Day after day, week after week, and month after month the newspapers have been filled with headlines about companies cutting back. They’re cutting people. They’re cutting wages. They’re cutting their sales forces. They’re cutting advertising. Every company has to do what it has to do to make it through the economic crisis, but forward-thinking leaders know there’s one thing they should protect at all costs: R&D.

Last Thursday, Genentech reported a 47 percent increase in fourth quarter net income on the strength of its cancer and arthritis drugs, which continue to generate significant demand even in a down market. Contrast that with Pfizer, the world’s biggest pharmaceutical company, which recently announced layoffs not only in its sales force but in its research operations as well. Pfizer’s cash cow, Lipitor, is losing its patent protection in 2011, and the company’s $7+ billion R&D budget hasn’t produced any winners to take its place.

Genentech is reaping the benefits of past investments, while Pfizer’s hole is currently coming up dry. But both companies understand the critical role of R&D, the lifeblood of the pharmaceutical industry. So does Intel. CEO Paul Otellini remains committed to the company’s long-term future and will not cut Intel’s R&D budget, even in the face of plunging earnings. “We’ve always believed that the best way to successfully emerge from recessions,” he says, “is with tomorrow’s products, not by standing still with today’s.”

Your company may not be in the research-intensive tech industry, or rely on basic science for new product development. But every enterprise must continually innovate to stay alive (see Circuit City R.I.P. below), and innovation requires investment.