The 2009 Global Innovation 1000
Booz & Company’s 2009 edition of the Global Innovation 1000 report finds large R&D spenders are keeping the pace when it comes to developing new products and services despite fiscal challenges presented by the economic downturn. The top 10 global R&D spenders in 2008 were, in descending order: Toyota, Nokia, Roche Holding, Microsoft, General Motors, Pfizer, Johnson & Johnson, Ford, Novartis, and Sanofi-Aventis.
In the face of a severe global recession, the world’s 1,000 largest publicly traded corporate research and development spenders increased R&D budgets in 2008, affirming the critical importance of innovation to their corporate strategies, according to Booz & Company’s Global Innovation 1000, the global management consulting firm’s fifth annual analysis of global innovation spending. R&D spending at these firms rose 5.7 percent in 2008, a slower rate of growth than the prior year’s 10 percent increase, but in line with the group’s 6.5 percent increase in worldwide sales. More than two-thirds of the companies included in this year’s Global Innovation 1000 maintained or increased R&D spending in 2008, even though a third of the companies reported a financial loss for the year.
As in previous years, Booz & Company identified the 1,000 public corporations worldwide that spent the most on researching and developing products and services for their marketplace. Additionally, the firm conducted a special survey of nearly 300 senior managers and R&D leaders from 230 companies, which collectively spent more than US$230 billion on R&D in 2008. This additional survey presented participants with detailed questions about their companies’ response to the recession, and the authors of the study conducted in-depth followed up interviews with a number of top R&D executives.
The feedback from corporate leaders revealed that innovation investment is increasingly viewed as essential to corporate strategy: More than 90 percent of the executives surveyed stated that innovation is critical as they prepare for the upturn, and a majority have maintained or expanded their portfolios and are pursuing new products to improve growth and margins.
Not all companies, of course, maintained or boosted R&D spending. More than a quarter of the Global Innovation 1000 cut their innovation budgets in 2008. And many companies were cautious: The top 20 companies increased R&D spending just 3.2 percent in 2008, compared to 10.7 percent in the prior year.
Judging from the data in this year’s study, the results of the senior management survey, and conversations with executives, the recession’s effect on innovation activity has not been as severe as some observers of the business scene might have anticipated. Innovation has become central to every company’s efforts to compete, and the degree of competition has been in no sense reduced by the downturn; if anything, it has been heightened. Long product development cycles have forced companies to maintain their R&D spending even when revenues decline. And most companies are fully aware of the need to be in position to profit from the coming upturn.