Building an R&D strategy for modern times

(9 pages)The global investment in research and development (R&D) is staggering. In 2019 alone, organizations around the world spent $2.3 trillion on R&D—the equivalent of roughly 2 percent of global GDP—about half of which came from industry and the remainder from governments and academic institutions. What’s more, that annual investment has been growing at approximately 4percent per year over the past decade.12.3 trillion on purchasing-power-parity basis; 2019 global R&D funding forecast, Supplement, R&D Magazine, March 2019, rdworldonline.com.While the pharmaceutical sector garners much attention due to its high R&D spending as a percentage of revenues, a comparison based on industry profits shows that several industries, ranging from high tech to automotive to consumer, are putting more than 20 percent of earnings before interest, taxes, depreciation, and amortization (EBITDA) back into innovation research (Exhibit 1). 1 What do organizations expect to get in return? At the core, th...