I spoke to Forrester Research Principal Analyst Lisa Bradner today about her latest report, “How CMOs Lead Consumer-Driven Innovation In Tough Times” [executive summary; full report available for a fee]. The study jibed really well with news about the decline in customer satisfaction for the Top 100 Internet Retailers, released this morning by ForeSee Results and FGI Research. (The news story has now been posted will be posted soon on destinationCRM.com.)

Bradner says that in tough economic times the typical pattern is to “batten down the hatches, [not] spend money, and let innovation die on the vine.” And yet, there’s sufficient research out there that suggests doing the exact opposite is what’s going to save you. Unfortunately, companies are too fixated on the near term; too panicked about disappointing the shareholders; too enamored with hitting their numbers, even if those results are short-lived.

“Innovation has been one of those buzz words,” Bradner says. “From a mind-set perspective, it’s very difficult to keep your mind open and free because people get so in-the-tunnel about it–’I gotta keep my job, keep my customers.’ It becomes very, very easy to default to a price message and forget what your is brand good at, what you’re brand’s known for, and keeping that front and center.”

On the other hand, some of the best innovation comes out of being backed into a corner — necessity is the mother of innovation, after all. Of course, innovation isn’t just a light switch you can turn on in an economic emergency. Rather, it provides the motivation to suggest something new, to try something that maybe never made it off the drawing board.

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James Surowiecki had a piece in The New Yorker a couple weeks ago (Hanging Tough) about this very topic. He used breakfast-foods companies Kellogg’s and Post (now owned by Ralcorp) as an example of companies that went two ways in the face of a difficult economy (in this case, The Great Depression): Post went on budgetary lock-down, and Kellogg’s continued to spend on advertising and new products.

Post did the predictable thing: it reined in expenses and cut back on advertising. But Kellogg['s] doubled its ad budget, moved aggressively into radio advertising, and heavily pushed its new cereal, Rice Krispies. (Snap, Crackle, and Pop first appeared in the thirties.) By 1933, even as the economy cratered, Kellogg’s profits had risen almost thirty per cent and it had become what it remains today: the industry’s dominant player.

The funny thing is, Surowiecki’s piece is about companies dealing with this problem in the 1920s and 1930s when the Great Depression hit. Now, nearly a century later, as we suffer through our own depression/recession, companies are still struggling with the same conundrum. Is history really doomed to repeat itself…over and over again?

What marketers didn’t have 90 years ago was social media and the Web (check out the upcoming June issue of CRM magazine, which focuses entirely on social media). What brands can do now is keep their “finger on the pulse,” Bradner says, and, not to mention, at an affordable cost. Companies have the resources to track their brand messaging with regard to what customers are saying. Unlike traditional market research, social media revolves around constant participation and back-and-forth discussion. Sure, the customers may not always know what they want, but social media at least lets you keep their interests at the forefront of your decisions. (See Lauren McKay’s May feature on enterprise decision management.) The challenge here is that infusing the voice of the customer into your business is significantly harder than cutting costs by deciding to run one campaign instead of three, or slashing customer service agents. This kind of shift comes down to a cultural change.

“What we’re really trying to tell people is, this is real,” Bradner says. “There are real ways you break through and rethink your business model.” Businesses, she says, spend too much time talking in siloes. The thought process shouldn’t be, “What’s my Facebook strategy for marketing,” but rather, “How does Facebook work with my business?”

In her research, Bradner found that while 66 percent of marketers said that customer acquisition is a top prioritry, only 30 percent said the same about retention. “It’s crazy,” she says. “Retention is everything. Retention is caught up in everything you do. You retain your customers by having a great end-to-end experience.” This simply isn’t possible if your company is operating in siloes. Marketers need to make sure their companies look beyond any single campaign and think more holistically about how the voice of the customer–her expressed desires, her reaction to each channel, her praise and complaints about the experience–can enrich or even completely redirect their business cultures. That, in turn, will lead to innovation in the products and services those companies deliver.