In this interview Harvard’s famous innovation professor Clayton Christensen argues that the economic downturn will drive innovation. His insight is that in good times, innovators get too much funding and have the chance to continue too long with innovations that eventually fail. The innovators have too much budget and time to spend before confronting the market with the innovation. In bad times, they get less funding and have to be more picky in deciding which innovations to pursue. Evenmore, the lack of resources sparks creativity and pushes the innovators to really challenge assumptions and current ways of working, thus delivering more breakthrough innovations.

Being able to stop innovation projects is one of the characteristics of successful innovative companies, and I guess Christensen is right when he argues that in hard times, companies will be more focused on selecting the right innovations. I also ran across this in my research. One research project was focused on a company that had delivered some very successful products to the market, but also experienced some big failures. The failures were costly as they were products that were introduced in many countries, incurring all marketing and sales costs, but taken out of the stores within a few months. As the successes delivered a lot of profits, they could afford do have these failures, so they didn’t have to be very selective in the innovation funnel. Our research found out that the failed innovations should have been stopped earlier in the innovation funnel, as they didn’t meet many of the selection criteria. They were not stopped however, because they were pet projects of managers and nobody dared to tell them to stop the projects.

Some companies understand that stopping innovation projects is not a shame, but is something that stimulates innovation. These companies don’t need bad times to become more innovative. Take Google’s CEO Eric Schmidt for example. In an interview with the Economist he stated his view on failures: “Please fail very quickly – so that you can try again”.

Will the economic downturn help companies to become as innovative as Google?