by Louise Frank

Created on: September 19, 2011

"The business has two - and only these two - basic functions: marketing and innovation. Marketing and innovation produce results, all the rest are costs." Management consultation guru Peter Drucker.

Companies have to make innovation the centre of their strategic planning if their businesses are to survive and thrive during a recession. It is innovation which will drive business and meet the needs of customers. Innovation will keep companies competitive and keep shareholders happy.

If companies drive forward cost-cutting and rationalisation to the detriment of innovation, they will see, sooner or later, a decline in their competitiveness and viability.

There are many opportunities for innovation, even during an economic downturn. Companies must have their finger on the pulse of ever-changing technology, trends and tastes and cater to them, producing products and services that meet those needs. Thus, innovation should match market opportunities to products and services.

There are several types of innovation which companies can implement to see themselves through a climate of economic difficulties.

1. New inventions: Companies need not come up with some invention that is going to change the world but they should constantly be on the look-out for products which improve on what is already available. After all, as Ralph Waldo Emerson said, "Build a better mousetrap and the world will beat a path to your door." Savvy companies learn from other firms' mistakes, On the other hand, they should not be averse to copying their competitors' best ideas - and improving on them. Inventions are not only applicable to products but also to services which offer a superior experience for consumers. Constant improvement is vital.

2. New acquisitions: Companies should always be on the look-out for growth through acquisition, especially in a recession. Big firms can buy ailing small companies which have already developed are are in the process of developing innovative products or services.  However, they should be sure that once the acquisition is complete they have the staff and facilities to take those innovations forward.

3. Customer-led innovation: Companies must build up good relationships with customers and really listen to what they want, whether it's through focus group, market research or just plain talking to existing customers.  Cater for un-met needs and concentrate on quality. There may be complaints about delivery, delays or staff. All these must be addressed

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