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Business WeekThe innovation industry took a hit this year, as executives dialed back on initiatives—and paid the price. But some encouraging trends also emerged

In 2009 the world was no longer flat; much of it was flat broke. Deflated by slumping sales and income, companies roundly did what innovation consultants say they never should—they cut spending on research and development. The U.S. drug industry, historically one of the most lavish spenders on research and development, announced the elimination of a record 69,000 jobs this year, up 60% from 2008. At many companies, quick hits and line extensions replaced more costly, though potentially more rewarding, investments in game-changing inventions.

Still, creativity lives on. Among fresh or fringe approaches that became mainstream tools in 2009: trickle-up innovation, design thinking, and open innovation. And while innovation may no longer be the golden goose it was in flusher times, the penny-pinching has forced companies to break some bad habits—such as wantonly pursuing every new idea—which could help them roll out new money-making products and services as the recession eases and an economic recovery takes hold.

Original Article: The Year in Innovation - BusinessWeek