Research and development efforts remain a strategic priority for many executives, even these days, according to a recent McKinsey & Company survey. McKinsey's researchers asked survey respondents about the relative importance of R&D in their companies, the changes those companies have made to R&D spending and strategy in 2009, and the expected results of the changes.
Forty percent of respondents report that their companies are actively seeking to reduce R&D costs. About 34 percent of the executives say that R&D budgets are lower in 2009 than they were in 2008.
Furthermore, in response to the uncertain times, a majority indicate that their companies are changing their approach to R&D. Many are taking on shorter-term, lower-risk projects, or focusing on minor changes to existing products.
This cautious behavior is understandable, but it may lead your clients to overlook longer-term opportunities to innovate--and to emerge from the downturn in a stronger position.
Naturally, clients will look to protect shareholder value, and R&D costs can be an obvious target in any attempt to shore up the bottom line. But it may be worth helping clients figure out if the short-term gain from R&D cuts is a reasonable trade-off for potential long-term value.
Comments