200% increase in business cutting innovation spend during COVID-19

200% increase in business cutting innovation spend during COVID-19
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Featured image: Supplied

Businesses cutting costs to survive but the real cost could be standing still in this crisis
In March, just 1 out of 13 businesses surveyed said they would not be investing innovation compared to 1 in 4 a month later
Data from the last recession shows innovation as a key driver for growth

New global research reveals that in March, before extensive Covid-19 restrictions, just 8% of businesses surveyed said they would not be investing in innovation activity this year, with that rising to 25% during the current crisis – a 213% increase.

Research by innovation firm Rainmaking shows that businesses predicted 2020 revenues have fallen by almost half in just a month as the implications of Covid-19 have become apparent. Business leaders also confirmed the measures being taken to navigate the current crisis: reducing costs by improving efficiency (30%), cost cutting measures including redundancy (29%), cancelling planned investments in growth projects (28%), accessing state Covid-19 bailout funds (21%) and reducing investment in innovation activities (15%).

The study among business leaders of large businesses revealed over 90% of business leaders will not invest more in innovation in order to kickstart growth in their businesses, despite nearly half of respondents (46%) confirming that investment in innovation had helped to spur growth over the last year.

With a global recession forecast, Rainmaking reveals that while financial control and cost cutting are critical aspects in times of crisis, a company’s performance during and post a crisis is in fact reliant on its ability to innovate.

Carsten Koelbek, Rainmaking CEO in a statement said,

“It is understandable that many leaders have focused on stabilising core operations, implementing cost savings and building resilience in their supply chains during the initial phases of the Covid-19 crisis. However, it is also evident that the winners in previous crises are those companies that started investing in new growth opportunities early on. No company can succeed in the long-run based on saving costs.”

“Now is the time to identify new opportunities that did not exist before, to add value to their customers and change the way they work to support their people. Demands will have changed; new technologies will have been accelerated and often industry barriers will have become more blurred. For the complacent companies this poses a threat to their long-term survival – this is no time to sit tight and hope for th