GE released the results of its second annual “Global Innovation Barometer” that confirm business executives’ belief in innovation as the main driver of prosperity, competitiveness and job creation, and also reveal how challenging and uncertain economic and political environments may hinder companies’ ability to deliver meaningful innovation.
The continued uncertainty of the global economy has had a marked impact on companies’ ability to innovate, with nine out of 10 executives reporting increased difficulty accessing external funding or a conservative shift in appetite for risk. Specifically, 88% of respondents saw increased challenges accessing venture capital, private investment and government funding, while 77% reported a reduction or reevaluation of the company’s willingness to take risks.
“This year’s study confirms a lot of what we’ve been seeing in the global marketplace, that the uncertainties inherent in today’s economic environment are challenging business’ ability to innovate,” said Beth Comstock, senior vice president and chief marketing officer of GE. “We see these results, in some ways, as a rallying cry for business leaders to understand where and how their innovation strategies are being challenged and to drive to new models. Innovation is a powerful lever to address the challenges of a growing world. It allows us to use resources more efficiently, produce more with less and deliver better technologies to help markets drive economic growth and better quality of life.”
GE expanded its global study this year by surveying nearly 3,000 senior business executives in 22 countries, all with direct involvement in their companies’ innovation strategy and decision making. The Barometer was commissioned by GE and conducted by independent research and consulting firm StrategyOne to identify drivers and deterrents of innovation, and to analyze perceptions around innovation opportunities and challenges.
Innovation and Growth Inextricably Linked
Executives surveyed indicate that innovation and competitiveness are more connected than ever before. By comparing survey results to external economic data, the report also indicates that countries where innovation policies are perceived as more competitive actually delivered more growth than those countries whose policy frameworks are perceived by executives as less competitive.
• 92% of executives said that innovation is the main ingredient for a more competitive national economy, and 86% agreed that innovation is the best way to create jobs in their country.
• Markets where business is most satisfied with the perceived political and social environment for innovation delivered higher GDP growth (5.19% average) than those markets where business feels anxious or threatened by policies (2.32% average).
The survey showed that companies’ internal investments in innovation, from research and development budgets to the pursuit of new products or business models, are particularly at risk when the business community perceives a negative shift or deterioration of government policies that support innovation.
• 71% of executives that reported an unfavorable change in external policy or government budget priorities as a result of the global financial crisis also reported cuts in their own company’s R&D spending.
• Globally, business reported the least level of satisfaction (42%) with the efficiency and coordination of government support for innovation.
“Investing in innovation is a critical piece of global competitiveness and it comes in many forms – from traditional R&D to new products, markets and business models,” said Comstock. “Cutbacks today will have reverberations on economic and social progress for years to come, and may seriously hinder a company’s ability to compete. Governments and businesses both need to do their part to shore up the fragile innovation ecosystem.”