Investing in Product Development During Bad Times

Every where we turn there is a gloom and doom about the global economy. Job cuts are starting to occur in Australia across a range of industries (ANZ tipped to cut 3000 jobs, Qantas to slash 1500 jobs) and we’ve seen evidence of companies cutting operational costs and reducing new product development efforts.

The International Monetary Fund has called this downturn “the most dangerous shock in mature financial markets since the 1930s.” “Activity is increasingly being held back by slumping confidence. As the financial crisis has become more entrenched, households and firms are increasingly anticipating a prolonged period of poor prospects for jobs and profits. As a result, they are cutting back.” (Telegraph UK)

Given the financial environment and talk of a global recession, should companies re-evaluate their product roadmap and stop development efforts? Should companies simply cut costs, bunker down and hope to survive the storm?

Evaluating your product roadmap, your product set and its position in the market relative to your competitors is always a good idea regardless of the economic climate. But…. simply stopping product development altogether to manage costs in this environment is too simplistic.

Perhaps companies should consider investing more in product development when times are tough. This is not to argue that we should create product for the sake of product development but we should spend on research to determine what customers want rather than making assumptions about what should be developed. An unstable economic environment “forces” us to identify and articulate the “market opportunity” for each new product developed. Doing so will produce sustainable, healthier products that will survive the bad times and thrive during the good times.

My view about the gloom and doom is that at some point it will end. When it ends, companies that smartly invested in product development will be poised to flourish.