What are the secrets of a solid innovation strategy in a pandemic?

innovation strategy

With the Senate committee’s verdict on the controversial R&D tax incentive reforms expected any day now, and COVID-19 still wreaking havoc on business operations around the nation, Australian innovation is facing some serious challenges. 

SmartCompany‘s startups and technology editor Stephanie Palmer-Derrien spoke with Cameron Owens, CEO of Radium Capital, and a panel of business leaders and strategists about the current landscape, and the secrets of savvy R&D investment in a pandemic.

New legislation “counterintuitive” to growth

If COVID-19 has taught us anything, says Owens, it’s the importance of reinforcing our national supply chains and on-shore manufacturing capability. But if the Morrison Government’s proposed research and development (R&D) reforms are legislated, the estimated $1.8 billion cut to the program would be a disincentive for businesses to keep jobs in Australia.

“It’s actually working against what we need as a nation,” Owens says. “We’re already uncompetitive in terms of the percentage of GDP that goes into research and development, so our strong views are that this legislation would make us less competitive.”

Amit Shah, founder of The Startup Shop and Get Grants, agrees. “R&D is about jobs for the future and about our GDP in the future,” he says. “It would be crazy for them to cut this right now. 

“Even going forward, it seems really counterintuitive to what the country’s trying to do in terms of growth.”

Three key trends, one common problem

Since the outbreak of COVID-19, Owens has seen three key trends emerge among businesses: 

  • Businesses that have made a clever pivot to products and services needed in response to the pandemic. 
  • Businesses with existing products or services that have become really popular due to COVID and which are now going through sudden scale-up. 
  • Businesses which, perhaps through no fault of their own, are going through financial stress and struggling to remain solvent.

“What’s central to all these trends is that there is just a different type of need for capital – some to pivot, some for growth, and some for solvency,” Owens says. “Those are the different trends we see and solve for every day.”

Expert tips for innovation

Focus on fundamentals

Your innovation efforts could be “taking a left turn unless it’s tied to authentic purpose”, says Melanie Wiese, chief strategy officer at Wunderman Thompson. So, “sharpening up your value proposition and focusing on brand fundamentals should be your decision-making framework for what is appropriate R&D.”

That means focusing on why you started and what you are passionate about, she explains – “because the drive to innovate only comes from people who are passionate”. 

Be lean and nimble

Sticking to core values was one running theme of the webinar, flexibility was another. 

Recognise early on that things don’t always go as you intended, says Shah – and while it’s important to know what you’re trying to build, “being really lean in terms of costs” and having the flexibility “to pivot and shift as market changes” are also keys to success. 

In uncertain times, find surety 

A whopping 70% of Recce Pharmaceuticals’ expenditure goes to R&D, according to executive director James Graham, and advance findings (forward guarantees from the government on activities that are eligible to be claimed) are critical for budgetary considerations.

“It’s thinking a bit smarter with the tools available to us and creating surety with investors in the process,” Graham says.

Play to your strengths

For Brett Savill, chief executive officer at Quantify Technology, savvy innovation strategy in a reduced environment is about working out how to get the best return on R&D investment.

For example, “We think we can get a better return from investing in integrating with other players in the market – such as Google or Amazon – rather than developing new, standalone products in our own right,” he says.

Of course, as Wiese points out, slipping in the last word, there’s one other critical component of a solid innovation strategy that can’t be overlooked – and that’s the cash flow to back it up.

NOW READ: Stay ahead of the curve on any budget: Three expert tips to capitalise on opportunities presented by COVID-19

Radium

At Radium, financing R&D tax advances is all we do. We’re experts in helping businesses reinvest their own money sooner because we’re passionate about helping businesses of all sizes grow.

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