Investment in innovation by Italian companies is declining. That is a figure to which various keys can be reserved and a phenomenon whose causes may be many and varied. Indeed, however, it can be judged as a signal to pay particular attention to. Innovating is not only a way to develop the untapped potential of one’s own company and sector but also a process that can offer a competitive advantage to those who put it into practice with intelligence and strategic and managerial ability.
Data in hand.
Istat’s report dedicated to innovation in Italian companies and published a few days ago attests that investments in this direction by organizations in the country are in sharp decline and that organizational models are also changing.
To realize the situation, let’s take a look at the data for the three years 2016-2018 and compare it with the following three-year period:
- in general, the percentage of companies that carried out innovative activities reached 50.9 percent, losing five percentage points from the previous three-year period.
- in the industry field, 58.5 percent of firms report innovative activities, but investments in this regard have decreased by 7.2 percent, particularly in small firms.
- the decline in investment is general, as is the propensity to innovate. The latter, however, varies according to the size of the organization, from 48.4 percent of small firms to 76 percent of large firms.
- also the percentage of companies that have invested in product or process innovation is on the decline.
- a collaboration between companies (not belonging to the same group or linked by partnerships) to develop new products or work out more efficient processes remains uncommon: companies tend to look for internal solutions and rely on their own strengths and capabilities.
Slowing down investments are often costs related to innovation processes and intense competition in the market. Not missing, of course, among the causes is the health emergency, which impacted about 65 percent of the companies that had initiated innovative activities in the three years 2016-2018, with the smallest companies being most affected.
In short, a decline in investment is related to the contingent situation and the cost of innovating. But what is the cost of not innovating? And most importantly, does innovation bring benefits in terms of efficiency, productivity, opportunity, and growth: is it worth cutting budgets dedicated to this item?
What is innovation?
If we search the dictionary for the meaning of innovation, we find that it is the act of innovating, introducing new systems, new arrangements, and new production methods. A process that leads the company – regardless of its industry and size – to benefits that touch different business areas and offer benefits that almost always far outweigh costs: innovation is generally recognized as an activator of competitive advantages for companies. It is something that, efficiently managed and applied, enables the entire organization to evolve, refining its procedures, activating its unexpressed potential, stimulating its people and, as a result, leading it to be more effective in every process. Therefore, also more competitive in the market.
There is more: those who invest in innovation acquire benefits in terms of productivity and in terms of attracting talent and investors. It is a type of investment that accompanies the company in identifying new patterns and new models. Today, that is a significant journey when the economic crisis is helping to destabilize the financialization model, highlighting the inadequacy of short-term strategies, which are almost always focused solely on cost-cutting. The need to build on solid, profitable models that work over the long term can only lead us to look at innovation as that process that can improve – in every sense – the contribution of every individual, every department, and every source of support for the company.
Innovation brings benefits, but it is not enough to trigger it. It is necessary to nurture it correctly, managing the strategic processes facing inside and outside the organization. And also to rely on – and to train – people capable of designing and managing innovation processes to seize market opportunities through concrete and valuable responses.
Innovation: cost or investment?
When we think about innovation, we consider the latest technologies serving efficiency in the enterprise. And many investments – rightly so – go precisely in the direction of adopting technologies to optimize operations, increase productivity, and make procedures more efficient. Just think of Digital Workspaces, which today more than ever represent a tool that can accompany the company through its evolution, facilitating the development of more functional operational schemes and equipping employees in every area and competence with advanced tools that guarantee better results and a decisive reduction in possible errors. But innovation 4.0 is not reduced to the technological component; it includes an equally fundamental one: the human one.
Innovation, whether software or device, process or pattern, brings with it change. And this is not always experienced easily (and positively) by the corporate population. In the face of what we know, we are much more supportive than when we are asked to review the ways and means by which we perform our professions.
Consequently, while innovating introduces new ways of conceiving and managing operations, it also means changing the way people do and think about their work. From daily tasks to professional growth.
Preparing and stimulating people is one of the investment items to consider when looking at innovation as a tool for business improvement. That’s why adopting innovative, technological, and advanced tools is the perfect pretext to foster the spread of a new corporate culture, develop the skills of the company’s people, and overhaul processes. In short, choosing a path of growth for the organization and its people enhances human capital and productive capital. In addition to everything, this will increase the company’s attraction to people with skills, interests, and values in line with the company’s new operating structure. Here again, Digital Workspaces are the most interesting tool to consider, both because of the endowment of applications and digital tools they offer and because of the way people can be involved, through various communication tools, but also access to the information needed for their tasks and the possibility of increasing their competence and approaching work in a freer, albeit guided, and responsible way.
In practice, it costs money to innovate, but not to innovate is a higher cost: it does not allow the company to operate better and more efficiently, to grow, and it does not allow the company’s people to increase, providing them with a method to do their jobs better and with better results, embodying even more the role of the organization’s most important resource. To invest in innovation is to look forward, beyond, and upward.