How R&D could turn these difficult times into an opportunity

There’s no doubt about it, the beginning of 2020 has been a tough one and we’re all facing difficult situations and decisions. The Australian bushfires, tension between the US and Iran and now Covid-19 has put a real strain on all of us and I’m sure changed the way we’re all thinking. Management are having to make difficult decisions to close businesses, furlough employees and make redundancies; subsequently the economy is taking a hit and we’re facing an economic downturn.

In what appears to be an environment of doom and gloom, we must try to see the positives within and grasp any opportunities that arise. One opportunity is the chance to focus on R&D, as it has been proven that investing in R&D during an economic downturn can be highly beneficial.

Making cuts during difficult times is almost inevitable and many companies are reluctant to spend on R&D during these periods. McKinsey[1] found that during the 2008/9 recession, almost 40% of companies took the decision to actively cut spend, while another 40% ‘trimmed’ projects.  Interestingly, while the tendency is to be cautious, research has found that we should not overlook the longer-term benefits and opportunities to innovate.

Put simply, companies that continue to invest in R&D during difficult economic times perform better than firms that hold back (Roberts, Keith[2]). Why limit competitiveness? Be ready for the recovery – it has been proven that companies that continue to invest during economic downturn leave competition behind in the long-run. Highly innovative companies are much more likely to see this period as an opportunity and look at even increasing spend on innovation.

Here are a few things that you can do to ensure you are getting the most from your R&D activities to create a proactive approach:

  • Increase R&D budgets
  • Expand R&D activities
  • Look towards longer term projects
  • See the downturn as an opportunity to upgrade R&D
  • Use the crisis to extend competitive advantage

Companies must ensure that they prepare offerings for when everything returns to normal and this is a perfect opportunity to pull ahead of the competition (Amore, Mario[3]). One great example of a company that has previously taken this opportunity is Apple with Tim Cook’s (CEO) strategy to be ‘We believe in investing in downturns’. He reported that it has always been Apple’s intention to invest in R&D during difficult economic times and in their long-term interest to do so.

We can also look at the example of the car industry during both the 1990 and 2008 recessions. While huge companies such as GM, Ford and Chrysler (all US), saw sales decline alongside the economy, Toyota (Japanese) were actually investing, opening new plants and continued to grow during the recession[4]! They made a strategic decision to align with customer’s concerns during the downturn and saw an opportunity to satisfy the market needs. By addressing needs such as reliability and quality, and investing during the downturn, they achieved growth where others could not. This is a fantastic example of how investing in R&D during economic downturn can be a huge opportunity to pull ahead of competition.

As R&D is at the heart of any company’s innovation efforts, it is during this difficult time that we should not turn our back on it. Innovation may be the key to recovering once we are all back to normal and so continuing to invest is a tried and tested strategy to company survival.

If I could give any advice and something that you can tangibly take away from this blog, it would be:

  • Resist the urge to cut R&D – optimize and upgrade (while you have time) to gain a competitive advantage
  • Fail fast – in order to maintain momentum and reduce wasted spending, identify failing projects fast and cut them before they go too far
  • Think of the longer term – it is easy to focus on all the madness currently going on and forget that we need to be competitive in the coming years

I know that R&D uses precious cash resources, especially at this time, but think of it as investing in your company and your future.

I hope this blog has been of interest to you and hopefully encouraged you to think slightly differently about our current situation; let us see this as an opportunity and seize it. If you have any questions or would like to discuss further, please email me at








In the Yorkshire Mafia?

Have your say on LinkedIn

Become a member

of Yorkshire's biggest network