50 R&DMagazine December 2013 www.rdmag.com
2014 GLOBAL R&D FUNDING FORECAST
Maximizing the Economic Value of R&D:
R&D funding is only one ingredient for innovation-based economic success
The Role of Ecosystems
Research and development is a long-term investment in the future,
serving as the cornerstone for innovation-driven growth. While
there is a significant immediate economic impact from R&D activities (estimated to reach a total impact of 8. 7 million jobs from the
full effects of R&D spending across the U.S. economy in 2014), the
big pay-off from investments in R&D are longer-term sustained
economic gains through strengthened global competitiveness and
even creation of entire new industries.
R&D investments are the foundation for generating new knowledge
through basic research and ultimately for generating products and
services through applied research and commercialization. For this
pay-off to happen and innovation-driven growth to flourish requires
a successful R&D ecosystem.
What it Takes to Build a Successful R&D Ecosystem
In successful economies, innovations are fostered and prepared for
market within robust, supportive environments—ecosystems—that
enable risk-taking and catalyze enterprise formation. Well-known
examples include the dedicated Research Triangle in North Carolina
and the more loosely evolved Silicon Valley. More recently, purposeful development of geographically integrated ecosystems has
resulted in Russia’s Skolkovo, Singapore’s Biopolis and the innovation assets of the Qatar Foundation.
One fundamental aspect of these ecosystems is that they are
“sticky” environments in which talent and capital are retained and
recycled into successive phases of innovation and commercial development.
Key features of any successful ecosystem regardless of location
• LARGE INVESTMENTS IN HUMAN CAPITAL: Close attention
is paid to encouraging and advancing a talent pipeline in science,
technology, engineering and math (STEM) skills, along with
broader base of product design, management, sales, finance and
entrepreneurs to ensure commercial success.
• SCIENCE IS PARTNERED WITH COMMERCIAL VISION AND
ENTREPRENEURIAL EFFORTS: Basic research is an essential
starting point, and scientific discovery per se can be an explicit
objective for a portion of publicly sponsored research. How-
ever, when seeking maximum economic impact, innovations
are viewed from the outset in terms of their future commercial
applications, and close collaborations with entrepreneurs are in
place to advance their commercialization.
• CAPITAL AVAILABLE FOR ALL STAGES OF R&D: All levels of
funding are encouraged, from small-scale grants for early stage
proof-of-concept research to large-scale commercially focused
• GOVERNMENT SUPPORT IS ESTABLISHED & RESPONSIVE:
Policies, regulations, incentives and taxes are in place to support the formation and growth of R&D ecosystems. Industry
is offered opportunities to give input on the changing needs of
Absence of one or more of the key components substantially hinders an ecosystem’s ability to provide returns on investment and to
successfully commercialize innovations.
These components are determining factors in the ongoing stability
and growth of established ecosystems during recessionary periods
and market contractions. They also are essential measures for the
viability and growth of ecosystems in emerging economies.
The Challenge of Translating R&D into Commercial
Success Persists as the Rate of Innovation Increases
An important measure of research and development is how it
improves or generates new products. The 2014 Battelle/R&D
Magazine survey finds that the translation of R&D into products that
reach the market remains an uneven endeavor throughout industry.
Nearly half of industry executives report having only some success,
with remaining industry responses split between rarely having success to regularly having success in the translation of R&D into new
or improved products.
Yet the need for industry R&D to keep pace with advancing
technology mounts. In the past year, 22% of industry executives
reported significant technology growth and another 56% slight-to-moderate technology growth affecting their industry. So while
industry perceives that innovation consistency could be improved,
the demands to keep pace are unrelenting.
In a more positive direction, the 2014 survey reflected a sense of
improving productivity, efficiency and return on investment in R&D.
Seven out of ten of the industry executives report productivity gains