Henry Ford was, as is widely acknowledged, a genius. He is well known for introducing mass production principles to the burgeoning horseless carriage market thereby effectively creating the automobile market as we know it today. Less well known is his attitude to innovation which accurately reflects the dilemma of many a company in the present economic climate.
Back in 1914 the world was in recession and car sales fell off the edge of a cliff. Henry Ford’s company, spoiled by success was experiencing something new – rapidly falling sales with no turnaround in sight. Faced with such a calamity, Henry Ford introduced a number of measures designed to ensure the future success of his company.
One of these measures was to double the salary of the employees. Yes, double it. From an average $2,34 per day to $5,00 per day. He also started involving his employees in improvement activities during the times that they would normally have been building cars. What sounds like pure communism actually made perfect sense. The good employees stayed at Ford and the company emerged from the crisis better positioned to build better cars. In other words, Ford had invested into the cyclic downturn in order to strengthen the company for the future. There was also the possibility of better using the employees’ skills during economic downturns in order to improve the products and give them a cutting edge for the next upturn. The expressions “R&D” and “Lean” hadn’t yet been invented, but the thinking and philosophy were clearly in place.
Reflecting these events of history onto the situation today raises the question of whether anything can be learned. Of course, just simply blindly increasing your innovation budget is probably not the way to go in today’s environment. However, blindly cutting your budget is also not the answer. Maybe it’s time to reevaluate your innovation activities, analyse exactly which activities are the ones that generate the value for you now and also where the value is going to come from in the future. These activities can then form the base of an investment plan to ensure that necessary cost cutting and efficiency increases take place, but using an instrument better suited than a lawnmower.