The current financial crisis affects virtually every organisation to some extent and as a result less investments are being made. Actually, cost efficiency is a term that is mentioned a lot lately. Therefore, people question whether innovation will be high on the agenda. I dare to argue that it should be, otherwise these organisations will fall behind. This blog post is the second of two about innovation in a time of recession, and specifically focusses on the combination of innovation and cost efficiency. The first post was about innovation and strategic agility in times of recession.

Sales of innovative products in the Great Depression
In a blog post, written on the Innovate on Purpose blog, a comparison is made between the recent recession and the Great Depression. The writer quotes a report “Collateral Damage” released by the Boston Consulting Group. The report states that industries with highly innovative products withstood the Great Depression fairly well. An example is given in the form of the sales figures of refrigerators, considered an innovative product at the time, which grew by 30% from 1929 to 1933. You can grant this to the desire to be an early adopter or the fact that over time refrigerators save money by keeping food fresher, or a number of other attributes. But in the end, people were spending money on innovative products and services in truly bad economic times. To relate this with the recent recession, the winning combination would be to strive for innovative products and services that let consumers save money.

Cost saving idea challenges
Innovation is not only about new products and services, but also about new processes. A process innovation is the implementation of a new or significantly improved production or delivery method. First of all, idea generation focused on process innovation often generates ideas that cut costs. So the combination of innovation and cost efficiency can be brought together by idea challenges focussed on cost savings. In times when budgets are being cut back, this aspect of innovation can be very helpful. Secondly, when striving for a truly innovative environment it is very important that everybody in the organisation participates. This creates a situation where a small contribution by all, means a big difference at the bottom-line.

Involving all employees in a cost saving idea challenge therefore seems to create a double-win: an innovative organisation and ideas for cost savings.