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Field Notes – January 2009

Companies globally are assessing their futures even as Obama takes the reins in the US.  Economic forecasts are all over the map.  Optimists are those that predict rough time through the third calendar quarter of 2009; pessimists are looking for three to five years of difficult economic challenges.


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Companies globally are assessing their futures even as Obama takes the reins in the US.  Economic forecasts are all over the map.  Optimists are those that predict rough time through the third calendar quarter of 2009; pessimists are looking for three to five years of difficult economic challenges.

Against this backdrop, organizations are thinking about the tools at their disposal to survive and hopefully thrive in these times.  Innovation is viewed as one of the tools being evaluated.  While some companies are looking at pulling back on innovation, many more companies are saying the innovation is even more vital to their go forward strategy than ever before.  In some cases, these innovation forward companies are coming from unexpected arenas.

The automotive segment is one of the hardest hit in the current economic storm.  New cars sales are sharply down.  Automotive companies are suffering tremendously.  Even Toyota is cutting personnel for the first time in response to the pressure.  Yet despite these trends, I have seen some promising signs coming out of the tier-1 automotive suppliers.

In Germany, one tier-1 supplier has recently made a significant investment in expanding its innovation technology deployment.  What’s behind this commitment to innovation?  As internal sources put it, in these difficult times, they “have to innovate.”  Simply doing the same thing will not be sufficient to survive in the new economic climate.

In Japan, we can see a similar phenomenon.  A leading automotive supplier is actively reallocating investments from production engineering (customizing part for each manufacturer) to high-value research and development projects.  Their thinking echoes the sentiments of their German counterpart.  As the industry contracts and consolidates, they can’t continue to deliver the same old products.  They must look to radical strategies to drive revenue in the coming years.

There is a valuable lesson for us in these two examples.  Don’t wait for your company to be faced with the crushing pressure that the automotive players are facing.  Get ahead of the curve and be proactive about using innovation to chart a course through the troubled waters ahead.

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