With speculation of an economic slowdown enough to bring some organisations’ R&D investment to a grinding halt, a new report released by Arthur D. Little today warns businesses that, even when times are tough, innovation capacity cannot be first place to wield the cost-cutting axe. The report recommends a renewed focus on fostering an "innovation culture" as a practical way for companies to ensure they get value from their innovation effort more quickly, and manage their investment wisely during an economic slowdown.  Remaining dedicated to innovation despite short-term market conditions is certainly not always easy, but has been a proven success factor behind e-commerce company Amazon, Google, and Research in Motion – developers of the Blackberry.
Innovation sounds like a great thing to invest in when business is booming. But when times start to get tougher, as they seem to be at present, the case for investment suddenly becomes much more difficult to make and even the most well-intentioned businesses can see their innovation efforts reaping less reward. Arthur D. Little's latest report finds that despite giving lip service to the critical role innovation plays in their businesses’ success, evidence shows that as economic times get tough, senior management’s reaction may inadvertantly lead to the creation of an innovation-stifling culture. Specifically, the report points to managers’ increased risk aversion, tendency to focus on the short-term, and insistence on air-tight ROI as having potentially devasting effects on a company’s innovation culture.  The report goes on to offer business leaders practical advice for how ensure they are encouraging a culture of innovation – through both words and actions – despite signs of a looming economic slowdown.
"Recession fears have been the death knell of many potentially brilliant R&D projects over the years, and as CEOs consider how they will respond in order to keep their business models sustainable through a potential downturn, we need to make sure innovation investment is part of that solution" said Rick Eagar, Director of Arthur D. Little's UK Technology & Innovation Management Practice. "Recession fears aside, research has shown that successful innovation relies on an organizational culture made up of a set of unwritten rules that equip staff and management to innovate because of, not despite, limited resources."
According to Arthur D. Little’s study, during a downturn innovation can provide just as much value as during growth periods. But leaders will only achieve the most impact for their innovation efforts if they foster a corporate culture that supports the organization’s innovation goals.  In the report, Arthur D. Little offers leaders five strategies to ensure they are fostering the right culture for innovation:

1. Identify your firm’s "unwritten rules" and understand how they relate to innovation behavior
2. Proactively address common barriers such as risk aversion and short-termism
3. Make sure your behaviors align with your public declarations – and vice versa
4. Recognize that your opportunity costs and the costs of experimenting have now fallen, and make the most of this
5. Explore what you can achieve in partnership.

The Innovation Culture report is now available for download at
http://www.adl.com/innovationculture