U.S. businesses spent over half a trillion dollars on R&D in 2021. Most of this money was squandered.

U.S. businesses spent over half a trillion dollars on R&D in 2021 — most of it squandered on established technologies bound for obsolescence. What if that capital was deployed to anticipate the market instead of just keeping up with it? A new framework for corporate innovation investment.

U.S. businesses spent over half a trillion dollars on R&D in 2021. Most of this money was squandered on established technologies that will become obsolete in just a few years' time. Instead of spending to keep up with the market, what if businesses were spending to anticipate the market? Anticipating the market means deploying a portion of R&D capital on emerging technologies to position products, services and internal operations for the future. By making forward-looking decisions now, companies will preserve their relevance – saving money, saving time, and remaining competitive for years to come. The ability to deploy capital for innovation is particularly important in industries driven by productivity and cost control. Why Is This Important? Companies in these industries have small innovation + R&D budgets and can’t afford to spend each year on technologies that will quickly become outdated. For example, the Aerospace and Defense industry is driven by cost control and, Comprises only 1.8% of global R&D spend (Figure 1) Operates under razor-thin overall profit margins (less than 5%) So What? Legacy technologies put people and businesses at risk . The recent slew of Southwest flight cancellations is a testament to this. Southwest Airlines’ legacy scheduling system crashed under high demand - leaving 62% of Southwest flights canceled and a whopping $825M in damage control., Thousands of other businesses face a similar fate unless they learn to deploy innovation capital efficiently. Figure 1: Percentage of global research and development spending in 2020, by industry Four Steps to Deploying Capital for Corporate Innovation Step 1: Identify an Innovation Thesis The first step in our process is to help our corporate partners to identify areas where innovation will have the biggest impact on their bottom line. We then leverage our deep expertise of the entrepreneurial landscape to develop an investment thesis around emerging technologies that can help to

By Erin Martell at TechNexus Venture Collaborative