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Customer pulse check amid COVID-19 crisis reveals strong innovation heartbeat

This article was published on 11 May 2020

COVID-19 has raised massive challenges for NZ businesses across every sector. Yet a large number of Callaghan Innovation customers are demonstrating a heartening level of optimism.

Once their immediate cashflow needs are met, most of our customers have a real appetite for innovation, particularly in support of the COVID-19 response. They can see the opportunity to build something new in their next phase, instead of simply rebuilding what came before.

These insights are from a census survey of our customers we undertook to get an accurate understanding of the impact COVID-19 was having on their business and their R&D programmes.The survey took place over 7-9 April 2020 - while NZ was in COVID-19 Alert Level 4 lockdown with only essential services operating -  and received 775 responses. 

After analysing responses on two key dimensions - their vision for capitalising on opportunities presented by COVID-19 and the state of their cashflow runway - we have been able to identify six COVID-19 customer need states.

By identifying these groups we are able to identify shared needs, see trends in sectors and business age around COVID-19 responses and tailor our immediate and ongoing response accordingly.

It has also clearly demonstrated that a large group of our customers can see a huge opportunity to innovate and re-shape rather than simply rebuild: 58% of respondents want to accelerate or pivot in their COVID-19 response; and 99% expected to continue with R&D in the next 12 months.

The message is clear. Robust and widespread R&D and innovation will be key to the future success of our businesses and New Zealand as a whole. Our task is to provide the right targeted support to make that happen, amid a rapidly changing business environment. To help us do that, we’ll run further follow-up surveys as a pulse check for business needs as COVID-19 impacts and opportunities develop.

Customer need states

COVID-19: Opportunity identification and cashflow position

Customer need states COVID-19

Need state snapshots

Need state



Support needs

Opportunity now

  • Medium to large size
  • More likely to be digital sector 
  • COVID pivot to support health sector
  • Expect to maintain or increase R&D in next 12 months
  • Cashflow not critical
  • Sees opportunity to contribute to COVID response or problem solve
  • Cash to maintain or increase R&D and keep staff working
  • Expertise to accelerate products to market
  • Longer term will need new opportunity ideas and access to talent

Opportunity coming

  • Digital, food & beverage, engineering, agritech sectors
  • Refocusing current R&D to new objectives
  • COVID pivot to support health sector
  • Cashflow not critical
  • Need clarity on opportunities to problem solve
  • Cash to maintain or increase R&D and keep staff working
  • Expertise to accelerate products to market
  • Longer term will need tax incentives & new opportunity ideas

Opportunity but cash constrained 

  • Small businesses in digital, manufacturing, health sectors,
  • More likely to be pre- and low revenue
  • Appetite to boost R&D spend next year
  • Want to take advantage of opportunity but constrained by cash
  • Cash to keep operating
  • R&D support to accelerate to market after lockdown

Holding up 

  • Broad size range
  • Mostly established and late stage businesses
  • More likely to be manufacturing and agritech
  • 27% pause R&D, but rest keen to increase/maintain spend
  • Uncertain about future but no immediate cash flow concerns
  • Cash to maintain or increase R&D and retain staff
  • H&S advice on lockdown operations
  • Long term strategy advice


  • Broad size
  • More likely to be manufacturing, agritech
  • ⅓  pausing R&D, ⅓ refocusing R&D
  • Cashflow short or gone
  • Uncertain about future
  • Trying to refocus quickly
  • Cash to maintain or increase R&D and retain staff
  • Bigger tax incentive for longer term

Potentially closing 

  • SMEs under 50 staff
  • More likely to be agritech and energy sectors
  • Mix of early and late stage
  • In crisis
  • Reliant on wage subsidy
  • Cash to keep operating as priority, then retain staff and maintain R&D

Additional survey insights

  • There is likely to be a hiatus in short term R&D activity with close to a quarter intending to pause their R&D until there is more certainty around their cashflow or investment position.
  • However, optimism remains high for the medium/long-term, with only 1% intending to stop spending on R&D in the next 12 months
  • Behind the need for immediate cashflow support, most companies emphasised a need to move much more quickly - particularly in accessing R&D expertise - to accelerate products and services to market.
  • The top five most valued support activities are:
    • Cash to maintain or increase R&D capacity
    • Cash to keep staff and maintain BAU
    • Cash to retain R&D talent
    • Expertise to accelerate getting to market
    • Direction on the problems government would like R&D / startups to help with
  • More than a third (38%) of businesses reported having a very short cash runway and are reliant on investors and Government support. Cashflow is of the most concern to pre-revenue businesses (58%) and startups (48%)
  • A large majority (70%) of businesses work with global markets, 7% exclusively. These businesses reported concerns about the impact of global instability on revenue, and supply chain disruptions.
  • 24% of businesses are pausing R&D activity - either until NZ downgrades Alert Levels or until they have cashflow or investor certainty, and 1% say they are unlikely to restart their R&D work.

You told us, we listened

With this feedback we have already been working with the Government on support measures, such as:

  • There is now flexibility, early claim options and R&D staff measures with Callaghan Innovation R&D grants.
  • Over 100 innovative businesses are now tagged on our networking platform, Scale-Up NZ as providing services in the COVID-19 space. They are connecting to current opportunities.
  • We’ve worked with the Government on trying to ensure more of its support measures are accessible by high-performing R&D firms who are pre-revenue. As a result tailored support options for specific high-performing R&D businesses are in discussion.
  • The R&D Tax Incentive is also now more applicable for these R&D focussed, pre-profit businesses, with Government passing changes under urgency to bring forward refundability.
  • A new $25m COVID-19 Innovation Accelerator Fund is available, which is fast-tracking innovative new products and services that could help to detect, diagnose, treat or prevent COVID-19.
  • We’re piloting or developing new Innovation Skills programmes to build relevant business capability.

This regularly updated COVID-19 information page has more details on our response and the status of our services. 

Where to from here?

This survey has given us excellent insight into our customers’ need state at the time of lockdown. It is important we continue to gather up-to-date information as things change. 

We will continue to periodically survey customers as we move through stages of COVID-19 response.

We encourage all customers to participate in the surveys to ensure their needs are known to us, and can help drive the nature of ongoing support.

Other initiatives being considered:

  • To ensure R&D is not parked, we are working with Government on further R&D support measures and will update customers as these evolve.
  • In addition to our current Innovation Skills programmes, we are looking at current needs such as market validation, capital raising and business innovation consultancy.
  • As an organisation we are taking this as an opportunity to transform the who, how and where we deliver innovation and R&D services.
  • Other initiatives floated as a result of the survey findings, which may be progressed as business needs evolve include:
    • additional funding schemes for R&D performing businesses 
    • ways of getting R&D funding to businesses faster
    • think tanks on future work streams
    • more certainty and specifics around how to operate under all lockdown levels
    • expert directories to support finding talent, skills and opportunities. 

Callaghan Innovation COVID-19 customer pulse insights webinar

On Monday 29 June 2020, Callaghan Innovation held a webinar to present in-depth findings of its two COVID-19 customer impact surveys.