Research and Development (R&D) has been one of the casualties of the global recession. Total R&D spending among the world’s top spenders on innovation dropped in 2009 for the first time in 13 years, according to Booz & Company’s 2010 Global Innovation 1000 study. The 1 000 companies that spent the most on research and development decreased their total R&D spending by 3.5%, or US$18-billion to US$503- billion in 2009, according to the report. Sectors that cut back most were automotive, computing and electronics. In contrast, health, software and Internet, telecom, chemicals and energy, aerospace and defence, consumer and industrials increased spending “to some degree,” according to the report. No logistics or transport companies are mentioned in the report. However, research is not enough. Successful companies “must also excel in areas outside R&D, including manufacturing, logistics, sales, marketing, and human resources,” says the report by Barry Jaruzelski and Kevin Dehoff. Despite the drop in expenditure in dollar terms, overall the investment in R&D as a percentage of revenues increased, according to the report. Companies cut other discretionary spending categories, such as sales, general, and administrative expenses more sharply than R&D spending. “The relatively modest cuts in R&D spending compared to much larger declines in revenues, demonstrate the continued importance of innovation as a critical component of corporate strategy to companies in every industry,” said Michael Knott, Partner at Booz & Company.
