Why your R&D spend, not your strategy deck, tells the truth about your portfolio
The decisions you make in R&D today will not be visible for two years. That is the uncomfortable math of this job. What you choose to work on right now is what you and your team will actually be measured on in 2028, so you should take that choice very seriously.
Early in my years running R&D, I assumed everyone on my team shared my devotion to adding value and staying productive. What I learned through close management of every kind of skillset is that real efficiency varies widely. Your people are carrying personal and professional pressures at different intensities, which creates a natural ebb and flow in capability that can be hard to detect and even harder to diagnose. Some engineers need very clear instructions. Some, especially early in their careers, will simply stop when they finish a task and need guidance on what comes next. In time they learn to see the next logical step on their own. Until then, you need actual data about where their hours are going.
This exercise always made me uncomfortable. Nobody likes the big brother feel of it. But if you position it correctly, the data is enormously useful. Through whatever tool you have, even a spreadsheet, ask your staff to track their time against the work they are doing. Capture the major programs, and just as importantly, capture all the sustaining and supply chain work. Between the chip shortage, tariff-driven component changes, and the MDR remediation that has upended Europe, I can nearly guarantee your team is constantly getting pinged to replace a component or qualify a new vendor. Sometimes it is easy. Many times it is a huge distraction. You may believe your new product development team is developing new products when they are actually spending much of their time maintaining the business. The switching cost on professional engineering talent is far too high to let that happen unmanaged.
There is a second dynamic underneath the first. Engineers at every career stage can gravitate toward the simple problems. Qualifying a new vendor pays off quickly and feels satisfying. Developing new requirements and new test methods, with all the risk attached, does not. In companies with long-lived, market-leading technology and a stagnant R&D team, this becomes your single hardest problem to solve: a team that keeps old products going, sometimes redesigning them again and again with no additional benefit to the customer.
So be bold. Shut down the budget and time-tracking codes for every program that is not actually funded. Then watch where the hours land. If people are still logging work against unapproved projects, that is exactly the information you need to decide whether those projects should continue at all.
From there, review the actual spend on each project and sort your portfolio into three buckets: ‘Incremental’, ‘Sustaining’,’ and ‘Breakthrough.’ Understand how much your company is truly investing in each. Do not forget clinical research and geographic expansion with your regulatory teams. The effort that goes into those areas rarely gets accounted for correctly.
Once you have the data, compare it to the plan. I recommend a spending walkover: reflect back to your counterparts and your leadership, whether that is the CEO or the board, the difference between what everyone believed the R&D investment was and what the actuals show. Complete this exercise quickly, because a misalignment here means one of two things. Either the program timelines will not hold or the timelines were far too long to begin with. The pattern usually tells you which. If R&D is underspent and timelines are slow, execution is low. If R&D is overspent and timelines are still slow, judgment is off, and you likely have a skillset problem or unchecked vendor spend. Just look at the heaviest hitters by project. Spend and time on task will tell you the hard truth about what is happening in R&D, and how far it sits from what the strategy says should be happening.
Then put your numbers in context. Larger medtech companies competing on differentiated products will spend close to 9 or even 10 percent of sales on R&D. They run large clinical trials, have extensive intellectual property, and keep unique subject matter experts on the bench. They stay in fast-growing segments and avoid a race to the bottom on commodity products.
More stable medtech companies deliberately invest in less risky products and markets, and you may see R&D spend as low as 4 to 6 percent of sales. That is not a failure. These are often market leaders with wide portfolios and tried-and-true technology in slower-growing, less contested segments, where high quality and the right level of sustenance are exactly the correct focus. And some companies choose to acquire new technology rather than build it, which is a valid strategy too. In that case, your job is to integrate and remediate seamlessly, without eroding the value you just paid for.
The point is that all of these are legitimate strategies when you choose them. The failure mode is letting incoming work define the strategy by default. If your spending pattern shows too much sustainment while your company intends to compete on differentiation, you are missing the boat and setting yourself up for disruption. If you have actively decided to stop differentiating a product line, then take cost out of manufacturing and materials so you can hold price and protect margin. Sometimes this analysis needs to go all the way down to the product line or family before you can see what is really happening.
Do all of this carefully with your finance business partner, because the methodology will be scrutinized and challenged. If you lack the detail to make firm recommendations, focus on the big movers. And work closely with your marketing counterpart, upstream and downstream. If your company brought you in for a turnaround, it’s likely that leadership has never seen this analysis. Socializing it with your counterparts is how you earn the mandate to point your team at the needle movers.
Terri Kapur is a seasoned R&D executive with more than 20 years of experience driving innovation in the medical device industry. She has led global, multidisciplinary teams across the full product lifecycle, from early research through development, commercialization, and post-market support.
