2010 Global R&D funding forecast at greater than $1.1 Trillion

R&D magazine produces an annual Study on global R&D funding forecast that is full of great information. In 2010 R&D spending is going to exceed $1.1T globally (flat from 2008). US continues to lead at almost 35% of the global R&D budgets, but the share seems to be flat to declining. Finland and Sweden lead the world in number of scientists/engineers per million people.

Almost 75% of the organizations have changed R&D plans because of the recession and a similar fraction has actually reduced focus on R&D.

Lots of interesting data. Check it out…

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Disruptive and sustaining innovation

Inder Sandhu, SVP of Strategy and Planning at Cisco has written an article in Forbes about new product platform development and product improvement. The idea is that an organization needs to focus on developing new product platforms while generating revenues from incremental improvements to existing platforms. He calls it Disruptive and Sustaining Innovation.

But doing both isn’t easy. Start-ups often prefer the dogged pursuit of the next big idea. And large companies are often reluctant to invest in disruptive innovation, feeling constricted by their commitments to existing customers, pressure from investors for short-term results or even fear of upsetting existing revenue streams.

But when companies do both, the payoff can be great. Two complementary options, in this case sustaining and disruptive innovation, can amplify one another many times over. When Cisco makes an advance in one form of innovation, it usually gains a benefit in the other. And that is the true power of doing both.

Clearly, author has a great point and R&D managers need to effectively balance R&D investments across disruptive and sustaining projects. There are also other axes that factor in: Early stage or mature, discriminating vs sustaining, skill-set enhancing vs. feature developing etc. However, the right balance is often difficult to find and tools to visualize and effectively guide the R&D portfolio are nonexistent.

I am not sure if I would necessarily call adding features to an existing product innovation. However, definition of innovation it self is some what confusing. Clearly, one can make disruptive innovations in production of an existing product and there by gaining a new advantage in the market place (see the earlier post about R&D at 3M). However, calling all R&D innovation may hinder effective R&D portfolio balancing.

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Why are companies still struggling with cross functional core teams?

The concept of cross-functional core teams have been around for decades. The belief is that a diversified team will be able to make better collective decisions and move projects faster by taking parallel, but coordinated functional paths. Most companies have embraced the concept and run development project teams with members from Marketing, Quality, R&D, Operations, etc. A closer look reveals, however, that these companies have the form but not function. It continues to amaze me how even multi-billion dollar technology companies struggle with it. Functional areas are highly siloed with each not knowing what they need to produce for other functions to do the work. Why are we still struggling with this?