Is R&D A Waste Of Time?

A recent survey of R&D spending by Booze Allen comes to the opposite conclusion of the recent DTI study . However we liked Booze Allens comments, especially when they state what should be obvious to any sentiment lifeform that doesn’t have an interest in boosting nanotech through IP studies:

“The number of patents held by companies – regarded by both governments and chief executives as an important driver of performance – has also little bearing on sales and profits because few patented inventions become best-selling products.”

I have seen any number of nanotechnology business plans based more on the possession of a patent than any great insight market insight or killer application, and this is one of the reasons that nanotech companies often fail to raise funds. While companies with the resources of IBM and NEC can afford to take a chance by diverting a small proportion of their sales into building huge patent portfolios, the model doesn’t hold true for smaller companies, even large nanotech IP aggregators such as Nanosys.

This study goes further and claims that “conventional wisdom often seems to view R&D as a predictable black box that automatically translates today’s innovation investments into tomorrow’s profits… But the process isn’t automatic. Many companies’ R&D efforts are unfocused. Money is wasted ‘reinventing wheels’ that others have already rolled out.”

The conventional wisdom which the authors rail against seems unfortunately to have been taken as gospel by many European governments who point to the level of R&D spending in the US, around 3% of GDP, as being responsible for their higher competitiveness.

Both the Booze Allen and the DTI studies seem right on some points and wildly misguided in other conclusions. The problem of course is that some companies are simply smarter, have more visionary management or are just luckier than others, and that’s something that governments have no control over whatsoever.

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