Analysis of past economic cycles has shown that when it comes to research and development, it’s not the size of the investment that counts, but the targeted use of resources.In the wake of the ongoing Corona crisis, companies can maintain and even expand their market position with the help of an efficient investment strategy. We have compiled a list of five success factors that will help you choose the right investment strategy.

5 Success Factors

  1. Cut back – but do it right!
  2. Focus on Future Opportunities!
  3. Reduce Complexity in core business
  4. Direct financial resources to future projects.
  5. Act countercyclically.
  1. Cut back – but do it right. In a recession, many companies cut spending across the board in all business areas. This ensures short-term liquidity, but reduces their growth opportunities when the economy picks up again, thus jeopardizing their long-term competitiveness. Pioneering companies act more farsightedly in crises.
  2. Focus on future opportunities: Companies can weather upheaval safely if they analyze their market share, profitability and capabilities and concentrate on business areas that offer them the best future opportunities.
  3. Reduce complexity in core business: The traditional core business should be the company’s source of profit and cash. Classic cost reductions in the existing portfolio are not enough to create sufficient scope for innovation and growth areas. Instead, the complexity of products, processes and sales channels must be fundamentally questioned and massively reduced.
  4. Direct financial resources to future projects: In most cases, companies have only a narrow window of opportunity to manage the transition to future, permanently profitable business areas. The severity of the current crisis increases the urgency of a balanced dual strategy: strictly optimizing the traditional core business while simultaneously ramping up investments in new business areas.
  5. Acting countercyclically. While many companies currently have limited liquidity and need the available capital for their survival, others have sufficient financial leeway to act proactively. They are now in a position to invest more in growth accelerators such as research and development. Those who seize the opportunity can emerge from the crisis significantly stronger.