Though the economy is seemingly showing signs of recovery, companies are still spending with caution -- if at all. Innovation is one area where at least some companies appear to be be scaling back their spending, as I wrote last month. According to Boston Consulting Group (BCG), 58 percent of companies it surveyed plan to increase their innovation spending in 2009, a 5 percent decline from 2008.

Is that so surprising, considering the uncertain returns of many innovation efforts? Unlike a server virtualization project, where companies are almost certain to attain ROI, not every innovation effort will yield positive financial results. When I recently interviewed David Consulting Group President Michael Harris, one of three authors of a new book titled "The Business Value of IT: Managing Risks, Optimizing Performance and Measuring Results" (download an excerpt from the Knowledge Network), he told me:

The test of whether a business and an IT group are truly interested in innovation is whether or not they are prepared to waste money on experiments. Is the business making funds available for experiments which could fail? If they aren’t, then they aren’t really serious about innovation.

He isn't suggesting the business give IT total carte blanche, said Harris. The business should expect some -- but not all -- of IT's experiments to be successful.

So what should IT organizations do if they hope to follow BCG's advice of using the economic downturn to step up innovation efforts when competitors may be too broke and/or cautious to do so? I like the advice of Gartner's Kathy Harris, who recommends proceeding with a "grassroots pilot" plan for innovation.

This doesn't have to cost anything at first, writes Harris on her blog. Start by assembling a small team of productive, influential and collaborative folks. Get an "idea sponsor" to vouch for the team's efforts. Focus on producing a plan for a pilot with the magic combination of low time commitment and potentially high impact. Commit to a time frame, and agree to assess the results of the pilot before moving forward.

Harris' straightforward approach seems to strike the right balance. It doesn't stifle innovation by presenting too many hoops for IT to jump through. Yet it adds focus and a commitment to measure results, two frequently neglected steps, to the process.