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"When the going gets tough, the tough gets flying"- INNOVATE! This is applicable to any business or company, especially when the markets are in a recession mode for some time - which we all are experiencing for the last one year or so! During a recession, innovation is key to a business as well as to the economy of a nation.What are the key ingredients that one must look for to promote innovation during recession, is what this article would attempt to understand.

Strategic thinking and more interactions

In a recession companies need to have more strategy discussions and put on their thinking caps more on the efficient use of capital and people. Typically, cost-cutting strategies are put in place immediately during a recession- but more than this, one must extract value from the talent pool available within the company and leverage on networking to access new ideas. The eventual result is that we are always preparing ourselves for the next big challenge in business or life.

Practice "Open" Innovation

"Open" Innovation: the practice of accessing externally developed intellectual property in one's own business and allowing internally developed assets and know-how to be used by others. The key to success of an Open innovation is a well-laid strategy! Procter & Gamble (P&G) implements Open Innovation through its "Connect & Develop" strategy- wherein, P&G relies on internal capabilities and those of a network of trusted suppliers to invent, to develop and deliver new products and services to the market. Today, open innovation at P&G works both ways - inbound and outbound - and encompasses everything from trademarks to packaging, marketing models to engineering, and business services to design.

Customer-driven innovation-Listen to the Customer always!

One must always listen to the needs of a customer and strategies must always be customer centric- especially in times of recession. Many companies tend to cut costs, but real strategy lies in adding value to a basket of product rather than cutting costs. Rely on promoting your business by using new means of media tools (such as internet, facebook, online promotion, etc)  to reach to the customer and penetrate various markets.

Be hungry to innovate

Kevin Sharer, CEO, Amgen, USA-world's largest biotechnology company credited an 'open, risk-hungry environment that tolerates healthy dissent and rewards the right results and behaviors' for promoting innovation. 'It is so hard to be open and honest,' in the corporate world today, he lamented, and challenged executives to 'have the courage for candor.' Sharer was especially critical of companies that lose the innovative spirit as they grow larger. 'They become careful and bureaucratic. It's harder to get the truth. Decisions are pushed off to committees,' he said.

Be more creative- there is no tax to pay for thinking "out-of-the box"!

One must research more to explore ways to get more bang for the buck spent in R&D. Though capital may be a scarce commodity, one does have more access to time and how we manage our time is entirely dependent on us, to unleash the entrepreneurial creativity in us! Maybe its also time to read more, listen more to themarket for unsaid solutions, and be financially savvy. Warren Buffet once said, that he chose to invest more when there is gloom and doom around- maybe its true, if we look at his investment in Goldman Sachs. In September 2008, Buffet invested US$ 5 biilion in Goldman Sachs via purchase of preferred stock and also gets to buy warrants upto US$ 5 billion of common shares.Buffett will earn a hefty 10% dividend yield on his preferred shares. The warrants, which are immediately exercisable, have a strike price of $115 a share. As of August 7, 2009, Goldman Sachs shares closed at US$163.65 (NYSE: GS). I leave it to you to do the math to estimate the profits that Buffet would have made so far from this single investment alone!