De-Risk Innovation Spending
- Drake Pusey
- Nov 14
- 3 min read
De-risk Innovation Spending
In hyper-volatile environments
The situation
Multiple industries are experiencing elevated levels of volatility in 2024-2025, driven by tariffs, geopolitical tensions, supply chain disruptions, and policy uncertainty.
Manufacturing leaders cite demand volatility as their top supply chain concern, with 70% of manufacturing and distribution leaders identifying it as their primary challenge for 2025.1 The May 2025 Institute for Supply Management’s manufacturing index declined for the third consecutive month, falling deeper into contraction territory as trade policy and economic uncertainty weighed on the sector. Manufacturers expect raw material and input costs to grow by 2.7% over the next 12 months, with persistent concerns about inflation, tariffs, and domestic market volatility. 2
The automotive industry faced significant tariff-related volatility, with shares of the big three U.S. automakers falling 4-8% in after-hours trading on tariff announcements, while Japanese and South Korean automakers declined 2-4%.
The healthcare volatility index of 30.5 as of April 14, 2025, was up 70% year-to-date.
The sector was the worst-performing industry on average across key FTSE regional equity indices during the first half of 2025, driven by U.S. healthcare policy uncertainty, tariff concerns, and company-specific challenges.
“For product leaders, the challenge of demand volatility links back to pandemic-level supply chain disruptions.” Gocious
Our Approach
When the policies, prices, and other “numbers” get unpredictable, and quantitative models get “wonky”, it is especially beneficial to turn to a complementary source of qualitative information: talking directly with your customers.
Understand customer needs, goals, attitudes, and behaviors, in their own words.
Uncover both emotional and rational drivers for customer decision-making.
Map out hierarchies of need to understand customer priorities.
Determine what doesn’t change when everything else is volatile - the “eye of the storm”.
These insights will provide a view of what remains stable in otherwise volatile conditions. They enable companies to de-risk their innovation investments in two ways:
By pursuing solutions to chronic problems, not momentary trends.
By proactively addressing the underlying, often emotional needs of customers, rather than trying to adapt to everchanging conditions - in other words, “treat the patient, not the symptoms”.
Invest to Reduce your Customer’s Risks
Some of our recent work with leading global manufacturing clients has uncovered this trend: many customers don’t need new, innovative products as much as they need help with application. They need innovation on the process side, to lower costs, de-risk processes, and make their businesses more resilient in the face of unstable conditions (supply chains, etc.).
Understanding your customers at a qualitative level can help direct innovation investments towards resiliency for your business and theirs.
Bonus: The efficiency of our approach means you can spend small money to avoid wasting big money.
We help clients focus on innovation investments
that matter most to their customers.
Sources
About the Authors
Drake Pusey is an entrepreneurial organizer, using custom information frameworks to align the objectives of the business with the needs of the customer. 25 years of experience in brand, digital, and traditional marketing agencies, cross-pollinating ideas and practices from diverse industries.
Carol Pudnos is a customer experience strategist, helping companies transform their operations to deliver seamless experiences. Carol’s thoughts on customer experience are backed by over three decades of B2B business leadership in chemical, food, pharma and medical device industries. “Processes that serve customers the way they want to be served will differentiate your company and drive business results.”
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