3. Realize you can't do it all
The temptation after researching a variety of growth areas is to try to invest in as many as possible. Of course, we want our companies to be as diverse as possible, but too much diversity can hurt you. When deciding on where to invest, make sure that the technology or innovation area of change aligns with your current business model.

A great recent example of a company making a sound investment strategy is the multi-billion dollar giant Applied Materials. Applied is one of the huge players in the semiconductor space, but with the semiconductor market quickly dwindling, Applied Materials has chosen to strategically invest in solar energy. The company that has been instrumental in nano-manufacturing technology over the years for semiconductors and displays is now taking this technology into green engineering. It's amazing to see how a company can leverage its existing expertise in a new area of growth.

Start-up companies have a big advantage over established companies at times like this. Start-ups can be more nimble and change directions more quickly based on where funding is going, although this advantage can turn into a hindrance if start-ups never get to a point of deciding what growth area they'll focus on. In times like these, regardless of whether you're an established company or a start-up, you must realize you can't do it all.

4. Prototype cheaply
When talking about innovating during a downturn, it's crucial that we don't forget the fundamentals of innovation. One of the crucial steps of the innovation process is the creation of the functional prototype of the idea or project. Creating a functional prototype has many advantages: it helps demonstrate your idea to management and/or investors; it lets you work out bugs early and test your design; it lowers financial risk; and it can speed time-to-market.

Prototyping is something that every engineering individual or team should go through at some point in their design. But if you wait too long to prototype your idea or project, or spend too much money in the prototyping process, your idea or innovation might not live to see the future. Therefore, when prototyping your idea or innovation, it's important to use the right tools and spend just enough (and not too much) time and effort transforming your idea into reality.

In these challenging economic times, it can be easy to skip this step and not invest resources in prototyping. This can lead you into funding something that might not have long-term value. Of course, we all have to watch our budget and don't want to over-invest in a prototype, but there are ways to create a prototype and prove the value in your project or idea without spending too much money in the process.

Make sure your design and research teams are using tools that enable them to move quickly and nimbly with their prototype. More and more engineering teams are designing at a system level during the prototyping process rather than using low-level tools. One methodology for prototyping that we've seen customers use and have success with is graphical system design. This approach abstracts the implementation details that have typically required more specialized skills. Using high-level software tools and PC-based hardware allows smaller design teams to accomplish major design and prototyping feats quickly, without wasting too much time and money.

Dr. James Truchard is CEO, president, and cofounder of National Instruments. He is the co-inventor of the NI LabVIEW graphical development environment and is recognized as an industry leader for revolutionizing the way engineers approach measurement and automation. Truchard holds a doctorate in electrical engineering as well as bachelor's and master's degrees in physics, all from The University of Texas at Austin.