VR NEWS –  INNOVATION MARKET

Keeping the innovation
market alive in the
Corona era

Why innovation must not fall by the wayside during times of economic crisis

Berlin/Bochum, March 18, 2020 – Just a month ago, no one could have imagined the sheer severity of the current Corona crisis. Today, it’s not just residents who must live with the restrictions imposed to curb the spread of the virus. Companies, too, are starting to feel the far-reaching effects of the current situation. What makes things worse is that we don’t really know how long the present restrictions will last, whether new measures will be added, or what all this means in the medium and long term for the economy – and thus for businesses.

The status quo for companies

Basic processes at companies are already slowing down and must be restructured. The current focus is on maintaining business-critical processes and keeping everyday operations as close to normal as possible. Employees must adapt to new conditions and situations such as working from home or cutting back on their hours to ensure companies survive.

Non-critical processes such as investments in innovative products are falling by the wayside or simply no longer pursued. Young companies, in particular, whose focus is on selling innovative products to enterprise customers, are severely affected by the current situation.

Why the B2B innovation
market is so hard-hit

Most investment decisions are based on simple cost-benefit analyses. But for innovative or disruptive technologies, such analyses are not always realistic as companies often lack references and best practices that have been established in the past or from their own experience. 

Moreover, innovations often create value by way of levers which cannot be derived from KPIs or other figures. These include the elimination of losses in productivity which arise during the coordination of video conferences on design reviews, and the prevention of errors caused by coordination problems or complicated communication processes. 

Why the innovation market is so unique

To deal with the above-mentioned uncertainties, the innovation market must often create new types of supplier relationships. When it comes to B2B, a collaboration with a startup or other innovative company usually involves the development of a long-term strategic partnership.

Large companies, in particular, want to make sure they have enough control over the technical development process as most startups, especially in the beginning, are not yet able to fully meet the requirements defined by their customers. 

Partners who decide to work with a startup are often forced to make the same decisions as a potential investor. During a time of crisis such as the current Corona pandemic, it is therefore essential that partners ask themselves the following questions before making a final decision.

  • Do I believe that the company can already fulfill my needs better than the competition?
  • Will the company continue to meet my needs in a timely and satisfactory fashion in the future? Will it eventually be outpaced by a competitor?
  • Is the startup team fair and trustworthy? Is the startup transparent? Am I allowed to see exactly how it functions and do I understand its future plans (e.g. technical roadmap)?
  • Do I believe in the long-term success and survival of the company? Are there economic indicators that support this belief (e.g. funding, sales traction, etc.)?
  • Is it the right time for such an investment? Is the risk proportionate? Will such an investment allow me to stand out from my competitors? Will I lose the connection in the future if I decide not to invest?
  • Do I believe that the company can already fulfill my needs better than the competition?
  • Will the company continue to meet my needs in a timely and satisfactory fashion in the future? Will it eventually be outpaced by a competitor?
  • Is the startup team fair and trustworthy? Is the startup transparent? Am I allowed to see exactly how it functions and do I understand its future plans (e.g. technical roadmap)?
  • Do I believe in the long-term success and survival of the company? Are there economic indicators that support this belief (e.g. funding, sales traction, etc.)?
  • Is it the right time for such an investment? Is the risk proportionate? Will such an investment allow me to stand out from my competitors? Will I lose the connection in the future if I decide not to invest?

For these questions to be answered satisfactorily, the company and the startup must first establish a strong bond based on trust. Such a relationship can take quite a long time to build, especially in the beginning, but on average requires 9-12 months.

In particular when it comes to IT innovations involving several stakeholders from different departments and teams (including the IT department and management team), a long-lasting bond and a high level of trust are essential.

The challenge for the innovation market during times of crisis

The keyword is therefore trust. And even in today’s hyper-digital world, trust is still built via face-to-face interactions (especially in Germany). Regular meetings in person are therefore vital to the innovation market. 

But in times of crisis such as the current Corona pandemic, these trust-building meetings are difficult or impossible to set up. As a result, the investment and buying process of innovative goods can stagnate and even come to a standstill. 

For an established company, such a situation is unfortunate but not the end of the world. But for startups, for whom time is of the essence, a small matter like rescheduling an appointment a few months down the line can have far-reaching effects and even jeopardize their survival.

Strategies for keeping the innovation market secure during crises

For tech startups to survive during a crisis like the current Corona pandemic, established companies must change the way they think. The following factors can play a significant role in a startup’s survival:

Facilitating the decision-making process for small innovation projects

Essentially, companies should divide their decision-making process regarding new innovations into several small parts. Individual departments or teams should receive set budgets for investing in innovation. They should then be able to freely decide upon the experimental projects they’d like to invest in, without including or having to get approval from other stakeholders or departments.

Allowing decisions regarding small projects to be made virtually

In today’s world, strategic decisions are often made during day-to-day business without in-person meetings. Why shouldn’t the same be true for investment decisions regarding innovation projects? In principle, a “virtual first” mentality would considerably reduce the lead times of such decisions (several weeks or months usually pass between important in-person meetings, while virtual cycles are much shorter) and at the same time enormously boost the potential for innovation.

Treating innovation as a priority – even in times of crisis

During difficult times, innovation activities are often among the first things to be put on the back burner so more time can be spent on managing the crisis. However, it has been shown that neglecting innovation only creates more pressure in the future. This is mainly due to the rapid pace at which new innovations are launched today. Failing to make time for new innovations can have drastic medium to long-term effects on a company.

The disappearance of innovative startups during times of crisis generally weakens the innovative and competitive power of German companies compared to their international counterparts and can come with costly medium to long-term consequences. 

Stressing the importance of innovation for companies

By focusing on innovation, a company has a much better chance of surviving on the market. Considering increasing globalization (and the added competitive pressure that comes with it), the rapid surge in digitization, and changing customer and employee needs, it is vital that companies find new ways to grow. This in turn increases the need for new innovations. Consequently, the use of new technological innovations also increases the success of companies competing in dynamic markets. 

Companies must be able to react to fluctuating market and demand conditions both quickly and flexibly, not only in the current situation caused by the coronavirus but during any economic or financial crisis.

To do so, they must have a foundation to build upon. If companies fall behind when it comes to innovation, they may have difficulty adapting to a sudden crisis and therefore run the risk of being outdistanced by their competitors. In this way, innovation more or less ensures the survival of a company.

Companies must identify new markets quickly and take advantage of opportunities as soon as they arise. 

This in turn leads us to believe that those companies who have hitherto neglected innovation, especially in times of crisis, will now be forced to adapt and invest some of their resources in innovation to ensure they remain profitable and survive on the market.

Website: weare-rooms.com

LinkedIn: www.linkedin.com/company/weare-rooms

This article was first published on 23.03.2020 by Marvin Tekautschitz auf LinkedIn

Share on:

written by

Marvin Tekautschitz

Marvin is Co. founder of WeAre
and an expert on the field of Virtual Reality.

WOULD YOU LIKE TO RECEIVE FURTHER INFORMATION
ABOUT COLLABORATION IN VR?

WOULD YOU LIKE
TO RECEIVE FURTHER
INFORMATION ABOUT
COLLABORATION 
IN VR?

Or directly book a demo of our VR software?

Or directly book a demo
of our VR software?

Then leave us your email address
and we will get back to you.