Innovation in a pandemic is usually the stuff of Hollywood thrillers like the 2011 movie, Contagion. But this year, life imitated art when COVID-19 swept the globe. Businesses with R&D, and those without, suddenly found themselves in the middle of a real-life drama, and innovation was centre-stage. Anyone could be forgiven for wanting to consign 2020 to the dustbin of history. But when we cut through the devastation of the pandemic, it’s clear that huge leaps forward in innovation have been made.
Let’s look at the seismic shifts of 2020 that are likely to linger, for businesses doing R&D, long after the virus has gone.
Fortune favours the brave
With a deadly virus on the loose, it was a case of no health; no wealth. So the pendulum swung heavily in favour businesses that could combat COVID-19 and its impacts, and away from businesses with activities that would spread the virus, for example travel and events. While Lady Luck sent the share prices of many medical and technology businesses skyrocketing, other companies were not so fortunate. Many had to make pivots—big and small—to survive. Some made changes to their supply chains and sales channels to continue to serve their customers. Others morphed their operations towards new offerings.
Risk provides opportunity
Take packaging business Detmold Group. It saw opportunity in Australia’s risky dependence on overseas supply chains, and started manufacturing medical face masks in South Australia. The company’s decision to lean into the crisis paid off. They soon had orders for 145 million masks and needed 160 new staff. Although many businesses bobbed and weaved using innovation to reinvent themselves, others battened down the hatches to weather the crisis. What’s becoming clear is that businesses that met the COVID-19 challenge using innovation have gained a new mindset and new skills. These businesses will be better placed to capitalise on next year’s vaccine-led recovery, than those that dived for cover.
Collaboration is king
Picking a single word or phrase that sums up 2020 is tricky to say the least. Zoom meeting, lockdown, new normal and social distancing are all up there with the best. But when it comes to actions, we can easily spot the winner. It’s collaboration. From medical researchers and government agencies teaming up with big pharma to fast-track COVID-19 vaccine discoveries, to strangers following public health guidance in lockdown. 2020 has been collaboration’s best year in a long time. The benefits are plain to see. Safe and effective vaccines being rolled out less than a year after COVID-19 first emerged, rather than the many years this process would normally take. With business models upended overnight, collaboration on innovation has extended far beyond medical research. Other industry sectors have got in on the act too. And businesses that have embraced collaboration, and assembled the best teams and partners, wherever they are in the world, have strengthened their products and value propositions.
No rewind button for digital
Disruptor-in-chief is an apt way to describe digital technologies during this year’s worldwide public health crisis. Its power as an information superhighway was truly revealed when it not only supported innovation in a pandemic setting, but took it to the next level. Obstacles that had previously blocked working from home and telehealth from getting off the ground, suddenly disappeared. Social distancing smoothed the way for digital technology to come to the fore. Overnight, video conferencing leapt out of the board room and straight into everyone’s lounge room. The progress that proponents of digital technology had been seeking for years happened in the space of a few short weeks.
Restrictions widened our horizons
While doors slammed shut due to border closures, travel restrictions and lockdowns, new ones opened up online. And for businesses that were willing to roll with the punches, digital technologies meant they could suddenly pitch, collaborate and provide their products and services to clients anywhere in the world. For businesses doing R&D, this served up a smorgasbord of new, short-term possibilities from fresh collaborations to connecting with new investors. Long-term, this progress in digital innovation is likely to trigger yet more digital advancements. The year 2020 is likely to become a watershed for how we work and the infrastructure we use to make innovation happen.
Recognition for R&D
As the pandemic began to emerge in March, it was clear novel solutions would be needed to disarm this novel coronavirus. Our fate rested in the hands of the world’s innovators and researchers. The crisis has thrown the spotlight onto R&D and innovation. And this has led to vigorous debate on how R&D is funded. There are growing calls for better incentives for innovation. Pre-COVID-19, the axe was poised to swing on funding for Australian innovation. Cuts to the tune of $1.8 billion were hanging over the Federal Government R&D tax incentive (RDTI). But in a remarkable reversal of fortune, this eye-watering haircut to the RDTI became a $2 billion boost instead—courtesy of the 2020 Federal Budget. The spectre of retrospectivity was banished. So the net effect is no change for businesses claiming the R&D tax refund for FY 2019-20 or 2020-21. From 1 July 2021, as detailed in our October blog, the additional $2 billion will start rolling out.
More R&D investment needed
The Federal Government’s increased backing for R&D investment has provided some much-needed certainty for businesses with R&D. It has also acted as the catalyst for many businesses to increase their R&D investments using R&D advances. Disquiet about Australia trailing behind other OECD countries on R&D investment is persisting though. And the fallout from the 2020 pandemic is set to leave an imprint on our collective conscience for years to come. So this could foreshadow additional funding for the R&D, depending on how Australia fares in a post-pandemic world.
Reliability is valuable
It didn’t take innovation in a pandemic for businesses with R&D to realise how important cash flow is. They already understood that cash flow was, is and always will be the fuel that drives their innovations. The COVID-19 pandemic has sparked the biggest global economic crisis since the global financial crisis. What business with R&D have learned is the importance of having cash flow that’s consistent, from sources they can count on. Alternative finance and government support rushed to fill the void left by nervous investors.
Cash flow is crucial
More businesses with R&D applied for a Radium Advance than ever before this year. With a Radium Advance, you can either bring forward your R&D tax refund as a single burst of capital, or take a more strategic approach and access multiple Radium Advances throughout the year. Extra advances mean extra tax refunds and a bigger budget for your R&D.
So if you want to have a strong finish this year and make a flying start to 2021, lock in a Radium Advance for your business this month. Simply send us your completed application that meets our lending criteria by 1pm AWST, 21 December and we’ll do the rest. Phone us on 1800 723 486 or start your application and we’ll be in touch.