10 Worst Innovation Mistakes In A Recession.

Posted by: Bruce Nussbaum on January 13, 2008

We are probably already in a recession (or very close to it) and, in the past, CEOs made serious mistakes in trying to cope with a slowing economy. Here is a list of What Not To Do. All of them hurt innovation. Unless you really want to compete on price (remember, last week India launched its $2,500 Nano car), the ability to do sustained innovation is the one competitive edge left. Innovation is the driver of performance, growth and stock market valuation.

Here are the 10 worst mistakes you can make in a recession that will hurt innovation:
1) Fire talent. Because of America’s accounting laws, investments in talent are expensed, not capitalized, so cutting back on people, especially really smart, high-priced people, is a quick

way to cut costs. The accounting rules only hurt companies who follow them. Talent is the single most important variable in innovation.

2) Cut back on technology. Xerox and others report that companies are already curbing investments in technology to save money. Banks especially. The rise of social networking and consumer power means that companies have to be part of a larger conversation with their customers. This means big money spent on IT.

3) Reduce Risk. Innovation requires taking chances and dealing with failure. Recessions push managers to be more conservative. They need to fight this instinct.

4) Stop New Product Development. Saving money often means cutting back on new products and services during an economic downturn. This hurts companies when growth returns and they have fewer offerings in the marketplace to attract consumers.

5) Boards Replace Growth-Oriented CEOs with Cost-Cutting CEOs. Sudden declines in revenues and profits often leads boards of directors to search for managers with experience in pinching pennies. That's what appeared to happen recently happened at Bang & Olufsen. Boards forget that most recessions last only two or three quarters and, these days, are relatively shallow. Penny-pinching CEOs don't have the skills to grow, when growth returns.

6) Companies Retreat From Globalization. It's expensive to expand globally and managers often save money by cutting back on emerging markets. It's a big mistake. Emerging markets are sources of new revenue, business models, and talent.

7) CEOs Replace Innovation As Key Strategy. By turning defensive, top managers take innovation off the top of the official agenda and replace it with systems management and squeezing costs. The entire organization follows. It is extremely hard to reverse this when growth returns.

8) Performance Metrics Are Changed. To Save money and cut costs, managers shift employee evaluations away from rewarding riskier new projects toward sustaining safer older goals. Risk-averse behavior follows. Again, this is hard to change.

9) Hierarchy Is Reinforced Over Collaboration. Sudden drops in revenue and profit often lead companies to panic and mobilize to stem the decline. The need for fast decision-making often leads to a return to command-and-control management. This alienates creative-class employees, young Gen Y and Xers and stops the evolution of corporation organization toward a flat, collaborative, open source model.

10) Retreat Into Walled Castles. Cutting back on outside consultancies is seen as a quick way to save money. Yet one of the key ways of introducing change into business culture is to bring in outside innovation and design consultants. They know what companies across a broad range of industries around the world are doing to promote change. Not receiving this information can hurt a company's global competitive position.

Winners always emerge out of recessions and they almost always beat their competition on the basis of something new. Apple worked on iTunes, iPod and its retail stores during the last recession and came out swinging once growth returned to destroy its competition. Apple didn't make any of the top 10 innovation mistakes. Your company shouldn't either.

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Reader Comments

Rita Gunther McGrath

January 14, 2008 01:17 PM

This is a great list of what not to do during a recession, and it reflects one of the big ironies of new product development and corporate venturing: the time to do it is when performance is good, which is simultaneously when a company is least motivated to undertake growth projects.

I'd like to add one more big 'no no' to the list - and that is cutting back on training and executive development expenditures. While it's easy to do in the short run and seems to save money, it creates huge gaps in company capabilities and bench depth, and often costs you talented people who feel they can't develop personally in their current jobs. At Columbia Business School, we see it all the time - companies who can't afford to invest in their people during bad times and then find that they don't have the talent to staff growth projects when things turn around.

logic

January 15, 2008 03:10 AM

I hate to be a wet blanket, but one could describe the 10 rules as rationalizations to keep spending money as if the times were good. I'm as in favor of keeping the money flowing as the next guy, but would it be possible to list some rules of cost-cutting that *do* make sense?

I can think of a few to start:
1) Stop traveling so much. Rely on the phone and on WebEx, Google Apps.
2) Have C-level compensation cut disproportionately harshly. The CEO, CFO etc. can take the cuts...Dave Packard and Bill Hewlett (HP) were famous for cutting their own pay before they'd cut their employees' pay.
3) Cut back on technology *spending*, but not technology. Why pay Microsoft millions for software, when free or low cost alternatives like MySQL or GoogleApps can do 95% of what you need?

Kelly Stuart

January 15, 2008 07:39 AM

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Robert Troup

January 15, 2008 02:24 PM

Great and timely article, Bruce. With a globalized economy, point number 10 is the most critical. Failure to keep looking for the next big (or small) thing can seriously hamper a company both now and coming out of the recession. With that in mind,my own company, brainstorm exchange - www.brainstormexchange.com - helps other companies to tap, track and manage innovation generated from all sources - inside and outside. Employees, suppliers and customers are great sources of innovation, and we help your company to access them.

gregggallagher

January 15, 2008 02:57 PM

In line with Logic's thinking, some behavior patterns likely will need to change - cost-cutting an obvious one, but as it relates to Innovation & new product development, are there ways in which a firm can prudently modify their behavior to reduce costs/risks while not throwing the proverbial baby (innovation) out with the bathwater?

For example, tightening up the go/no-go hurdles at the early and mid-cycle stage-gate reviews so as to cut losses a bit earlier on "iffy" projects?

amen

January 15, 2008 04:44 PM

Amen to Logic and Gregggallagher. I watched my last company go down the tubes for some of the very reasons they noted. "iffy" projects, exorbitant expense budgets and worthless travel expenses.

C. Walker Ham

January 16, 2008 01:45 AM

This is the time for evaluating the
Corporate operation for maxium efficiency. Eliminate the areas of present operation that are not contributing to sustaining the continuation of the Company. Team work
is now essential in all levels of the business. Do not forget the value of a
positive attitude!!

jbm@thestateofaffairs.com

January 16, 2008 09:34 PM

My understanding is that Japanese companies invest in R&D and growth no matter what the economy is like. Here is a great example detailing Toyota's investments, note, when US sales were SOFT:
http://findarticles.com/p/articles/mi_m0FWH/is_3_113/ai_72117364

Changing investment strategies when the economy changes means the company is doing something fundamentally wrong. This is too common, unfortunately.

John Hatrick-Smith

January 17, 2008 01:43 AM

This article has generated a bunch of discussion around here. The first thing we thought was that if these are the 10 worst things to do in a recession, is it that the 10 best things to do are the inverse of the 10 worst things. For example when times are tough, do you go out and hire more talent rather than firing what you have?. Obviously this is not the answer. So a much more fruitful discussion would arise from an article that described the "10 best strategies for driving innovation in a recession". Now there's an opportunity - - - - - -

Dario Morandotti

January 17, 2008 07:39 AM

Thanks for the list. At the end seems that the key is to balance the temptation of short term returns and thinking for a long term picture. Recessions actually are opportunities to show peoples' attitude toward future and let leaders emerge.

Bruce Nussbaum

January 17, 2008 02:46 PM

John,
Brilliant idea--10 Best Things to do in a Recession To Promote Innovation.
You start. Give us your 3 best ideas.
Bruce

Lisa G

January 17, 2008 04:09 PM

In terms of what we should be done to promote innovation during a recession, there are certain more than three things but here are my top considerations:

1. Engage the entire organization and challenge people internally to come up with ways in which the company can continue to innovate. And then, appropriately reward people for their actions. This will also help foster the all important positive attitude so you don't lose essential people during a downturn.

2. Cultivate your key stakeholder relationships. In addition to tapping your internal audience for input, look to your vendors and customers to find ways that you can be more innovative in terms of the products and services you're currently offering. By listening to their needs and ideas, you will help strengthen the bonds of these key relationships that will help pull you though a difficult time when they could go elsewhere because of cost pressures.

3. Be upfront. Nothing will suffocate a company's culture quicker than fear and speculation. During tight times, employees will waste valuable time that could be spent on coming up with ways to innovate by focusing on the what ifs. Stop the water cooler paranoia by being honest and open about your situation and encouraging people to participate in the solutions. See point #1.

Joanna Clark

January 17, 2008 07:05 PM

I’m a new regular reader of Business Week and love the innovation and design features. As a creative person with a background in both product design and business these discussions are a great resource for me.


1. Be honest and communicate. Acknowledge the reality of the recessionary environment. Nothing worse than not talking about what everyone is already worrying about. Next step is to motivate and reinforce teamwork. Nothing better than unifying to overcome obstacles and challenges. Company culture needs to be fearless that it can weather moderate recessions.
2. Diversify research and ramp-up product development. In stead of making sure you have the next home run by investing more resources and longer development timelines in a limited number of “best” ideas (researched and chosen during the good times), brainstorm how to get more of your ideas to market faster. Revisit the good ideas files, and look from the perspective of the leaner times to come. Diversifying your portfolio of products or services is a tried and true method for managing risk.
3. Stick to the strategy and plan accordingly. Don’t change direction out of fear. It sets a bad example and demonstrates inconsistency to shareholders and stakeholders. That being said, if your strategy was too short-sided to adjust gracefully to leaner times, then you may have fallen victim to the all too common problem of not truly developing a comprehensive business strategy that fully addresses worst case scenarios. If you find yourself less prepared to lead with confidence during a recession, a good bet is to learn from your situation and scramble to assure employees that you have a plan and don’t intend to get caught flat footed again.

Tazio

January 17, 2008 09:57 PM

True innovativeness is a talent, a strength that some people possess, and most do not. (perhaps it should be the "35th strength, eh Gallup?) My #1 suggestion of what to DO in a recession is to keep the innovators in a position to innovate, or to look at it from the opposite perspective (such as original article) - whatever you do, don't take the innovators and move them to jobs that stifle them. #2 thing to do is to continue to create an environment where creativity is encouraged, nurtured, and protected from the dark forces of bean counting stormtroopers.

Diane Rambow

January 18, 2008 07:21 AM

I thought I had a comment to add, but after reading the INCREDIBLE REPLIES to an EXTREMELY WELL-WRITTEN ARTICLE, I realized I had nothing to add to the wisdom of those who've compiled this 'handbook' those of you have created.

Simply great - figure how to consolidate all this, and CIRCULATE - get the 'news out', and FAST!

I thoroughly enjoyed this read!!!

Pierre

January 18, 2008 09:17 AM

Bonjour Pierre,
Vois cet article intéressant.
N'oublie pas STP de m'envoyer l'article sur l'innovation dont tu m'as parlé hier.
Merci. Bonne journée à toi,
Frédéric

John Luther

January 18, 2008 02:41 PM

Thanks, Bruce, lots to think about. I work at a small company (40 people), and for us there's a catch-22 because during a recession we will likely be living payroll to payroll and not able to spend anything on innovation. The challenge for us will be building something for nothing. I know this can done, but it's very hard b/c we don't have the cash reserves of a large company.

As for the challenge to cite "to do's" instead of "to dont's," I would say focus on retaining current customers and making them feel very well cared for.

In tough times there's often an impulse in managers to send everyone out searching under rocks for new customers or verticals. This runs counter to reality in a recession, and moreover we all know that it costs exponentially more to lure a new customer than keep an existing one.

Ezra Christensen

January 18, 2008 06:51 PM

Encourage your innovators to innovate more!

While cutting luxury costs like unnecessary travel expenses or turning to open source productivity tools that are sufficient can help reduce costs without affecting your R&D budget, the common thread to many of these suggestions are "they" comments, the "bean counters" cutting innovation budgets. If "they" are the problem, then the conclusion is that we don't need to change.

While we might get them to change, the more assured approach is to change ourselves. Your new project may be the best thing since sliced bread; think about how much better it would be if you could achieve it at half the cost. Better profit margins, better to shareholders, and better for you the next time you go asking for money to start your next new project and the "bean counter" nods yes knowing you aren't going to squander it. And we all know the major innovators are going to keep innovating; that's why it's suggested you keep your talent.

Learn to do more with less. Bootstrap. Figure out a new, less expensive solution to achieve the same goal. After all, you're the innovator, you're the one that loves finding new, better, faster, more profitable ways to do things. Show us just how good you are!

James Todhunter

January 18, 2008 07:57 PM

Bruce, you are right on with this!

As the dialog around economic recession expands, many companies are rethinking their strategies to ensure that they will remain strong and vital. Shortsighted attempts to improve bottom line results at the expense of innovation and product development will deliver more and deeper harm to the organization that greatly outweighs the short term benefits perceived.

Companies must understand that innovation and product are the core drivers of their value propositions. In order to protect and expand revenue in a tough economic climate, it is essential to deliver a strong and well differentiated value proposition.

Fortunately, many leading companies are still very focused on innovation as a driver of product revenue and company value. This was highlighted by the recent Aberdeen survey titled “Product Innovation Agenda 2010: Profiting from Innovation Today and Tomorrow,” and is a big reason Invention Machine's clients invest in our products to help drive their sustainable innovation initiatives. You can see the survey at this URL. http://www.aberdeen.com/link/sponsor.asp?spid=30411017&cid=4170

As to right things to do in these challenging times, here is a link to some suggestions for “Driving Innovation Culture to Thrive in Lean Times”. The URL is: http://www.eweek.com/c/a/Knowledge-Center/Driving-Innovation-Culture-to-Thrive-in-Lean-Times/

Jim Todhunter
InnovatingToWin.com

Andrew Personette

January 20, 2008 12:23 AM

What to do.

1. Don't Panic!
I borrow this from the cover of the Hitch Hikers Guide to the Galaxy, and I find it appropriate in any ,stressful, challenging or unknown situation.

2. Talk amongst your selves.
Communication between disparate parts of any organization will always increase the potential for success. This is one of the fundamentals of strategy. You want to involve all the stake holders. Grab those bean counters and chat 'em up. Because if you don't count your beans, there is no business.

3. HIRE!
Absolutely hire. Everyone else just paniced (see #1) and no one communicated (see #2) and now you have a talent rich pool that is hungry for challenging opportunities. Be smart and selective, but really, its a good time to shop.

Beyond that I really appreciate Joanna comments about Honesty. It is the best platform for communication.

Ricardo Sosa

January 24, 2008 06:15 PM

Yes but...

1) In a simplistic way, yes talent is important. But more specifically, a crisis can be used to reshuffle things, including ‘talented’ profiles whose experience hinders innovation. Training is expensive, but it opens a window to rethink processes and roles.

2) The technology argument is weak. Companies may indeed need further contact with customers, but it does not follow that IT is the only way.

3) Risk and failure are certainly part of successful innovation, but it may be that the sort of risks needed in crisis are different.

4) It is untrue that continuing NPD means increasing the product portfolio.

Bruce seems to advise against changing current practices over a crisis. I agree only partially. It may be that conventional reactions to recessions are wrong, but it does not follow that not changing is good.

I disagree with Bruce’s apparent view that crisis need continuity. Crisis are great opportunities to change. Talent or expertise, technology, risk, NPD, everything does need to be redefined not as a reaction to a crisis but as a long-lasting strategic change.

We should be discussing what changes are in place, not whether we should keep doing the same stuff as if nothing is happening.

Lastly, I wish we would stop endorsing the notion that Apple is the paradigm to copy. By definition, one cannot copy other’s strategies to innovate. We need to learn from them and then be creative.

To extend the analogy, Apple did not copy someone else to be successful (after a long time of being a failure).

Fernando Salazar

February 5, 2008 05:34 PM

Muy bueno el artículo y también los comentarios de todos. Yo agregaría algo sobre un artículo que leí en HBR.
De varias maneras se hace mención sobre el hecho de cuidar el no centrar toda la atención en el control de los costos, en caso de recesión.
Creo que hace falta (como lo dice HBR) el poner en claro en nuestros Estados Financieros, el análisis de las Ventas. Dicho de otra manera, Contablemente, desglosamos a gran detalle los Costos y Gastos pero no trabajamos al mismo detalle las Ventas, acciones realizadas, rendimientos y productividad de cada acción emprendida, etc.
En caso de recesión creo que merece un lugar destacado, al igual que los 10 puntos que propone Nussbaum.

Kathleen Wang

November 24, 2008 07:49 AM

yes, during the recession, the company shouldn't cut the budget of using consultancy. instead, they should make best use of the time and consultancy's valuable insight to help them improve the problems faced to the company for quite a long time and improve low performance area so that they can boom once the spring comes.

Paritosh

November 24, 2008 02:42 PM

In principle, I agree with most of the points laid out below. Putting it simplistically, the point is not to cut down on innovation, but probably, in my opinion, be more careful/stringent in prioritizing investment choices regarding which innovations to pursue - after all, we are talkin about a credit crisis...

Playing the devil's advocate, if you were forced to ensure short-term cost savings (take the example of GM), what would your priorities be? Fire talent, cut NPD/technology investments, or put expansion plans on hold??

SuilEile

December 5, 2008 07:32 PM

I would add 2 things to the "should do" list.
1) Fail fast. This is not just my $0.02. I work with an Innovation group in a large tech company. With less cash to fund innovation create processes to weed out "nearly-there" innovations and
2) Innovation can be redirected towards "recession-appropriate" activities and products. In Maunfacturing TQM/JIT/Lean are all innovations that save money and resources. What is the next innovation ?

Khawar Nehal

December 22, 2008 12:44 PM

Waiting for something to happen could mean death for the company.
It is better to dye trying than to let the company die a slow and slow death by recession induced suffocation.

R R Raj

February 15, 2009 08:22 AM

Excellent article;very informative.

Some thing must change.If u do the same thing ,u get same result.I would suggest do the position analysis.The competency required at all key levels vs what u have and work on developing competency.

NicolasB

February 26, 2009 11:17 AM

Excellent article, let's hope for us consultants that a lot of companies will come accross it and apply some of these rules!

The sad part of the story is that companies start cutting costs (including the quick wins that have little real operational impacts most of the time: constant travelling, communications, ...) only when they have to. One of the lessons learned would probably be that burning too much cash for no good reason shouldn't be more acceptable when the house isn't on fire.

Just to add a few elements to what Paritosh was saying: many companies these days have cash problems and some priorities are also to get rid of a few assets as a means of getting extra cash. And maybe as an opportunity to concentrate on one's core business, or kill a few "dogs"... This means that for the guys who have been paying attention a bit more before the bad times arrive there are also many opportunities to acquire other companies at a very good price, to enter new markets or diversify for a fraction of the normal cost.

So I would also add to the 10 good reasons an extra one:

11) Stop external growth to preserve cash. A reflex which would lead to ignore major opportunities of acquiring assets "for sale" and boost the activity when growth returns. It also has the negative effect (if everyone does that) of putting in jeopardy the comapanies selling these assets if they cannot get a reasonable price for them, in a short time frame (the now famous domino effect in worst-case scenarios...).

Prof.M.S.Rao

February 27, 2009 04:51 AM

Great article on innovation and recession.

You may visit more on this topic http://profmsr.blogspot.com

Prof.M.S.Rao, India
Corporate Trainer in Leadership Development.

Bill Van Eron

February 28, 2009 01:53 AM

Hi Bruce,
It's great to see all the interest innovation is commanding, in this post and well beyond.
This list is a good one but I will say while it sadly may be new to many companies, it is basic. I say that because all of us that have experience managing innovation have heard this before. In that I have spent 20 years on this topic and am newly part of a team offering a truly innovative solution, here are some of the thoughts that we integrated that may be valuable to all of your readers:
1. The rules have changed. Yes the recession is the first thing that will occur to the less informed. But the new rules of branding call for companies to be dynamic to their markets and to stand for something those markets respect. It's not enough to just make a great product. Social responsibility ha spassed Go and is not integral.

2. We are at an interesting cross section in time where we enter what I call an age of accountability at the same time where we need to enable innovation. Most of us know Innovation Management has been on the Fortune 1000 radar but few F1000 companies have figured it out how to apply it.

3. Most companies do try but when you are a large global organization, filtering through the thousands of voices that represent customers, markets and your own business (imagine listening to employee's) has been perplexing to C-Level Managers. Likewise, if you follow Harvard Professor Clayton Christensen, as we do, you will see that companies must shift from renewal as a one time last ditch effort that is highly traumatic, to accepting customer, market and business insight as critical to their renewal, sustainability or resiliency.

Our new company -Inolytx - combines the best of analysis,insight methodologies and innovation to help large companies do all of what I am stressing as critical in this downturn and well beyond. We are soft launching in three weeks (Web site forthcoming).

Yes, as you state, it is important to keep talent, but we contend it is more important to shed the traits that bog a company down in internal bureaucracy, and use insight to apply facts and causal data to support new thinking that has to be a "norm". I saw what happened to HP firsthand as a dedicated, top 5% performer when cost-cutting became the primary objective. We all see what happened to Google when simple, human traits such as listening and staying curious prevail. Most companies today will struggle just accepting and acting on being the transparent organization they need to be, but those that can do it will find organizational renewal, innovation, growth and profits as solid by products.

Bill Van Eron
Partner
Inolytx

Mazen Sadat

February 28, 2009 02:32 AM

Innovation is essentially setting up a culture that encourages out of the box thinking, openness, challenging status quo, spotting opportunities and moving fast to seizing opportunities…….I think all of this is applicable to all times good and bad……Over all innovation might serve better during a recession and help adjust to changes in bold step and would protect product / service value from being commoditized and being forced to compete only on price, Mazen Sadat.

Jim Carroll

April 28, 2009 07:36 PM

Brilliant idea--10 Best Things to do in a Recession To Promote Innovation.

www.jimcarroll.com

1. Focus your team -- relentlessly -- on growth. I keynoted a global organization in Las Vegas in February. The CEO got on stage before me -- and spoke about the recession for one minute. He then spent 19 minutes speaking to the growth opportunities that the organization could pursue. That's what everyone needs to do right now. There are growth opportunities in every industry. Focus on them!

2. Respond faster. When I keynoted a food industry summit in New York, we spoke of the need to respond faster to the fact that consumer preferences were changing more rapidly than ever before. More people eating at home, sensitive to dollars, looking for food-comfort. Reformulate new brand and product options faster. Just do it. Don't study -- do.

3. Invest in the brand. Brands can become weaker in a recession, particularly as consumers scramble for value. Decide where you want to reposition your product/brand, and act fast to do it rather than studying it to death.

4. Mix it up. Don't assume that worked before the recession will work now. Try out a lot of ideas, particularly around value. “I'm experimenting rapidly with price points and product mix."

5. Invest in experience. Lots of your staff will be down in the dumps, and are spinning their wheels. Get a message out that NOW is the time to invest in experience. Try things out, to build up the collective experience of your team.

6. Kill off the innovation killers. Reframe your team, so that they are thinking "what a great idea," rather than viewing with suspicion any new ideas. Remember -- everyone is worried about being laid off, and paranoia sucks the life out of innovation faster than anything else.

7. Collaborate within the industry. When I keynoted the American Nursery and Landscape Association recently, I stood in awe of the blog they were running that was offering practical, on the ground, easy to implement ideas that retailers could put into their stores NOW.

8. Seek ideas. Go knowledge farming once a day, looking for ideas on customer service, operations, IT strategies, and just about anything else. There's a flood of ideas out there -- now's a great time to chase them down and do things.

9. Partner up. Sure, resources are scarcer during a recession. That's why you can speed up innovation with anything -- from advertising, to customer service, business model implementation, IT strategy, opportunities for operational excellence or just about anything else -- by seeking partners to help you out. That will help you achieve key goals faster.

10. Get over it. Lots of organizations are still stuck in the anger and denial phase of the Seven Steps of Economic Grief. Make a decision to get into the acceptance stage, and move on. This will recession will pass, just like every other one.

Derek

June 20, 2009 01:42 PM

1) Incease Executive Pay
2) Build more call centers in India (even if no one is calling).
3) Hire expensive consultants to make up fancy charts about worthless innovation ideas.
4) Increase pay for the talent (AKA Executives).
5) Fire the little people who run the company
6) Buy expensive technology that doesn't do anything.
7) Buy a corporate jet. By the time it's built the recession will be over and you will get a good price for it.
8) Invest all corporate profits in Florida real estate.
9) Innovate by completely scrapping the parts of the business that make money and try something "special."
10) EXPAND LIKE CRAZY!!! Especially if your company is named Starbucks.
11) Don't worry the recession will be over in 2-3 quarters from the start... which was a month or so ago... so it's all fine now.

Jason G

June 29, 2009 07:30 PM

I'm the CEO of a micro-cap public company. We are fully reporting and trade on the OTC Bulletin Board. I won't post more information than that because it's not likely appropriate, but I will respond to questions and comment at the gmail address I provided.

First off, to open the article by saying "We are probably already in a recession..." - is this serious? We have seen sales get pummeled, credit lines eliminated and leasing companies all but entirely cease financing equipment sales. Our top line is off about 60% and my staff is down 70%. I am unsure where Bruce hails from, but as far as I (and my constituents, stakeholders and sharehodlers, etc) WE ARE DEFINITELY in a recession - at least.

Now that that is off my chest, let me share a few thoughts about the actual list.

1) Please, please, please show me how to attract and retain talent without cash. We had huge layoffs, three instances, each time cutting a third of the staff, in all it's nearly 70%. All of those people weren't superstars - but they were all good. If we didn't think they brought anything to the table in the first place, we would not have ever hired them. If you're thinking about key engineers, developers, programmers or otherwise you may not have a choice. They may not stay under reduced or restructured comp and you may not be able to afford them... I am open to ideas though.

2. This is simply too broad of a statement, please narrow the thought. Is our copier/fax/scanner technology or is my redundant gigabit network? Is a new accounting software package technology? Should I NOT buy the $250 desktops for our telemarketing department? How much cheaper can this stuff get - and more importantly, how can you go without it. And - to the posts that said that the functions could be handled by WebEx and GoogleApps - agreed with a caveat. The PCAOB doesn't accept public filings except on specific forms, EDGARized and admission ready - no such luck with the shareware, open source, and GoogleApps. There are areas that CANNOT be cut which force the hands of others which often appear less luxurious.

3) OK - if you can be innovative and do more than stay alive, kudos.

4) Agreed, but with sensitivity to #1 (talent) all of the innovation I am aware of comes from talent, so it comes back to being able to keep the good people around with reduced, limited, or non-existent resources.

5) On my own behalf, I wholeheartedly agree with this comment. Boards don't do this as often anymore, but this column wasn't about boards, instead it was about CEOs. If a board replaces me, it wasn't my mistake, but rather theirs. I think this could have been replaced (I have another one or two to drop and I'll offer a suggestion of my own)

6)Global expansion is not necessarily expensive. In fact, in our case, it is the one thing is likely to keep us growing through these terrible times. Especially now, as our crisis isn't isolated to the USA or to public markets or companies. In fact, this is a global crisis and resourceful companies are finding ways to work with others in similar situations This one doesn't have to be bad - wholeheartedly agreed this one is a mistake.

7) I am not personally guilty of this but if anything is expensive on this list, it's innovation. I force group think tanks and brainstorming, conference call with my sales force, speak with management and stay in touch with my customers. I noted that someone else commented that they are all for keeping innovation and his company that helps companies like mine do it - I bet you the consulting fees are six-figures... this is another one that I'm open to ideas. Innovation typically results from accidental discovery or time - accidents happen so there will always be innovation, but time costs more than anything else.

8) disagreed - drop this from the list.

9) this is probably an issue in larger companies. The young "creative class" workers are the only ones interested in performance-based comp. Collaboration is key. Again, large-caps - maybe, but they have enough money to weather most storms. I'd kill this one too, doesn't apply to most companies.

10) This must have been written by an innovative outside consultant. I don't get this one at all.

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huge points to the posters who suggested travel budgets and executive comp. Our travel budget was the first thing to go, well second thing - my comp was first. Additionally, we had expense allowances for certain employees that we changed (i.e. we'll pay $XX towards your existing cell phone bill vs. giving you a company phone, we'll provide you a gas card and EZ-PASS in lieu of trying to organize hundreds of receipts and reports and burdening the accounting department with extra work.)

We've shut offices, changed planning, reduced our workforce, switched vendors, changed our product suite, sold vehicles, engaged IR firms, PR firms, solicited investors for ideas, provided incentive-based plans to sales people, etc, etc, etc....

I really am looking for ideas. Keep in mind, this was about mistakes CEOs make, and they all revolved around cost-cutting... please don't suggest how to spend more, but instead, how to save it or stretch it out further...

Thanks. JG

Terry Newcomb

February 22, 2010 07:14 PM

JG - Thanks for the REAL WORLD insights!

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Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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