Innovation in a Recession

So, I did a little "Innovation in a Recession" Google Search this morning. And it returned these two articles:

http://www.businessweek.com/innovate/NussbaumOnDesign/archives/2008/01/10_worst_innova.html

http://www.businessweek.com/innovate/content/jan2009/id20090126_282449.htm?chan=innovation_innovation+%2B+design_top+stories

The first article is a sort of What not to Do, top-ten list of innovation 'mistakes'. Not a great title for the article - "top ten things to do to thwart innovation during a recession" might have been better.

It reinforces the idea of innovation being where technology and business meet. The list says to cut back on tech investments, make reducing costs your #1 priority, and retreat from globalization in order to not foster innovation during a recession. There's nothing ground-breaking in the article. Just a good reminder of what does (or does not) make an environment ripe for innovation.

The second article is about an IT Innovation Tax Credit. Venture Capitalists and others have proposed the government give a tax credit to companies continuing to invest in technology and innovation during the recession.

Personally, I don't think that companies will innovate because of subsidies. I believe that the auto firms that were bailed out are unlikely to significantly change the way that they do business. As long as the gov is there to bail you out or help you keep things moving, it doesn't make sense to invest in innovation.

I agree with one critic of the tax credit mentioned in the article. He said it would be hard to monitor which companies are making a meaningful investment in innovation through IT (software and hardware). He said that this will be an important period for companies to innovate. He just predicted that it will most likely be companies on the fringe who can revolutionize their models and basically turn lemons into lemonade over the next couple of years.