It's Back: Innovation Spending Is Rising

Posted by: Michael Arndt on January 28, 2010

As founder and managing director of innovation consultancy Strategos, Peter Skarzynski meets with a lot of businesses. A year ago, when he made client calls, corporations were mostly talking about cost-cutting. Today, he says, they’re more interested in growth again, and that means an increase in spending.

I caught up with Skarzynski at his office in Chicago. Also there: Doug Schaedler, chief executive of UTEK, a patent-licensing outfit in Tampa that acquired Strategos in 2008. (For a peek at one of UTEK’s own innovative investments, check out PharmaLicensing.com.)

Skarzynski says the shift back to growth mode is occurring almost throughout the economy. There is one exception: banking. He says the turn has been sharpest in commodity industries, such as packaging and chemicals. As the Great Recession deepened, these low-margin sectors were all about layoffs. Now they’re concluding that they’ve cut about as much as they can, and if they want to boost profits, it’ll have to come from boosting sales. That means they’ll have to have new stuff to sell, which in turn means bigger investments in R&D.

He doesn’t mean that layoffs are a thing of the past. Just this week, for instance, Wal-Mart said its Sam’s Club was cutting 11,000 employees, as it outsourced in-store product demonstrations to others. But Skarzynski argues that the reasons behind most job cuts will be different. They’ll stem from changes in business models or from mergers rather than from simply needing to save money to survive.

Of course, Skarzynski is just one person drawing conclusions from what he sees in his own sphere. Do you see something different?

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Reader Comments

Märt Ridala

January 28, 2010 01:31 PM

This might sound a bit cynical, but in the name of the world-economy lets hope that the banking sector remains conservative in their innovation spending. :-)

I recommend do a search "Bird and Fortune Financial Adviser" on Youtube. You will find the funniest and precise videos explaining what happens if the banking sector starts innovating and invents things like derivates of derivates etc. Here is one good one: http://www.youtube.com/watch?v=DXJtnqXubK0

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What comes next? The BusinessWeek Innovation and Design team of Michael Arndt and Helen Walters chronicle new tools for creativity and collaboration, innovation case studies in both the corporate and social sectors, and the new ideas that have the power to change the way things have always been done.

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