Budget cuts are here. Time to bolster the case for innovation.

Innovation teams are facing budget constraints for the remainder of 2020 and into 2021. But the impact of COVID-19 means innovation is more important than ever. Act now to bolster the case for sustained investment in innovation.

Innovation budget cuts are here, how are you bolstering the case for sustained investment?

“What we are ultimately going to be able to accomplish is directly tied to the rest of the organization believing we’re important.”

—senior director of innovation, aerospace industry

Chances are you’re dealing with budget cuts for this year, and also anticipating a tough environment in 2021. In a recent survey, we found that nearly 80% of firms were cutting budgets for the remainder of 2020, while 45% expected to also cut 2021 budgets (relative to 2019). Now is the time to solidify the case for sustained investment in innovation. Formulate a message about the value of innovation to your organization and systematically disseminate that message to those whose support you need. To help you do that, we’ve compiled advice from people responsible for innovation in large organizations and a guide to building a comprehensive communication plan.

All of the innovation leaders we’ve spoken with in the last few weeks are thinking carefully about what to communicate in the face of looming budget cuts. Here’s the advice they’d offer.

Remind stakeholders innovation is part of the solution to the crisis at hand.

Consider whether any of the following bolster your case.

  • Has R&D/ innovation had a recent success that may help the organization recover from the economic fallout? (One leader we spoke to was equipped with a solid story about R&D’s contribution in the last recession.)
  • How is R&D/ innovation responding directly to COVID-19? (We heard a range of efforts from piloting AR/VR-enabled customer support to contributing to vaccine development.)

Highlight initiatives you know to be high-priority for your audience right now.

Think about your audience—the people whose support will be most critical to sustained investment—and consider:
  • Which of your projects or portfolios will they consider most important to keep on track? Which should be accelerated? (After all, some are touting two years of digital transformation in two months.)
  • Are there flagship innovation events that key stakeholders value? Let them in on plans to adapt the format. (We heard about events of all shapes and sizes proceeding virtually—from big technology-focused events geared to cross-business unit collaboration to small brainstorming sessions. One leader said she usually focuses strictly on how these events are generative for the business, but now also emphasizes what they do for participants. They can bring together staff who may be feeling disconnected and energize them around the future of the business.)

Position innovation as a means to maintain the ability to think long-term.

One leader we talked to started investing time to shift his C-suite’s perspective to the long term, last year. As a result, his leadership is now positioning R&D and innovation as the thing that will bring the company out on the other side of the crisis.

A remarkable stroke of foresight on his part, but still instructive from our vantage point today. Other functions are going to have to get more tactical for now. But the business won’t survive if its ability to think in the long term is permanently hobbled. Innovation is the logical function to maintain this capability—position it as a balance while other functions necessarily focus on the short term.

Emphasize innovation’s capabilities to make sense of—and create—the “new normal.”

All indications are that, rather than some ultimate “new normal,” we’re facing a state of constant evolution for the foreseeable future. Businesses need to understand their customers and myriad environmental factors on an ongoing basis, and be able to respond to changes quickly. Consider:
  • What capabilities are resident in innovation (e.g., foresight, ethnography, rapid experimentation) that will be even more important given an increased need for adaptability?
  • Does your team have specific tools that are helping—or could help—the rest of the organization? (We’ve heard a lot about innovation teams introducing virtual collaboration and business model design tools to the rest of their respective organizations.)

Choose the right metrics.

Use the right metrics for a focused message about the value of innovation—now is not the time for the full dashboard roadshow. Choose outcome metrics (which quantify the forecast value created by the function or a particular portfolio, or their actual results) and/or relative performance metrics (which compare the function or portfolios on key parameters such as speed and efficiency).

Now that you’ve thought about the value of innovation from a number of angles, get systematic with your communication efforts. You need to formulate a consistent message and a get that message in front of key stakeholders regularly in the coming weeks and months. Following are the basic steps to building a plan to communicate about innovation performance. For more detailed guidance, download (below) our guide “Better communication of innovation performance.” It provides a step-by-step process for establishing a communications plan for information about innovation performance.

Step 1: Characterize the people in your audience

Think through each individual (e.g., Catherine the CFO) whose support you need, rather than lumping everyone into a group (e.g., executive leadership). Consider the specific pressures each person is up against, how R&D/ innovation relates to their priorities, and potential results or projects to highlight when you’re in front of them.

Step 2: Set your objective.

Consider what, specifically, you want your audience members to do. In this context, your objective could be as simple as sustain investment in R&D/innovation at 2019 levels or limit cuts to 8 percent. If it doesn’t feel like too much of a stretch, you might consider whether you also have an intent that’s more “emotional” in nature—given the crisis, is it particularly important that you build trust or increase a sense of ownership of innovation?

Step 3: Choose your key message.

Based on the audience insight and your objective, determine your key messages. Focus on what is critical for these audience members to know, right now, to inform the decision you want them to make. You should have lots of fodder from both your measurement system and the advice above.

Step 4: Assemble the information that supports your key message.

Keep in mind that different people respond to different formats. Complement the quantitative information provided by metrics with stories that make your team’s value and relevance real. Our rule of thumb is one story to illustrate each quantitative metric. Remember your audience members’ respective pressures and priorities as you choose.

Download our guide: Better communication of innovation performance​