Obviously, we are in the middle of some rough weather in terms of economic conditions. We hear about cost cutting everywhere. Survival through the storm seems to be the focus. However, recession is good in more that one ways. If one takes a careful look at recent downturns in the market, it is easy to realize that recession actually helps the real winners emerge. Apple is one great example and there are many others. In case of Apple, during the last recession they focused on offering something new to the market, they focused on iPod, iTunes and their retail stores, when the growth phase returned they had fully exploited the innovation that occurred during the recession phase.

During tough economic conditions, we need different kind of innovation. Normal way to react during recession is to cut down on product features and new development. Bruce Nussbaum in his January 13 article on Business week talks about the worst mistakes one can make during recession.
Firing talent, cutting down on technology and stopping the product development are top items in this list. If you strategically plan your innovation and product development, advantages of recession can be exploited. This is the time when we have more availability of manpower. We should be able to get the right kind of people in the team. It will also help the executives to closely examine whether they are funding the right kind of innovation and what the short term and long term benefits are of such innovations.

During growth period, in medium to large organizations typically several innovation projects are initiated. Most often than not, these innovations are not aligned with each other and with overall objectives of the organization. Think of each one as a vector. Vectors have magnitude and direction. When not aligned, these vectors are pulled in different directions and the effective return on these investments would be a zero.
When aligned properly we can expect that all these innovations result in returns that is more than the sum of individual outcomes. One of the most recommended ways to continue innovation during tough times is to adapt open innovation. That is, to base your tools and technologies on open source platforms and systems. Of course, this strategy works well even during growth phase.

For example, Yahoo is very actively supporting and promoting an open source distributed and cloud computing platform called Hadoop. It is making investments to make improvements to this open source platform that is open to anyone, including its competitors. Yahoo openly recognizes that it derived a huge mileage from this investment as many of its products (including some components of its web search, mail etc) are now running on this platform.
As you consider building your new products based on open source systems, you will very quickly realize that there are more advantages of doing this way than you initially thought. There are several open source projects that are very reliable and sophisticated.

Another way to open up your innovation is to make use of services like Inno-Centive where you can be connected to companies, academic institutions, not-for-profit organizations and individuals who can help solve problems. Another way of reducing costs while continuing the innovation is to partner with companies that provide complimentary products and services.
However, in my opinion, the academia connect is a best way to innovate in a cost effective manner especially during the tough times. In economically good times, more often than not, the collaboration between industry and universities is sub-optimal. There are funds flowing from industry into academia to conduct research but other contributions including continuous feedback and close collaboration is missing.

Tough market conditions are actually helping strengthen this weak link and we observe that the right kind of support and guidance is given to the university teams. In our experience, during the tough times, there is more close interaction between industry and academia. People in the industry are watchful about what are they funding and how much return are they getting on the investment.
I would like to give two examples from our experience at International Institute of Information Technology, Hyderabad (IIITH) in collaborating with product companies. Search and Information Extraction lab at IIITH developed a search engine for Indian languages and it has been field tested. Several core problems that are very unique to Indian languages have been solved.

An internet company licensed this technology and quickly added a major service from its portal within a few months based on this technology. Otherwise, developing a service like this would have taken an effort of several hundred man-months. This internet company worked very closely with the university to address the engineering gaps and deploy the service.
Another example is of a major mobile phone company working closely with a research group at IIITH for the past five years. This company has been funding an activity related developing personalized search engines, personalized and automated summarization systems and other information access systems for mobile phones. The company's research center established strong connections with the research group with IIITH and through this connection the future technology innovations are flowing from the university to company's research centers to finally the products.

by Prof Vasudeva Verma - Faculty member at IIIT Hyderabad, India