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Investing in innovation can set stage for growth

A recent press release from Silgan Containers put forth the common-sense idea that if a company invests in innovation, even during tough economic times, its efforts are likely to drive immediate growth or help position the company for a stronger recovery. While this may seem to be stating the obvious, the fact is that many companies do quite the opposite. They cut back so deeply that they may be hamstrung for years to come—if they can survive the downturn.

The Silgan release pointed to a recent Frost & Sullivan survey that says major factors shaping innovation and product-development strategy include the global economic downturn (33 percent of survey respondents) and the increasing need for innovation (48 percent). Meanwhile, survey respondents identified two pressing challenges they face as generating and maintaining a pipeline of commercially viable innovations (21 percent) and identifying and developing breakthrough innovation ideas (13 percent).

In an analysis of the 1990-1991 recession, Penton Research Service, Coopers and Lybrand, in conjunction with Business Science Intl., found that better-performing businesses focused on a strong marketing program. “Manufacturers can drive growth by continuing innovation efforts,” says Carolyn Takata, director of marketing, Silgan Containers.

Jay Gouliard, vp of packaging at Unilever, says: “Packaging innovation is a tool that can be used to both re-energize existing brands or bring new brands to life. Packaging should be seen as an investment in a brand; not just a cost to business. In some cases, a packaging innovation can drive additional value while actually costing less to produce.”

Scott Young, president of Perception Research Service, says that potentially valuable packaging innovations often aren't implemented. These missed opportunities stem from the fact that marketers and engineers often approach packaging from nearly opposite perspectives. Young says engineers tend to consider packaging in terms of functionality and rational benefits (easy opening, etc.), while brand managers think primarily about return on investment, incremental costs and sales revenue.

In another study, Kent St. Vrain of Paxonix, a division of Mead Westvaco, says lack of innovation does a disservice to the company, its investors and most of all its customers. “Innovation has to be part of the overall process of delivering products to the market,” he says.

That's a requirement even in tough times.

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