Innovating THROUGH a Downturn

(not just in a Downturn)

Thinking AND Acting Differently in Troubled Times…

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Who would have thought that the bursting of the US housing bubble last July would put a brake on the fast growing Brazilian economy? The Real has weakened and there is a liquidity crunch in Brazil. Companies, customers and banks have become conservative and are hunkering down to survive this new reality. Cost‐ cutting and conserving cash is top of mind of every CEO in Brazil. However, these actions albeit necessary are not sufficient to help companies survive through the downturn and come out even stronger after the downturn. During the dot‐com burst of 2000 or the financial crisis of 1998 or the stock market crash of 1987, we have seen companies that emerged as leaders are those who made innovation a strategic imperative. We have compiled five things that these leaders did to think and act differently in troubled times through a downturn.

Beyond cash generation to also accelerating cash generation AND building future assets

During downturns, companies focus on generating or conserving cash and abandon all longer‐term investments. Leading innovators accelerate cash generation and protect longer term investments. They accelerate cash generation through rapid rollout of new low‐cost process and offerings and modification of their business models to adapt to the new market conditions. They also build for tomorrow by tying today’s innovations in a way that helps protect and strengthen assets which will help drive bigger, bolder innovations and new growth platforms for tomorrow.

Beyond battening down the hatches to also looking around AND planning for new escapes

During downturns, many companies batten down the hatches so tightly that they are ill prepared to take advantage of new opportunities as market conditions improve or as distressed assets become available. Leading innovators instead look around for options and focus on keeping options open even by bootstrapping if necessary so that they are prepared to move when the time is right.

Beyond saving yourself to also protecting your friends AND building win‐win partnerships

During downturns, many companies abandon or turn on their partners as they hunker down in a survival mode. Leading innovators instead focus on driving win‐win innovations to prevent churn and switching in their biggest and best channels and customers. They also continue to nurture their key innovation sources and suppliers looking for ways to leverage more limited internal resources. During downturns, leading innovators reduce the risk of their overall portfolio while pursuing higher risk initiatives through partnerships and alliance and as a result grease the skids for rapid recovery on the other side.

Beyond slimming down to also optimizing your portfolio AND adding emerging adjacent opportunities

During downturns, many companies severely cut back on activities that are not income generating and focus entirely on lean operations. Leading innovators know how to slim down and rationalize their innovation portfolios and pipelines but they do this while also looking into attractive adjacent markets or parts of the supply chain where you can turn the weakness of others to your advantage. In driving lean innovation, leaders are able to accomplish more with less and faster. They conduct the last experiment first and have a bias for action. Streamlining their innovation operations and value chain enables accelerated innovation and time to cash.

Beyond being pulled into in‐fighting to being a lead customer AND driving teaming

During downturns, many companies devolve into internal infighting and balkanization which creates major barriers to rapid innovation. Leading innovators position themselves as lead manufacturing plants for new process or as lead customers for new product or service in order to attract the best innovations to win in the market. This positioning reinforced by stretch targets and rewards for innovating drives teaming across the organization and helps leading companies through the downturn and coming out number one on the other side.


Survival is essential and there is clearly no future without a present BUT/AND growth is also essential and there is no present without a future!! Lead innovators recognize this and their leadership teams are adept at managing both agendas simultaneously. This is not easy for most firms. Are you ready to lead your company through a downturn?