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Innovation – The Mantra for Revival During Recession

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Author: Dr. Shikha Suman

A lot has been said and read about the ongoing recession that has is being described as the worst economic recession after the great American depression of the 1930s. The financial gurus the world over are give their own mantras for a revival and predicting the time period this recession will last.

Sun Microsystems lately announced laying off 6000 employees; SAP toned down their 2009 forecasts, General Motors tumbled to the lowest stock price since 1942 as the automaker crept closer to bankruptcy, each economic sector announcing the most terrible news and tough years ahead. Some economists have compared it worse than 'The Great Depression'.

What should IT players do in such a situation?

Most businesses think now's the time to 'cut back and tremble'. Why not see it as an opportunity, the way the creators of some very big brands have? Companies like Microsoft are reinventing and moving fast in the innovation curve. Some time back Bill Gates addressed at the MGB in Atlanta in 2005 where he shared the vision for Digital Home and Surface Computing. Today these products are a reality and aim to redefine our lives and businesses. Take cue from Warren Buffett's recent article on New York Times - A simple rule dictates my buying: "Be fearful when others are greedy, and be greedy when others are fearful". No guess, he is now buying stocks in US companies.

In ERP scenario, companies like SAP and Oracle have focused primarily on the top end of the market. They are dependent on fewer businesses with each having huge IT budgets. Microsoft, on the contrary, started with a bottoms-up vision and extended the business risk over large number of customers. Bottoms-up is better as you can start customer acquisitions on a small investment and grow with your customers. Recession would bring down the speculation and result in correction to reality. As a Microsoft Dynamics partner, you need to push beyond your comfort zones and create new options. Lure more new customers at a lower price point by building re-usable productized implementation offers. Make attractive combos - ERP in a box - Dynamics software, Server and productized implementation at a great attractive start price. While your competition is withdrawing, you will be charging ahead, taking market share. Don't lose any avenue for revenue from your existing customers. Microsoft presents a unique opportunity to create value add solutions on Dynamics platform, construct integrated offers on MOSS, Business Intelligence Tools (Performance Point Server) with Dynamics. You cannot forget any of the key internal stakeholders. Push each division in your company - sales, pre-sales, R&D and marketing to justify the Returns on their Investments (ROI). Agility is the order of the day.

And therein lays a simple tip everyone seems to be forgetting in the midst of the current economic slowdown. If handled appropriately, a downturn can be a good thing for your company. It can give you the opportunity—and the funds—to innovate and get a substantial leg up on the competition

Recessions by definition are temporary.

Great companies and great executives don't abandon their innovative strategies in light of temporary setbacks. They attack aggressively, while everyone else is pulling back. Darwin's laws on nature are true for any situation - The fittest and the innovative would survive the downturn.

A good place to start is to look at those workers who are the knowledge workers in the organization. A recent thought-provoking article from McKinsey distinguished between three types of workers; transformational, transactional and tacit. Transformational workers are like factory workers who take something and turn it into something else. They create little value-add and the trend in business is to move this work to low-cost labour countries like China or Mexico. Transactional workers undertake repetitive tasks. Business looks to replace this work with automation such as ATMs in banks and IVR systems in offices. Tacit workers, however, draw on past experiences to address new and unique situations. Examples of such work include nurses, retail buyers or salespeople. McKinsey argues that these are the value creators in a business.

This is where we believe IT innovation is possible. When you look at the challenges these people face, they all have to do with knowledge sharing. The question is: how can organizations leverage past experiences to respond quickly and avoid reinventing the wheel? This requires the development of knowledge repositories that collect data from different parts of the business and help integrate workers who face common problems.

However, don't expect the business to immediately concur. First, CIOs need to get the agreement of the business that innovation is what they want. Then they need to sell what they can deliver. However, it is important to remember that this is not a request for millions of dollars for a big bang project. Instead, what you want is some scope within the IT budget that allows the opportunity to investigate potential solutions that empower knowledge workers.

Yes, there will be some risk because the outcomes are not certain. Nevertheless, if the request is small - for example, 5-10 percent of the IT budget to investigate potential innovation - then the exposure is small. Yet such projects could show the business that IT is in tune with their thinking and awaken them to the real value that IT can bring to the organization.

About the author: Dr. Shikha Suman - Ph.D from IIT Kanpur in Innovation and Technology Management,Heads Sampling Research Pvt. Ltd, providing end to end Market, Business, Industry & Financial Research, Database management, field operations & Outsourcing solutions.

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