Companies are budgeting more for innovation out of the pandemic

·2 min read

A new survey of large corporations shows the pandemic has driven home the need for innovation, while demonstrating just how hard it is to do.

Why it matters: In an exponential age, companies that can keep successfully innovating can reap outsized rewards, while those that fail risk being left permanently behind.

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What's happening: The software company Wellspring surveyed 300 high-level executives at $1 billion-plus revenue companies in the U.S. and UK about how the pandemic affected their innovation operations, and shared the results first with Axios.

  • 60% of the respondents reported they expected their corporate innovation budgets were expected to increase out of the pandemic, while just 10% expected budgets to be cut.

  • "The pandemic highlighted the need for science," says Robert Lowe, Wellspring's CEO and co-founder. "But there's also a lot of innovation around how companies think about what they do and how they re-engage with customers."

By the numbers: 62% of the companies experiencing what Wellspring characterizes as "breakaway innovation growth" said they have full-time teams dedicated to open innovation and/or technology scouting — the sourcing of emerging technologies or partners.

  • Nearly half of respondents at those companies say their partners include governments, which Lowe notes are still "the largest funders of research."

The other side: Companies that reported struggling with innovation tend to lack buy in at the C-suite level, with broad goals at the top foundering in the face of parochial concerns and day-to-day priorities on the ground level.

  • That failure can produce an existential threat, says Lowe. "In the past if you were a major company with large market share, you held onto your distribution channel and it was hard to get around you. That barrier just doesn't exist anymore"

The bottom line: "If you're an innovation laggard in any industry," says Lowe, "the penalty now is far worse."

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