Tough Market? Must be time to reflexively dump your head of R&D/Engineering

February 8, 2009

Judging by the number of resumes we are receiving, it is not a good time to be a senior R&D/Engineering executive. Tough times are forcing tough decisions and many companies are reducing R&D/engineering spend, or minimally the high-priced help directing those activities. Some of these organizations may have little choice in the matter as they struggle to survive. But in many other instances, companies appear to be responding to the unrelenting short-term demands placed upon them. And CEOs know all too well that they will be punished if they fail to adhere to the playbook.

Consider the recent case of Juniper Networks, the $3.6bb per year networking company. Though successful by any measure, Juniper has always lived in the shadows of its much larger rival Cisco Systems. Recently Juniper raised eyebrows for the manner in which it is dealing with the global slowdown. It wasn’t their decision to freeze merit pay increases, cut jobs or tighten costs which caught investors’ attention but rather their announcement that R&D investment will be increased rather than decreased. Apparently Juniper’s CEO has studied various historical accounts of enterprise performance coming out of the great depression and is convinced that Juniper’s future health depends on more innovation not less. The ‘audacious’ move, according to one analyst ‘shocked’ the market and sent the company’s shares down 15%. The Wall Street Journal devoted an entire article to the contentious decision and the pressures being placed on the CEO.

There is no doubt that these are ‘interesting’ times for most firms. But while the inclement weather darkens corporate horizons, the innovative architects of a brighter tomorrow idle in my reception area looking for something to do. The spectacle is both surreal and sad.