Innovation capabilities are the undervalued stock in your company, with nurture they’ll provide you with growth opportunities throughout the recession

There is clear evidence that investing in innovation during the recession, rather than cost cutting, will increase your prospects post recession. For many companies their innovation capabilities are undertrained and represent a huge opportunity for performance improvement. What’s more, you don’t need to invest lots of money, government support and tax relief all help the case.

Why investing in innovation during the recession is good

A HBR study of 4700 companies in 2010 draws the following conclusions of investing during a recession: those “reducing costs selectively” and who “invest relatively comprehensively in the future by spending on marketing, R&D, and new assets”… “continue to develop new business opportunities and (this) adds substantially to sales and profits afterwards.’

Tragically, 28% of companies are delaying or cancelling innovation investments — this is higher than their other plans to ride out the recession, i.e. improving operational efficiency and implementing cost cutting such as laying off staff, which come in at 21% as outlined by Rainmaking in April this year.

Start by understanding how the world is changing

The Pandemic has damaged the earnings of 13 of the 19 sectors in the BCG industry data. Many aspects of clients and customer needs change during recessions, this could not be more so today as the pandemic is affecting many aspects of how we interact, build, purchase, consume, and recycle — the social economic environment is remodelling itself.

However, in the medium-term, the underlying drivers of change to your business will not change — for example climate change, 4IR, AI, rise of nationalism, Brexit, cyber crime etc. If you wait for the storm to pass, it is likely your services will be less relevant in the new world.

Time spent in understanding and sensing the emerging environment through extensive client and prospect interaction will be hugely important when considering the mix of opportunities in your portfolio of innovation projects.

Take stock of your innovation capabilities and what is required

Many companies have been innovating recently to comply with social distancing rules, now is the time to use this experience as a springboard for reviewing innovation capabilities and then invest in supporting them.

In this context, it is extremely important the support comes loudly from the CEO as workforces are unwilling to do anything risky — which innovation inherently is — when downturn often spells redundancies.

Set targets and indicators before getting started

According to Rainmaking’s April Survey “Only some 45% of companies had any kind of key performance indicators in place for innovation projects, and 25% didn’t know if they were measuring projects at all.” This provides a great opportunity for generating huge improvement in your innovation capabilities and leads to cost effective innovation programmes.

Leverage on incentives

Many governments are offering R&D tax deductibles, over the past two years, many UK companies have left these unclaimed. According to Haines Watts these claims are available even if you are loss making, a claim could provide a welcome cash injection. Governments across the world are also providing emergency research grants up to 100% of cost. Grants are a safe place to collaborate with new partners in fresh markets as the outside funding often helps to remove the gravity of the larger partners. Just as importantly, this reduces further the cost of innovation.

Like all capabilities, innovation needs a good environment and nourishment to grow stronger, if you would like to discuss how we can do this for you, create an appointment via this link and we can explore ‘How to Innovate’ for more revenue and value generation.

Michele, Nigel, Abel