Innovation for the Recession

An uncertain economy is no reason for putting off new product and business development

Posted on HBR Editors' Blog: December 11, 2008 12:19 PM

With the economy in a frightening spiral, the temptation is to put new product and new business development on the back burner. The better choice may be to figure out how to keep high-potential projects alive. One way may be to team up with outsiders and do less yourself.

"Collaborative innovation" is nothing new, of course, but doing it has long been a huge challenge. (Gosh, I remember an article that I wrote for The New York Times in 1987 on how American-foreign alliances had resulted in a one-way flow of technology from the United States to other countries, especially Japan.) Yes, IT advances have made it easier to link up with others, thereby vastly increasing the options for collaborating. But this greater choice also has made the task of selecting the right choice much more difficult.

An article in the December issue of the Harvard Business Review offers some valuable help. Its authors, Gary Pisano and Roberto Verganti provide a simple but useful framework that focuses on two questions: Given your strategy, how open or closed should your business's network of collaborators be? And who in the network should decide which problems the group will tackle and which solutions should be adopted?

Pisano and Verganti point out that one size does not fit all and identify four basic modes of collaboration. (No, open models of collaboration such as crowdsourcing are not a panacea!)

Historically, tumultuous economic times have produced great innovations. This was even true of the Great Depression. So if your market is radically shrinking, your cost structure is no longer tenable, or your core customer needs to be redefined, chances are innovation is not a luxury you can postpone. Enlist people in a brainstorming effort to figure out how to reinvent your business. And as part of that exercise, consider how you can leverage outsiders—and not just the usual suspects—to get yourself from here to there.

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