Key to emerging strong from the recession is innovation, according to VCU expert
University Public Affairs
Businesses that invest in innovation during the economic recession are most likely to emerge from the downturn the strongest, according to Kenneth Kahn, Ph.D., professor of marketing and director of the da Vinci Center for Innovation in Product Design and Development at VCU.
Kahn said keeping costs under control is a sensible business strategy during an economic downturn, but focusing too much on the short-term bottom line can lead to serious long-term damage. Businesses that have attempted to weather the recession by simply containing costs “won’t have anything new to offer the customer” when the consumers start spending again, Kahn said, and will lose ground to less timid competitors.
“The companies that have been focusing explicitly on cost control and view new product development as too expensive are going to be at a severe disadvantage (compared to) those companies that have invested in technology and are able to come out with innovative products,” Kahn said.
Keeping current products fresh and producing new popular products are necessary for any existing business, Kahn said. At most businesses, new products drive profits because they offer higher margins than old products.
“That’s why the new product portfolio is so critical,” Kahn said.
Kahn said innovation is not limited to products, but should permeate an entire organization. Businesses that are innovative in delivery systems, information technology, customer service, marketing and other aspects discover efficiencies that will keep their costs down and produce a positive brand image to customers and business partners.
For example, Kahn said that companies that have successfully incorporated social media into their customer service or who have engineered viral marketing campaigns that have caught on are using innovative thinking to improve their businesses. Innovation does not mean just high-tech solutions, either. Kahn points to the way Wal-Mart began to use the end of aisles to display products as an innovative use of retail space.
Most businesses that have been investing in research and development and in an innovation culture will hit the ground running as the economy improves and will gain market share, Kahn said. A downturn can produce exciting times for businesses that see a chance to gain on larger competitors, Kahn said, and many of the country’s most successful companies blossomed from startups to major players in times of economic stress.
Kahn expects those companies that have searched for an opportunity in the recession and have found a way to capitalize through innovation will reap the benefits for many years.
“Those are the companies we’re going to be talking about in the next 10 to 20 years,” Kahn said.
About Kenneth Kahn
Kenneth Kahn is a nationally recognized scholar and consultant in the field of product development. Kahn previously was at Purdue University, where he was a professor and director of Purdue’s Burton D. Morgan Center for Entrepreneurship. Kahn authored the books, “Product Planning: Essentials” and “New Product Forecasting: An Applied Approach.” Kahn’s industrial experience includes serving as an industrial engineer and project engineer for the Weyerhaeuser Company and a manufacturing engineer for Respironics Inc. He has consulted with and facilitated benchmarking sessions with numerous companies, including recently Acco Brands, Coca-Cola, ConAgra, Honeywell, John Deere, Lego, Procter & Gamble, and Unilever.
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