At the Forrester Consumer Forum 2008, there has been a lot of discussion around the importance of maintaining momentum on innovating, even during times of economic woe. Understandably, the B-School will tell anyone that when times are rough, wallets get tight and businesses go into survival mode that diminish opportunities for new ideas. These changes in consumer behavior might be true, but that’s a short-term, short-sighted perspective. We took some notes from Paul Jackson’s talk on Innovating in a Time of Recession, as well as incorporated pieces from James McQuivey’s presentation on “Satisfying Consumers for the Next Decade:”

“The need to differentiate continues even in a recession.”

As strategists, we need to be aware of what is going on in time that will ultimately alter the way people are motivated to act. The focus here is on presenting a value proposition that clearly identifies with the person’s current need. Enough so that they are willing spend their limited source of funds to acquire it. There are four things to look at to help innovate on your business’s offerings:

• Watch for what consumers consider luxury vs. essential
• Make sure all the fat is trimmed
• Squeeze extra revenue out of existing products via component optimization, upgrades and pricing
• Fight to maintain funding for innovation

One company demonstrating this innovative push is HTC. This is a brand we are quite familiar with and have recently partnered with to help innovate on their next generation mobile handset experience. We worked together with their design team to conceive and prototype their now developed, TouchFLO™ 3D operating system. The innovation was their recognition in making a social phone for the socially aware consumer.

The TouchFLO™ 3D experience is something that has evolved from an evolution where HTC was just a commodity manufacturer. Over time, they have broken out of that and onto the stage with the rest of the handset competitiors like Nokia and Apple. They’ve created a strong offering that is appealing both in usefulness, and desirability across many products including the Touch Diamond™, the Touch Dual™, the Touch Pro™ and the Touch HD™. HTC transformed itself into a branded offering that let them gain more control over pricing and functionality.

Out of the box, it helps connect consumers with their networks on the web. HTC wasn’t building an entirely new network here, instead they piggy-backed on existing networks so that the customer would feel comfortable with adopting this phone and having it integrate with their existing lifestyle.

HTC is an example of how the company is committed to introduce new and better investments in experiences in order to stay competitive. As John Wang, their Chief Marketing Officer puts it, “It takes close to 1,000 ideas to turn up a few projects that are worth running.” It’s not about quick wins, but about long term investments that will showcase what it means to provide a premium mobile user experiences long after a recession lifts.

The result of these careful decisions HTC made regarding their approach to hardware and software design made them rise above the crowded market space. That attracted Google to partner with HTC to release an Android phone; the T-Mobile G1 handset.

How do we talk about innovation to our customers?

The four items listed above mention how you can market a product and begin to lay the processes to maintain innovation in a company with a temporary, smaller budget. In conjunction with that list, we can look a little closer at James McQuivey’s Consumer Needs Profile definition to help determine which need should be satisfied at their convenience through design.

Consumer Needs Profile (We will go in greater detail on what this means later on and give our two cents.)

In brief, Maslow had something going with the pyramid, but it didn’t account for the way consumer needs fluctuated over time due to their environment, and it implied that the needs were entirely hierarchical (e.g. that a hungry person could not have any need for self-actualization). We all have the same four needs:

1. Connectedness
2. Uniqueness
3. Comfort
4. Variety

These four are constantly being traded off depending on where we are in life, during the day, or during a time period. As a result, we can look to these to understand how behaviors will change and adjust the way we design experiences to satisfy what’s most important to them at that time.

In a time of an economic recession, connectedness and comfort are going to outweigh the other two because both consumers and businesses (they’re people too) are looking to reduce risk on how they spend their money. In turn, they look for ways to satisfy their need for comfort and safety in their activities such as shopping. They are also looking for greater convenience in connectivity because they might be looking to reach out to others who are going through the same situation as they are (related to comfort).

So what?

Jackson points out that on a typical product life cycle, innovation happens within three stages:

1. Creation
2. Growth
3. Decline

Right now, companies are steering away from innovating within the Creation stage. That might be okay, but we push you consider otherwise. It can be small and it can fail. As long as the thinking is there, these small investments can result in a big idea that stands on its own. Companies can remain competitive and position themselves for exciting long term product growth as long as they can navigate through these ambiguous times early on. Fortunately, there are tools and guides here that can help make those decisions easier.

Innovation shouldn’t stop, or even slow down. Instead, we need to take a closer look at how the trade offs in consumer needs impact our decision making process. By designing functionality that makes it more convenient to achieve the need for connectedness and comfort during hard times, it will be easier for users to identify with a product’s value and ultimately select that brand above the rest.