Graham Hill, newest member of the Strategyn UK team, blogs an insightful and evidence-based piece on how customer-driven innovation can help firms to beat recession.
As we enter further into the recession, companies are making ever deeper cuts in their spending. Nothing is sacred. Head count is being decimated, marketing budgets are being slashed and innovation is being curtailed. This might seem to be a logical consequence of the recession, but is it?
A McKinsey Quarterly article on Learning to Love Recessions looked at how successful 1,000 US companies were over an 18 year period, including the 1990/1 recession. It highlights the fact that companies that successfully weathered the recession significantly increased their spending on sales, on innovation and on marketing in comparison to their less succesful peers. In innovation's case, they increased their spending to 22% more than their less successful peers. The payoff from these and related investments was a 25% greater market-to-book ratio for the successful companies in the post-recession period.
It seems reasonable to conclude that increased innovation drives success during a recession.
Read the full article here...
Comments