Abstract: During global economic downturns, senior executives take many measures to reduce costs especially in their research-and-development budgets. However, such measures delay promising projects as well as adversely affect morale. This article’s main conclusion is that companies should take a more innovative and strategic approach to cutting R&D costs. They should use difficult economic periods as an opportunity to upgrade their R&D organization’s focus, practices, and management. This will not only help them to cut their costs in the long run but will also raise staff productivity and accelerate the process to develop new products for the customers.

Published: McKinsey Quarterly, February 2009

Authors: Christie W. Barrett, Christopher S. Musso, and Asutosh Padhi

Link: Upgrading R&D during Downturn