The Reward for Risk is Growing
With an economic downturn ahead, there's reason to invest in mid- to long-term innovation.
Everyone wants to say their company is innovative. But few want to put in the hard work (and take the risks) to actually be innovative — especially in a downturn, when scrutiny of every dollar, Euro or Yen goes up. It can be tempting while tightening the budgets to tighten up the ambitions along with it.
But innovating during a recession may actually be the best investment for 3 simple reasons:
Lean means smart. You’ll be forced to make tougher choices around where you’ll innovate. Sharpen your measuring stick to understand why you need to veto a pet project and instead invest for impact, avoiding novelties for something truly useful. Be sure it’s rooted in an eyes wide open evaluation of benefit and value for both your brand and your desired audience. Eyes wide open means asking why, looking at sources, and insisting on not just hearing what you want to hear. As P&G recently reported, innovation drives value. Leaders who surround themselves with people willing to challenge them are best poised to make the best calls.
Pull ahead of competition. As your competitors slow down, gains from your innovation practice mean you can end up multiple years ahead. So the moment your innovations are ready for full-scale application, they’re just getting going. If you had waited, you’d be the brand about to miss the next wave. In this, it’s best to think like the big firms, who tend to keep the lights on while small and medium sizes shut it down, according to an analysis from Kellogg School of Management, summarized nicely by Forbes. Don’t release all your creative capital in favor of only supporting your iteration teams.
Change won’t wait. Your business might want to slow down but your customer and the culture won’t wait on that. Many businesses are woefully behind in areas like sustainability and inclusion. They also have failed to embrace and evaluate the impact of emerging technologies like web3, AI, and the embodied internet (extended reality). Putting off those explorations even further can dig the hole deeper. Now is your chance to pull even or get ahead in those newer areas.
Whether it’s business, product or experience innovation (or the magical combo of all three), the brands who bet correctly now set themselves up for increasing their value down the road.
~ejw