Do greater levels of R and D funding and innovation success go hand in hand?

R and D funding and innovation success innovation strategy r and d funding innovation strategy innovation success R and D funding and your innovation strategy growth strategy of the business

Does greater levels of R and D funding lead to innovation success is an interesting question.

It is logical to expect that greater levels of R and D funding will improve your chances of innovation success, so the answer should be yes, but this is not always the case.

Having read a lot of the research on this area, I was surprised to find that there is “no statistical relationship between dollars spent on innovation and financial performance” (Source: PWC USA - based on their Global Innovation 1000 study). This might come as a surprise to you so it is worth looking further at the reasons behind this.

In essence, spending on R and D does not amount to innovation success. This is because, in a large number of Companies, the R and D funding is not being targeted or benchmarked by its impact on reducing costs, increasing revenues and profits or driving shareholder value. The focus has been on the technical requirements of innovation which have not been closely tied to the overall growth strategy of the business.

Companies have to assess their customer needs at the start so that they produce products and services that customers actually need and are willing to pay for. The business that is allocating R and D funding needs to align their investment and innovation strategy with the overall aims of the business. This need for a 360 degree approach to the business is a sentiment which I think was well captured by Forbes in the formula below.

Innovation = Invention + customer + business model” (Source Forbes)

Successful innovators invest time, management expertise and money in all three areas – so keep that in mind when developing your innovation strategy.

Read more articles by Linda Eziquiel on R and D funding

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Linda Eziquiel

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Hi, I'm an R&D tax credit claims specialist, helping companies save thousands of pounds by reducing their corporation tax payments, or if they are loss making helping them get tax credit cash payments.

I'm proud to have:

  • Personally helped over 100 companies make successful R&D tax credit and relief claims.
  • With RandDTax (our company) - gained in excess of £75m for more than 920 companies since 2012.
  • Published an online course for accountants on Claiming R&D Tax Credits (see my publications).
  • Run dozens of CPD workshops for accountancy firms on Claiming R&D Tax Credits.
  • A 100% success rate across all my clients' R&D claims - covering a very wide range of industries.

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