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.

Sources

• Booz & Company – Innovators Ready for Rebound
• Download “Profits Down, Spending Steady: The Global Innovation 1000” (PDF file)