United States will lead 2011 R&D funding, China now No. 2

Many years ago, when I worked at one of the news wire services, I used to have to report on all the short-term economic indicators that tend to make the stock market yo-yo. Personally speaking, I was fonder of the long-term metrics. I’m just as compelled by instant gratification as the rest of you, but I also don’t like surprises.

So, here’s a number that I’m watching closely: which countries are investing the most in research and development, aka investing in our future?

According to a new forecast released by Battelle-R&D Magazine, it is still the United States, which is expected to spend approximately $405.3 billion in 2011. That’s about 2.4 percent over what it spent in 2010. It is also about one-third of ALL global R&D spending, which is forecast to reach $1.2 trillion in 2011.

That’s the good news. The not-so-good news is that the United States will increase its R&D less than some other rising nations, including China, Korea, India, Russia and Brazil.

Indeed, China is now the second largest nation in terms of R&D spending, eclipsing Japan. The country has been increasing its R&D spending by roughly 10 percent each year — even during the 2008 to 2009 recession.

Here’s some perspective from Marty Grueber, the co-author of the magazine’s 2011 Global R&D Forecast and Battelle Research leader:

“The continued expansion of R&D in China is both inspiring in magnitude and worrisome from a U.S. competitive perspective. The Chinese are doing everything in their power to grow and develop through an increasing understanding and emphasis on research and technology. Even most of their highest ranking political leaders are engineers.”

Here are some other interesting statistic from the report:

• Industrial R&D spending (as opposed to that supported by academia or the government) will probably account for about 70.8 percent of all U.S. R&D spending in 2011.
• The strongest focus for materials research will be nanotechnology, which is linked to the need for lighter, more energy-efficient systems.
• Software-related R&D, which was slowed by the recession, should pick up with a focus on embedded control applications and interface software.

So, how can businesses ensure that their research money is well spent? That the innovation they are funding will be successful?

A new survey from the Association of International Product Marketing and Management and Accept Corp. is illustrative for those of you who are in charge of figuring out how to fund innovation, specifically investments related to specific products.

The two organization recently published the 2011 Product Innovation Priorities Report, which is based on a survey of more than 280 executives who are in charge of product management, marketing and development. Their somewhat scary revelation: more than half of the respondents reported that fewer than half of their product launches are successful.

The survey goes on to focus on why new products might fall flat on their face. Here are the four main reasons, according to the report:

1. “Failing to incorporate the voice of the customer”
2. “Failing to align product execution with company strategy”
3. “Failing to automate innovation process”
4. “Failing to mitigate planning and execution risk”

Something to keep in mind as you’re setting and resetting research and development priorities for 2011.