McKinsey & Co. has polled senior executives at businesses that generate more than $1 billion in revenues to examine the levels of their organizations’ research and development reallocation.
Data from the research shows that annual R&D budget shifts range between 12.7 percent and 13.7 percent, on average, regardless of a firm’s innovation performance, McKinsey said.
Seventy-five percent of top-quartile organizations reallocated up to 30 percent of their annual R&D resources in the past three years, compared with 37 percent of companies rated in the bottom quartile.
McKinsey also found that low-perfoming innovators move 5 percent or less of R&D dollars annually to subsidiaries or divisions.
The consultancy recommends that firms assess their R&D reallocation levels and ensure that investments are aligned with their strategic plans .