Innovation complacency post-pandemic could cost firms dearly

13 October 2021 Consultancy.uk 5 min. read
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Simply surviving the last two years of chaos has left many firms feeling like they are inherently “doing enough,” when it comes to innovation. Firms would be wise to avoid complacency though, with a new study warning that those who are not innovating further for the economic recovery could soon be left behind – either by competitors or start-ups.  

Ayming’s study was based on a survey of 585 senior executives and R&D Directors, uncovering the drastic impact the pandemic has had on research and development (R&D). It found that the majority of businesses saw the Covid-19 crisis push their innovation campaigns forward. While 82% of businesses agreed that the pandemic has accelerated innovation, 25% of all firms said that this acceleration was “drastic.” 

It may not be a surprise to learn that healthcare and pharmaceuticals, and IT and telecoms saw the greatest leaps forward. According to Ayming, the largest number of respondents in healthcare saw their market’s innovation accelerate “a little” in response to the public health crisis, while the biggest portion to see that acceleration become drastic was found in the IT segment – as huge swathes of work suddenly became remote operations. 

How has the Covid-19 crisis impacted innovation in your market

The crisis did not have such a positive impact on all industries though. A number of outliers either saw no change, or saw the crisis stall innovation at a notable rate. The worst hit of these was the automotive segment – where 24% of respondents said they believed their market’s innovation had stalled. The consumer goods and manufacturing sector was also thought to have struggled to adapt its innovation culture amid the pandemic, with just under 21% of respondents stating the same thing. 

At the same time, the picture was more complicated for some segments, where relatively similar numbers of respondents found they had been boosted or inhibited by the crisis. In the energy segment, similar numbers saw innovation stall and accelerate drastically – something which has seen many firms come out of the crisis strongly, but many more fold in the post-pandemic era. 

Which of the following statements best relates to your business’s innovation during Covid-19

With that being said, business leaders’ perceptions of their wider market can only be so accurate – as generally they only know what is going on inside their company. When it came to reflecting on their own firm’s performance, respondents across all sectors seemed broadly even more positive – even when from those outlying industries. 

In particular, the number of energy firms which had not innovated because of a lack of R&D talent; diminished financial resources; or the challenges of remote work; were far fewer than those who had innovated successfully in some way. More than a quarter had innovated “a little, with minor adjustments,” while a further 22% said they had innovated “very successfully,” adapting to seize Covid-19 opportunities. Similar patterns were also found in the consumer goods and automotive sectors. 

Do you believe your business’s current level of innovation is keeping pace with the level of innovation in your market

This may be why the vast majority of respondents seemed to believe their firms were keeping pace with the innovation levels of their constituent markets. Ayming found that energy firms were actually most confident of this. With one-fifth having asserted that Covid-19 had stalled innovation in the sector, over 32% of respondents in the sector said they “strongly believe” they are keeping up with the competition. 

Similarly, no other industry saw a majority of respondents say they “doubt” or “strongly doubt” their position in terms of innovation. While positive, however, Ayming warned that this attitude might also breed complacency. Among a media narrative of “doom and gloom,” if businesses surviving feel they are “doing well” just by doing so, they may not be keeping properly informed on the innovation due to come to the market – either from competitors, or new start-ups. 

Mark Smith, Partner of Innovation Incentives at Ayming UK, commented, “We know Covid-19 has completely shaken up whole industries and economies. It has simultaneously created the perfect environment for disruption while creating challenges for R&D teams and businesses… Unfortunately, it has made it very difficult to know how much R&D will be enough. The secretive nature of R&D means businesses don’t know what disruptive forces are emerging in their sector. However, a crisis like Covid-19 will always lead to the emergence of new, forward-thinking propositions. We can already see new start-ups and services emerging, and there is likely plenty more to come.”