How global unrest will impact innovation in 2023
The global economic and political turmoil of the past year has had a meaningful impact on corporate innovation in the technology industry and beyond.
The worldwide battle with COVID, the Ukraine-Russia conflict and the economic fallout of the COVID lockdowns and supply chain disruptions have together created a painful combination of a global recession, global inflation and unpredictable instability in the worldwide economy.
All of these factors have led to belt-tightening in the corporate world, layoffs and hiring freezes and a more conservative investment posture from the investment community. Inevitably, these changes will have a chilling effect on innovation in the years to come.
However, there is perhaps a silver lining when it comes to the prospects for innovation. In some ways, these market forces might actually serve as an accelerant for creativity and advancement in technology.
In this climate, it might be easier to buy and integrate instead of trying to build from scratch.
Short-term impacts
In the short term, the impact of these negative economic trends and the political instability will be felt by the centers of innovation in both the corporate and startup worlds.
Corporations are likely to slash spending on internal and external innovation. That is, they will reduce their research and development budgets and likely focus R&D on projects that can have immediate impacts on profitability at the expense of long-term visionary projects.
Corporations will also spend less on collaborations with other innovators and expensive acquisitions of advanced technology. We expect to see more acquisitions of early-stage companies as they become weaker and corporations look to develop new technologies more cheaply by buying at a discount rather than building from scratch.
