Posted by: Bruce Nussbaum on September 07, 2007
If you haven’t look at the stock market today, it’s sinking, thanks to a very weak jobs report that implies that the risk for recession is up considerably. I know from long experience that the knee-jerk reaction of 90% of top managers in the US in the weeks ahead, as they prepare their budgets for 08, will be to cut “excess” and “extraneous” expenses. And I know from past experience that investments in innovation and new products will tend to be cut. The rationale is always the same—we have to meet our numbers no matter what or Wall Street will kill us.
Well, don’t run scared of Wall Street and don’t cut investments in innovation. Wall Street will kill corporations who don’t have new products and services that generate revenue and profits anyway. If not this quarter, then next. It’s a losing game to play.
Cutting R&D and innovation spending now, as the economy weakens, opens competitive opportunities to those companies that take them. This is the time to boost, not cut, investments in innovation.
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