The Road Ahead: Spends and Trends in Innovation 2022

By Henry Crabtree

Posted on

The teams at Front End of Innovation (FEI) and All Things Innovation (AI) conducted an in-depth survey to take the pulse of the innovation community, sponsored by EY and supported by MassChallenge. The report, available here, covered what businesses are experiencing and planning for their spends and trends, cultures, opportunities, and talent for 2022.

The community polled for this report consists of high-level and cross-industry innovation professionals, with nearly half at Forbes Global-2000 organizations. The group spans the world, with half in the Americas, a third in the EMEA region, and 1 in 5 respondents in Asia-Pacific. FEI and AI wanted to take the pulse of the industry as a whole, based on their experiences and priorities for 2022 and beyond.

When asked whether the innovation industry is improving, the respondents had a mixed response. Just under half think that things are improving, while around 20% of those asked think that things are getting worse. You’d be forgiven for assuming that the problems in the industry were exacerbated by pressures caused by the COVID-19 pandemic. But the ‘Top Challenges’ section of this report tells a different story.

The top 3 challenges for businesses from an innovation perspective are:

  • Balancing short-term innovation vs. long-term thinking
  • Business resistance to change
  • Resources and funding

Impacts on innovation

This is historically consistent with previous ‘Spends & Trends’ reports, meaning that these issues are ongoing and difficult to break down. Balancing short-term value with long-term planning is a considerable task for any innovation team. How can you perfect the formula to show results now while aiming for a later goal? Economic downturn and stability are at the front of everyone’s minds. Many businesses are finding pressure to change without the resources to accomplish this.

To Mike Hatrick, Group Director IP Strategy & Portfolio at Volvo Group Trucks Technology and his team, creating and maintaining an innovative culture is the ‘holy grail’ of their goals: one that is “not only elusive to find but difficult to retain.”

Survey respondents believe that helping the business do more with less and having an impactful influence are the biggest perceived strengths of innovation within business. These impacts are often felt most within projects that create new products and services, guide strategy, drive sustainability, and enable digital transformation. Regarding the threats to innovation, the critical themes that emerged were a short-term focus from the business and not enough time being given to breakthrough innovation.

The survey also looked at the biggest challenges people face when working with internal stakeholders versus external partners. For innovation leaders, time and money were the biggest issues internally. This points to a difference in expectation and results between innovation teams’ workload and impact and what their business functions are aiming for. Greater alignment between your oversight teams and your innovation activities will hopefully reduce this gulf.

When working with external partners, resistance to change and finding time for new ideas were the biggest issues for respondents. This indicates a disconnect between short-term focus and a longer-term vision for innovation on a business, its partners, activities, and outputs.

40% of those asked have had their budgets remain the same in 2022 as the previous year. However, over half of the respondents expect their innovation spend to increase in 2023, particularly in areas of sustainability, insights, product, portfolio, and open innovation.

Key Takeaways

Spends are expected to increase in 2023, even with economic uncertainty. The pandemic shifted focus on to incremental changes. This has now given way to a more measured approach that brings breakthrough and adjacent innovation to the fore.

Innovation brings great cross-functional collaboration in businesses around the world – and their networks – but the issue of alignment remains. Across internal innovation, the time and budget spent on activities is the critical point of difference between innovation teams and their stakeholders. For external innovation, it’s all about a resistance to a change of practices. This is something that the industry is working hard to overcome with engaging talent and incentivization.

Plans are to add and/or reallocate staff to innovation to keep teams active and firing, despite budget difficulties. Sourcing external talent and using open innovation to bolster success will also become more fashionable across the industry.

By Henry Crabtree

Wazoku's Community Marketing Manager, Henry is also a life-long Manchester United fan - but we still love him, regardless. When he's not cheering the Reds on, he's working his way through an extensive reading list. Need a book recommendation? He's your man!