Should you stop innovating in a recession?

SmartCompany /

Many businesses are tempted to cut costs and keep their heads down during a recession. According to innovation consultancy Innovaro, however, there are at least five good reasons to ramp up your innovation efforts during hard economic times.

  1. As others lose, you gain: If other companies are cutting back, a recession may be a great chance to pick up or poach some top-notch staff.
  2. Don’t unbalance the business: Innovative projects tend to be high risk, high reward. In a recession, safe and steady may be a priority, but cutting even the best innovative projects could unnecessarily cut growth.
  3. People will notice: Pulling back on innovation could undermine the perception of your business in the market, both among customers, investors and potential employees. Are you a leader or a follower?
  4. You stop looking outward: Pulling back on innovation can trigger an inward looking business culture, with a focus on internal processes and achievements rather than opportunities in the market.
  5. What about after the recession: On average, recessions are quite short, generally less than a year. But afterwards, competitive pressures will be just as intense. If you stop innovating and your competitors don’t, who will be better placed in the market when growth picks up again?


SmartCompany is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.

We Recommend