I recently attended a meeting of the PMI Global Corporate Council (GCC), in Palo Alto, CA., US, home of Silicon Valley. The GCC is a council of more than 30 executives representing multi-national firms and federal government agencies throughout the world. These executives are champions for excellence in PM discipline in their respective companies and government agencies. They know what excellence means and have delivered results for their organizations.

At the meeting, I gave a detailed recap of the economy, and my observations of how companies around the world were reacting. All agreed with my observations, with one exception. The consensus was that each of their companies was actually investing in sharpening PM capabilities, varying from maintaining an educated core of project managers, to developing a better discipline in portfolio management. That is not to say that the companies had not restructured, or laid off employees. However, they were not cutting back on any new product development; and those related to federal government spending (stimulus spending in the US, India, and China), were hiring PM professionals. There is no question that the companies have suffered through the economy, but there seems to be a common commitment to making sure that they develop new products and have the team to launch them.

An article in the Wall Street Journal by Justin Scheck and Paul Glader, called "R&D Spending Holds Steady in Slump," supported the concept of continued development in the slumping economy. The article was based on a study conducted by the Journal, comparing 4th quarter 2008 R&D spending to prior year. The study focused on 28 multinational companies, with headquarters in the US (ex: Microsoft, Cisco, Google, Boeing, etc.) It turns out that average R&D spending dropped only 0.7% from the same quarter in 2007, compared to an average drop in revenues of 7.7%.

Although this is great news, we all know that if the economy takes a much deeper dive, many organizations will cut back. However, it still means that we may see continued investment in R&D. Lessons learned from the past, such as with Motorola, indicates that R&D is crucial to future competition. In 2002, Motorola slashed R&D by 13%. In 2004, they were very successful with the new RAZR cellphone, but then failed to follow up with critical new products, and ended up losing market share.

While I was in Brasilia, Brazil, last week, I met Carlos Heinz Loeben, PMO of Mobile Solutions and Services for Instituto Nokia De Technologica (Nokia Institute of Technology). We talked about the economy and its impact on product development. Given that new product lead time (or life cycles) has dropped to nearly 6 months in telecommunications, I was concerned that high tech companies like Nokia would fall behind. He said that Nokia, like all companies, is suffering through the downtown in the global economy, but that they were investing in new applications and new markets, beyond traditional mobile markets, such as healthcare information and data sharing.

R&D and new product launches are critical applications for PM implementation. Applying excellence in this area will only ensure that companies can accelerate out of the bottom of the economic downturn faster than their competition. It is no doubt a careful balancing act for an executive team, but it is clearly a risk worth taking.

Later.