Innovation makes the Hungarian SME market split

In July 2022 RnD Strategy Kft. together with Kantar Hoffmann international market research firm conducted the last twenty years’ most comprehensive innovation survey which focused on the soft quota region and the main national economic sectors: agriculture, industry, trade and services.

The last twenty years’ most comprehensive innovation survey had surprising results

The objective of the research was to assess the current and previous economic situation, the innovative habits and practices of companies of the aforementioned 4 sectors, having between 50-250 employees.

The market research clearly shows that company directors consider innovation and development a company’s second most important success factor, after financial indicators. In case of the responders of the trade sector, the order of importance changes, as for them human resources’ management and the company’s reputation are twice as more important than in the other sectors. However barely 51% of the companies having participated in the research apply innovation continuously.

Chart1

In terms of economic situation, the responders consider their company’s last year rather positive, but as for the current year more than 60% feel they are in a more difficult situation. The company directors are specifically pessimistic when talking about their company’s upcoming one and a half year: more than half of the responders project rather a pessimistic future for this period.

It turned out from the questions related to the companies’ subjective self-reflection and to their competitors’ situation that company directors think the following. On the one hand, they consider having rather an advantage as for their products’ and services’ quality and financial stability, but on the other hand they consider themselves being in a more disadvantageous situation when talking about keeping existing workforce, technological development, investments and innovation.

Chart2

It’s very important to note that responders think they have the least advantage in innovations and development compared to their competitors: in theory this could be the basis of an innovation supporting service.

By looking closely at the already completed innovative projects it turned out that most of the companies, 55%, have already performed technological innovations, followed by those that happened in production, sales and marketing and organizational development. When examining the sectors, agriculture shows an outlier: 93% of companies asked in this sector performed technological innovation, 7% innovations in production; other type of innovation did not happen. 68% of the companies considered all this a fruitful investment deserving to involve their own resources, of which 36% financed these projects exclusively with their own resources.

Chart3

Of course, it can happen that innovation initiatives are simply stuck or are left unfinished – we examined the reasons of those too. 77% of the responders indicated lack of resources as the first main reason for being stuck with those projects; next to this, 42% indicated lack of required expertise as a decisive factor, and at the third place we can see that lack of employees’ motivation is also a factor according to 28% of the responders. When responding to this specific question the responders had the option to choose several reply-options at the same time.

“Companies who function in a successful way never look at innovation as a project that occurs once in a while, but they implement it in their mindset, company life and are continuously practicing it. In their case, result-oriented operation is the same as innovational mindset that, in each and every case, aims to better the company’s financial indicators.

Vivien Dobos, CEO

We can say that financial indicators on their own do not represent an exclusive success factor any more, and that it's along innovation that the Hungarian SME market is split.” – stated Vivien Dobos, managing director of RnD Strategy Kft.

Every start-up is founded on innovation, its founder knows something more and better than the competitors. This kind of intention to innovate does not always stand the test of time. To be able to maintain the sustainability of the company it’s not necessary to introduce a new product or service. Applied innovation is a continuous, tangible, profitable, success-oriented mindset. Having recognized this trend on the market, in 2022 RnD Strategy Kft. expanded its management board, shifted its focus and opened up towards small and medium-sized enterprises, all this with the objective of institutionalizing innovation in the sector. It’s with our own software that we guide companies through the process of development, and by this, we support them so that they would be able to function by finding and stabilizing their own market and financial situation, even in the rapidly changing macro and microeconomic environment.

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