vol. XVII no. 2

				Page 2 Page 1 2 3 4 5 TO CUT OR NOT TO CUT Though innovation is crucial to maintaining a competitive advantage, history tells us itÕs one of the first things to get cut during a recession. According to one study, spending on research and development in the technology sector during the height of the recent recession declined 8 percent from mid-2001 through early 2002, a total drop of $1.7 billion. "The natural tendency during a recession is to cut - companies cut down on innovation, advertising and service quality," says Naveen Donthu, Katherine S. Bernhardt Professor of Marketing. "In the short term it seems to help, but over time it hurts them." But Alfred Mettler, assistant professor of finance, says that recession may not cause innovation to totally cease; it may just take on a new look. "It's true that many companies tend to scale back during a downturn in the economy," he says. "But, history has also shown us that when times are not so good, people are more inventive than when times are good." Benjamin Oviatt, professor of managerial sciences and director of the Herman J. Russell Sr., International Center for Entrepreneurship, adds, "if you broaden the definition of innovation to reach beyond the product side and into the process side, companies - particularly smaller ones - may be very innovative in trying to survive during a time of recession." IMPROVING THE PROCESS Ellwood Oakley, professor of legal studies agrees and says that when you talk about process, innovation isn't always as obvious. "Take the Sarbanes-Oxley Act," he remarks. "It requires huge process changes within corporate America and is challenging companies to be more flexible and innovative in their approach to dealing with this new regulation." Whether it's process or product based, technology has a significant role in accelerating innovation. "One of the things technology has allowed us to do is access global resources in a way we haven't been able to before," Houghton explains. "Technology has also allowed us to change our way of thinking about knowledge management. Now people in various disciplines throughout the organization are able to communicate across the globe and share information to come to solutions more quickly. This allows innovation to disseminate more rapidly.Ó" But while technology helps to accelerate innovation, the panel agrees that if a company is serious about being an innovation leader, it should take a closer look at corporate culture and organizational structure. Previous Page | Top | Next Page

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