Each year the European Commission release an analysis of the state of research and development in the EU. Their 2017 analysis found that firms based in the EU spent over €192 billion on R&D last year, with the average firm spending roughly 7% more than their peers elsewhere in the world.
The biggest investor in R&D in the world was car giant Volkswagen, who had also topped the charts in each of the previous three years. Their €14 billion investment best that of American companies Alphabet and Microsoft, who were 2nd and 3rd respectively.
The report suggests that this investment has been bolstered by low interest rates and a stable oil price, but the high investment is not necessarily a cause for celebration.
A recent study from the Stanford Institute for Economic Policy Research suggests that truly novel ideas are not only harder and harder to come by, but they tend to be ever more expensive to explore.
The analysis finds that whilst research spending is going up considerably, the ideas output by each researcher is going down considerably. They suggest that this huge increase in research inputs has helped the American economy to maintain growth as this increase has offset the decline in productivity. This is reflected in the number of people engaged in R&D, which has mushroomed twentyfold since 1930.
“It’s getting harder and harder to make new ideas, and the economy is more or less compensating for that,” they say. “The only way we’ve been able to roughly maintain growth is to throw more and more scientists at it.”
This was reflected in a recent report into innovation by the Congressional Budget Office. It shows that whilst the number of patents has gone up tremendously in the last few decades, productivity has barely budged.
Filling the pipeline
It is important nonetheless to invest in the hard science side of innovation. A recent study set out to do just that and find a clear connection between pure scientific research and patentable inventions. The research looked at any connections that exist between every single patent issued between 1976 and 2015 by the US Patent and Trademark Office (of which there were around 4.8 million), and every single journal article published since WW2 (around 32 million).
They found a clear and constant flow between pure science and practical innovations. Whilst there are, of course, some papers that are rarely cited by future work, of those with at least one citation, a whopping 80% contributed to a future patent. Similarly, 61% of all patents referenced a research paper.
The report from the European Commission highlights a number of areas for concern however. For instance, whereas roughly 75% of all Chinese patents are in digital technologies, in the EU the figure is approximately 25%.
What’s more, investment is heavily focused on Germany, France and the UK, with the majority of R&D investment even within those countries performed by a relatively small number of multinational companies. For instance, in Finland, Nokia produce 77% of the R&D investment, whilst Telecom Italia and Leonardo invest 52% of Italy’s entire total.
The best performing companies (and indeed nations) however were those who encouraged a collaborative approach to science. It’s a topic I touched on extensively in a recent post, and a recent paper by the Nature Index highlighted the growth in collaboration between corporate research labs and both academic and government research bodies. The data shows that such collaboration has doubled in the past five years.
The findings “demonstrate a fundamental shift towards greater collaboration in high quality research between industry and academia,” said David Swinbanks of the Nature Index.
The report highlights the higher quality of papers when they had a corporate partner working alongside an academic centre of excellence.
Innovation is undoubtedly getting harder, and more expensive, to do, and so it’s crucially important that companies learn to innovate effectively. Hopefully regular readers here will have picked up more than a few tips on how to do just that.