What's new? Not much.

Layoffs and cost cuts are wide-spread during this recession, and the research & development department is certainly not exempt.

From airplanes to technology, the cutbacks have been as broad as they have been deep (there was a good synopsis story in the Baltimore Sun on Tuesday).

Some companies are virtually suspending R&D efforts for the time being. Others are looking at this tumultuous time as an opportunity to consolidate or reconfigure their development efforts. Nissan, for example, in addition to restructuring their North American sales organization, is consolidating their U.S. design team and moving the operation into their San Diego office; a move they believe will bring the team closer to the company's global design projects. (See the Marketing Daily story from 1/30/09.)

Implications: When one looks forward—say, a year, or three, or five—one of the lingering effects of this economic downturn will almost certainly be the dearth of new products the consumer has to choose from. Countless product innovations have been at least altered or delayed—if not scrapped entirely—because the focus of many companies is on near-term survival, rather than long-term product development. Necessarily so. But this absence of innovation could become conspicuous... about the time consumers become ready to begin spending more heavily again.

If you’re in manufacturing, who in your company is watching for the perfect time to crank-up the R&D department? What economic conditions must be present in order for your firm to re-invest in development?

If you’re in retail, can you count on your current suppliers to provide goods that will excite shoppers, once they demonstrate a desire to crank-up their consumption again? Or should you be thinking about adjustments in your product lines?

Today, consumer spending is restrained for a variety of reasons, including a lack of confidence, a tight job market, and diminished access to credit. In the future, their restraint could be a matter of complacency or boredom; their dollars being saved for the day you—or a competitor—once again offer compelling new features or product innovations.

I’m reminded of a fundamental truth: Those who cut back at the right time are more likely to survive a recession. Those who throttle-up at the right time are more likely to survive a recovery.

Mike Anderson