Investing to unlock the innovation dividend: why high-growth also means high-tech

Our Trailblazers study shows that high-growth companies recognise a constant cycle of renewal is the key to staying ahead of the competition – even though this typically requires significant investment.

When it comes to R&D, more than six in every 10 high-growth businesses (62%) say they have consistently increased their investment levels over the past three years in comparison with 43% of lower-growth companies.

But the difference in terms of spending on new technology is even more stark:

43% of high-growth firms have increased investment in the likes of digitalisation, data analysis and artificial intelligence in the same period against just 19% of lower-growth businesses.

A bold future

Future investment plans follow a similar pattern. More than a quarter (26%) of high-growth businesses intend to invest “much more” in R&D between now and 2022 compared with just 8% of lower-growth companies. Meanwhile, 34% of high-growth firms intend to invest much more in technology, data and digitalisation over the same period.

These findings paint a vivid picture of high-growth companies as organisations which recognise that, in order to survive and thrive, they need constantly to be on the look-out for the innovative solutions that will keep them ahead of their rivals.

The leaders of these firms understand that technological innovation has been the foundation upon which almost every major global business success has been built since the turn of the century. Equally, they realise that disruption is simultaneously their biggest threat and their biggest opportunity. This is why a majority of high-growth businesses (57%) have a clear technology strategy in place – as opposed to only 36% of lower-growth companies.

Investment motivation

The Trailblazers research also looked at businesses’ motivations and goals in regards to their investment in innovation. Half of high-growth businesses say they aim to invest in technology in order to create new channels to market, against just 34% of lower-growth companies.

And high-growth firms are almost twice as likely as their lower-growth rivals (21% versus 12%) to have invested in R&D in order to create and launch new products and services.

Our study also suggests that faster-growing companies have a more insightful view of how investment in innovation can help them maintain their success. Almost one in four (37%) say their technology investment is a “key differentiator” for their organisation, against 9% of lower-growth companies, while a quarter (23%) of high-growth firms have seen clear gains after monitoring their return on technology investment. Among lower-growth companies, this rate drops to only 6%.

As we have seen with other elements of the Trailblazers research, high-growth companies are more likely to take a strategic and long-term approach to investing in innovation. At the same time, they show a greater propensity to focus this kind of investment on developing new products and reaching new customers.

Companies wishing to emulate these Trailblazers should follow their lead by seeking a better understanding of how new technology can help transform businesses, deliver new competitive advantages, and create new market opportunities.

Meet the Trailblazers: Our research into Britain’s high-growth companies