Academic journal article Research-Technology Management

Industrial Research Institute's R&D Trends Forecast for 2002: As They Tightly Target R&D Spending for Tangible Business Results, IRI Members Continue to Emphasize Growth through New Businesses and Partnerships

Academic journal article Research-Technology Management

Industrial Research Institute's R&D Trends Forecast for 2002: As They Tightly Target R&D Spending for Tangible Business Results, IRI Members Continue to Emphasize Growth through New Businesses and Partnerships

Article excerpt

IRI's R&D trends forecast for 2002 was conducted by sending questionnaires to the official representatives of the 227 IRI member companies based in the United States. Replies were received from 77 companies, a 34 percent response (48 percent last year and 38 percent the prior year). Respondents were asked to estimate the relative change in levels between 2001 and 2002 in: Expenditures, Effort Allocation, Personnel, and Other Trends.

The trends forecast questionnaire was completed by respondents during August and early September 2001. The voluntary nature of this forecast leads to a somewhat different mix of respondents from year to year and reduces the statistical significance of apparent trends. This discussion of the data will be divided into two areas, covering changes in the nature of R&D and the level of R&D expenditures.

Changes in the Nature of R&D

The difference between companies predicting a positive change of 5 percent or more and those predicting a negative change will be used here as a trend indicator. This becomes a "Sea-Change Index" that highlights where the IRI membership is heading. Table 1 shows the results for 2000, 2001 and 2002.

Using this sea-change index, trends were identified in 2001 that indicated a shift in R&D strategy and purpose. These trends continue in 2001 in the areas listed below. (Figure 1 shows a graphical summary of the results which are tabulated in Table 2 and compared with earlier years on page 19.)

1. Emphasis on "New Business" Growth through R&D and other growth models continues while R&D "outsourcing" declines:

* More participation in Alliances and Joint R&D Ventures (Q11).

* More R&D allocated to New Business projects (Q3c).

* Less Pre-Competitive Consortia (Q9).

* Less Directed Basic Research (Q3b).

* Less Contact with Federal Labs (Q10).

* Less Outsourcing R&D to other companies (Q7).

* Flat to declining grants for University R&D (Q8).

A high proportion of IRI members reported that they are shifting R&D to New Business projects, with flat to declining support of Existing Business and Directed Basic Research (Q3). At the same time, companies continue to leverage internal R&D resources through Alliances and Joint R&D Ventures (Q11) and are obtaining technology through mergers and acquisitions. Concurrently, we see a substantial shift away from outsourcing of R&D to other companies (Q7). The 2001 IRI survey of the top challenges facing R&D leaders would also support this observation; it placed "Accelerating Innovation" as the top issue for 2001 (see RTM Sept.-Oct. 2001, pp. 16-17).

2. R&D continues to be tightly targeted for tangible business results:

* Less participation in Pre-Competitive Consortia (Q9).

* Fewer contacts with Federal Labs (Q10).

* Fewer grants, contracts, etc. for University R&D (Q8).

* Less planned increases in Support of Existing Businesses (Q3a).

This continues to indicate the need for new models of interaction with historically non-commercial entities such as Federal labs and universities. At the same time, collaboration through alliances and joint R&D ventures continues to increase (Q11).

3. Focus is still on new models for development:

* More Acquisition of Capability through M&A (Q14b).

* More Licensing Technology to others (Q13).

* Continuing Spin-Offs based on Developed Technology (Q14c).

* Less Support of Existing Business/Tech Service (although both are decreasing at a decreasing rate) (Q3a, Q4).

The trend to license technology from others is flat, while the trend to license technology to others continues to grow. Utilization of mergers and acquisitions, and alliances and joint R&D ventures for developing new technologies, and assembling developed new technologies continues to be strong. …

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