineering resources to make manufacturing process changes that get cost out of the system. We don't normally think of this as product development - or if we do, it's called "current product support" and shuffled off to a distant team or our junior engineers. But it falls squarely into the realm of product development.
  In normal times, this is a good thing - it keeps the new product developers focused on the future. But in these times, you may want to consider applying your most experienced and intelligent minds to the problem of improving current product designs to generate immediate cash.


• Cut projects, not budgets. If you have to reduce expenditures, eliminate items from the portfolio entirely rather than ask teams to deliver across-the-board cuts. Give the programs that are on the list the resources to succeed, and eliminate everything else.
  I'll never forget the time when a blanket travel freeze forced me to cancel a face to face meeting with development partners at a critical time in my program. We conducted the meeting by Web conference instead, but the relationships were not in place for a remote format to work as well as it needed to work. It took literally months to undo the damage from that decision, wasting many times over the cost of the travel by the time we were done.


• Continue your efforts to eliminate waste, especially the big hitters like unproductive meetings and reinvention that suck development resources away when you need them the most.

In a way, we have the advantage in product development over many of our peers: our roles require us to look ahead towards the light at the end of the tunnel. When the recovery begins and your customers want to pull your products from the marketplace, how well will you have prepared your company to respond?