By Jeff Reinke, Editorial Director, PD&D
 "I’m not looking to compare an individual I’ve never met with one of the worst criminals in our country’s history, so if you read this Mr. Wileman, please forgive me." |
Over the past months parallels have been drawn between current economic conditions and those of the Great Depression era. While I certainly wouldn’t want to belittle those who are experiencing hardships or unemployment, I don’t think we are or ever will see a plight of that caliber again. Something I recently read however, did draw me to an applicable comparison between current conditions and that period of time.
A recent posting from the Financial Times offered some perspective on corporate spending cuts, including research and development.
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“According to Andrew Wileman, a consultant, ‘R&D is not untouchable. ... the first step is to recalculate investment cases and eliminate R&D projects that no longer show a positive net present value return.’”
This comment scares me. Maybe my definition of “present value return” is different from Mr. Wileman’s, but I believe that eliminating (as opposed to reducing) projects based on short-term projections places companies at an even greater risk.
While product upgrades and next-generation improvements are key to profitability, product development and long-term success, it’s the truly innovative concepts that fuel dynamic growth and project companies from the tougher times.
Instead of robbing our economy and its consumers of the innovation needed to drive it forward, I’d prefer to stand with those like Terence Kealey, vice-chancellor of Buckingham University, who was also quoted in the article.
He notes, “The survivors of this crunch ...will be those who have invested in R&D because they will be the ones with the new products.” Conversely, he feels R&D is untouchable.
I’m not looking to compare an individual I’ve never met with one of the worst criminals in our country’s history, so if you read this Mr. Wileman, please forgive me.
However, much like Eliot Ness exuded an Untouchable persona in defending what he believed in, and stood up to the pressures which dissuaded so many to turn their backs on the right path and take the easy way out, so should you or your company when it comes to ensuring the prospects of future product development.
Innovation is not easy. It commands the courage to make difficult decisions, but it can also make a legendary impact.
What's your take? Send comments to jeff.reinke@advantagemedia.com
Since I'm a bit of a Chicago history buff and had parents who grew up in the Roaring 20's here, your column caught my eye. Yes, to stifle R&D is a HUGE mistake. That's exactly what's kept AND STILL KEEPS America out front in literally every technology on the planet. Other countries may have greater "efficiencies" and "economies of scale" in manufacturing, for a variety of reasons, but nobody outdoes American ingenuity, imagination and engineering savvy. I always ask the naysayers why American technology is still sought out, in every corner of the manufacturing world, whether discrete or process. Usually quiets them quickly. Thanks for your column,
> Tim
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Jeff, Not only is this the time to innovate, but it is also the time to promote your products. As you know, in good economic times people are reluctant to make changes. This especially applies to vendors, new materials, new concepts, etc. because the "cost of change" is often perceived as being "too high." That is, the administrative costs, new training, building new relationships and the like. During recessions, however the cost of change gets deflated. In other words, people are more willing to try new things: design concepts, materials, new vendors, etc. I've helped several clients through recessions during the early 80s, 90s and again after 9-11. Unless a company dominates their market, they have an opportunity to increase market share and grow during slow economic times. The company may have to lower their marging, but they will be able to increase them as the economy recovers. Why? Because the "cost of change" will creep up and as these new customers get busier they'll be reluctant to make changes again... until the next recessionary business cycle! Keep the faith! Best Regards, -Steve
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