Are companies delaying strategic product investments (i.e., where product returns are realized in future years) for investments that provide returns in 2009?
Tom Nicholas from the Harvard Business School published in The McKinsey Quarterly an article which says that executives who take a “wait and see” approach to innovation investment during downturns may be putting their firms at a competitive disadvantage. “Companies that delay these investments may forego significant growth opportunities when uncertainty subsides and the economy recovers.”
In the 1930’s, DuPont R&D produced synthetic rubber and nylon. Radio Corporation of America (RCA) focused on a new technology called Television… And Hewlett Packard and Polaroid were start-ups back then.
The lessons on innovation investment in downturns is very pertinent today. The market will improve and those firms that continue to invest strategically in the down economic cycle will likely see a product advantage over competitors once the cycle improves.
So, are strategic investments taking a back seat during this downturn?