After two decades of product and technology innovation, companies started to recognize that innovation is an activity that should be undertaken by all business areas, and not by a little few within each organization, specially since change became the only variable constant.

Employees' talent (and work behavior) became the competitive advantage between companies. In this respect, Steve Jobs, President and CEO of Apple Inc., the most innovative company in the world, stated: 'innovation is about people, not about money'.

A large number of companies just follow economic cycles. They grow during favorable economic periods, however, when the market economy begins to stunt they start making adjustments or they even fall into bankruptcy. Yet, it is in crisis periods when companies who made the greatest effort to attract and retain the "right" talent, grow in an exponential way. Note that here right talent' includes those who are solution seekers, not adverse to risk.

During economic downturns, two of the most determinant factors to survive and grow wherever possible, are cash flow and balanced (or lean) costs. It is during these periods that a company's capacity to innovate takes its maximum weight, as it supports and increase in productivity based in the human capital.

In order to further analyze innovation's economic impact, it's clarifying to explain some macro and micro economic examples.

In the macroeconomic level, we can sum up the case of a country, which in the early eighties, went through a strong economic crisis, set out some really innovative macroeconomics and monetary policies guidelines. Some of those policies included the creation of a private pension's plan system, the encouragement of foreign investment with very strict return profit clauses, the creation of an economic monetary unit adjustable to the inflation rate (therefore creating a capital market), among others.

As a consequence of these innovative policies, Chile obtained an average GDP growth of 8% during the period 1991-1997.  However, a year later growth was cut in half due to imposed currency policies to maintain current account deficit and as a result of a decrease in exports' profits due to a global economic crisis.

A big draught increased the recession in 1999, reducing harvest productions and causing hydroelectric deficits. That circumstance produced the first negative growth for Chile in 15 years. However, and despite the effects of the recession, Chile was able to maintain trust in the international markets as a result of having built strong financial institutions and a healthy economic policy, which allowed it to obtain the highest grade in sovereign bonds among other South American countries.

In the corporate arena, it is Apple the company that wins all the innovation medals. In 2003 this company was near bankruptcy. It's stock value was U 6,82 and it's gross annual income U 69 millions. Five years later, it's stock value is U 166 and it's gross annual income increased to U 5000 millions.
Although most people think Apple's growth and fabulous success is based in a real smart product innovation strategy (iphone, ipod, etc.), this assumption is not quite correct. Remember that during this decade innovation became the "strategy", and Apple is a very good example of it.
Apple's true innovation relies upon its business model.  Steve Jobs resurrected Apple by bringing in several changes including cost control, rationalizing existing product lines, revamping of distribution system and introducing new products. Some of the products introduced by Apple are revolutionary and played a major role in turning around the fortunes of the company and placing it back on the growth track. Apple ceased to be a mere computer or software manufacturer and spread its horizon to become a diversified media company.