STUDY FINDS R&D DOLLARS GOING ABROAD

The secret to successful corporate research and development spending may not be in how much money is spent, but where.

Volker Staack, a principal with PwC’s strategy consulting business, Strategy&, shared this insight at the 5th North Texas Innovation Leaders Forum on May 26 at the Nasher Sculpture Center in Dallas.

This year’s forum topic, “Innovation Dollars on the Move,” attracted representatives from a variety of industries.

During the event, Staack discussed his findings as co-author of Strategy&’s annual analysis of corporate research and development spending, the 2015 Global Innovation 1000 study.

The Innovation 1000 study showed a shift toward globalization in spending from the last study on the topic in 2008. According to the study, 94 percent of the world’s largest innovative companies now conduct elements of their R&D programs abroad.

Staack said Asia is now the leading region for innovation spending, followed by North America and Europe.

Innovation 1000 also includes surveys showing no correlation between spending and innovation success.

Apple and Google are the world’s most innovative companies in 2015, according to the study, while the biggest R&D spenders are Volkswagon and Samsung.

Tesla Motors ranks third in innovation, but 273rd in R&D spending, which proves the amount spent is not necessarily a factor in performance.

CLASSIFYING INNOVATIVE COMPANIES

There are three types of innovative companies, according to Staack: need seekers, market readers, and tech drivers.

An example of a need seeker? The forum’s second speaker, Eric van Gemeren, vice president of R&D at Irving-based Flowserve Corp. As the world’s largest provider of industrial pumps, valves, and seals to companies in the oil and gas, petrochemical, water, and fine chemical markets, Gemeren said Flowserve (NYSE: FLS) must be close to customers in order to anticipate their everyday needs.

Gemeren pointed to his personal experience at Flowserve, which does an average of $4 billion annual sales, and said he can attest to the information presented in the forum.

“Think creatively with increased spending, it’s what you do with what you’ve got,” Gemeren said about R&D dollars.

Gemeren also discussed the growth of India and China in the research and development. The 2015 Innovation 1000 study shows the flow of R&D funds is shifting from Europe and aggressively moving toward Asia.

From small-businesses to Fortune 500 companies, this data in innovation spending benefits a wide range of professionals in Dallas-Fort Worth. Staack said the variety of attendees reflects the topic of globalization.

“The North Texas market is vibrant with innovation, venture capitalism, and corporate ventures, so it makes sense to have this event near a hub like this,” Staack said.

Julia Falcon contributed to this report.

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