IoD members innovating in response to Covid
The coronavirus pandemic has spurred widespread business innovation, new survey figures from the Institute of Directors reveal, but action from Government is needed to maintain the momentum.
- Almost 9 in 10 (87%) of company directors polled in November had made changes to their business in response to the pandemic.
- Less than 1 in 5 respondents (19%) said they hadn’t made any permanent changes due to the pandemic.
- 42% said the changes they had made improved their organisation’s productivity, compared with 27% who said they did not.
- Two thirds had made all the adjustments they intended to make, but a further fifth wanted to make more changes in response to the virus.
On balance, directors surveyed expected to ramp up investment in areas such as R&D, training and software in the year ahead, but significant minorities in each area said they would have to rein in spending. Overall, business leaders anticipated lower investment in buildings and machinery compared with their plans before the pandemic.
The Institute urged government to help SMEs kick on after the pandemic by pushing ahead with infrastructure and skills spending, and improved tax reliefs to support firms’ investment plans. The IoD warned that business debt and uncertain demand could hold back productivity growth after the pandemic if these actions aren’t taken.
Tej Parikh, Chief Economist at the Institute of Directors, said:
“There’s no overstating the challenges businesses have faced this year. However, a surge in innovation is one silver lining from this difficult year.
“Necessity is the mother of invention. Facing unprecedented restrictions, companies have had to come up with workarounds, fast. Many of these solutions – whether remote working, adapted supply chains, or moving services online – have turned out to work better than business-as-usual. As a result, some organisations may be more prone to embrace innovation going forward.
“Sadly, this doesn’t mean our long-standing productivity puzzle is suddenly solved. Entrenched challenges around skills and infrastructure still need addressed. The Government has been taking strides on these key issues for business, but there’s distance left to run.
“In the aftermath of the virus, many companies will be saddled with significant levels of debt. The Treasury will need to be accommodating to encourage business investment with tax reliefs. One thing it certainly shouldn’t be doing yet is hiking up taxes, which could snuff out the recovery.”
Full survey results
769 respondents, conducted between 30 October – 13 November 2020.
Thinking about your primary organisation, to what extent have you adapted your business in response to coronavirus?
Are the changes made by your primary organisation for the pandemic, which you intend to keep for the future, net productivity-enhancing or not?
Do you expect your primary organisation’s investment in the following to increase over the next 12 months, compared to your plans before the pandemic?