Why more projects in R&D don’t automatically produce more innovation

At first glance a full innovation pipeline seems positive for many R&D Managers and Innovation Leads. There are ideas, commercial opportunities and technical possibilities. Different departments see improvements for existing products and at the same time plans for new propositions emerge.

Yet that very quantity can slow progress. When too many projects demand attention at once, budget, specialist knowledge and engineering capacity are spread ever more thinly across initiatives. Teams are busy, but the most important projects do not automatically move forward faster.

The challenge is therefore not only to develop enough good ideas. At least as important is the ability to decide which projects deserve attention now, which can start later and which must stop. Prioritisation is not an administrative step within innovation. It is a strategic choice about where an organisation invests its scarce time, knowledge and investment space.

A broad innovation strategy gives little direction

Boston Consulting Group asked 1,003 senior innovation professionals worldwide about the biggest challenges in innovation, R&D and product development. An unclear or too-broad strategy was cited by 52 percent as one of the top three challenges. This was followed by rising capital costs at 47 percent and limited availability of talent at 44 percent. A risk-averse culture, innovation in separate silos and poor governance also ranked highly.

These issues reinforce each other. When strategy remains broad, almost every project becomes relevant in some way. A cost saving fits efficiency, a new feature fits customer value and a new platform fits future growth. Without sharper choices, however, there is no common framework to determine which initiative carries the greatest weight.

That quickly turns a roadmap into a wish list. Commercial opportunities, customer requests, technical improvements and long-term innovation are scheduled side by side, while the same engineers, test facilities and development budgets are needed to execute them.

A usable innovation strategy must therefore be concrete enough to provide direction. Which customer problems does the organisation want to solve? In which markets does it want to be distinctive? Which technologies and product platforms are essential for that? And which initiatives contribute insufficiently to those choices?

When everything is a priority, capacity becomes fragmented

The real capacity of an R&D organisation is not only determined by the number of available staff. Specific competencies, test equipment, suppliers, decision-making and interdependencies also determine how many projects can advance at the same time.

Scarce specialists in particular often form a bottleneck. The same engineer is needed for multiple concepts. A test rig is used by different teams. An expert in materials, electronics or regulation shuttles between projects. On paper all projects are staffed, but in practice everyone has to switch constantly.

As a result, effective development speed decreases. Decisions linger, work is interrupted more often and problems are discovered later. There is also the risk that projects all progress partially, while no single project receives sufficient focus to reach a decisive milestone.

McKinsey describes how leading organisations therefore not only review their portfolio periodically, but regularly compare projects and explicitly link available people and resources to chosen priorities. In one cited practical example, a speciality chemicals manufacturer reduced the number of development projects by 40 percent. This allowed resources to be more strongly concentrated on the remaining priorities.

Prioritisation is therefore not only about order on a list. A project is only truly a priority when it has access to the capacity required to actually complete the next phase.

An attractive idea is not yet a strong development project

In an early innovation phase, revenues, costs and lead times are by definition uncertain. That makes it tempting to evaluate projects mainly on their commercial promise or strategic appeal. But a roadmap that looks commercially attractive can be technically unrealistic.

A concept may, for example, depend on a material that is not yet sufficiently validated. The desired product properties may lead to high tooling costs or complex assembly. Electronics, mechanics and software can influence each other in ways that only become visible in an integrated prototype. Certification, supplier capacity and scalability can also greatly change feasibility.

Therefore prioritisation should not only answer how much value a project can deliver. The route to a reliable and manufacturable product must also be assessed. A smaller project with a clear technical route can create more value than a larger market idea whose key assumptions have not yet been investigated.

The right comparison arises when every project is evaluated from the same perspectives:

1. Does it fit the organisation’s strategic direction?
2. Does it solve a relevant and demonstrable customer problem?
3. Is it technically feasible with available or reachable technology?
4. Can the product be produced reliably and at an appropriate cost price?
5. Which specialist knowledge, resources and capacity are needed?
6. Which uncertainties must be removed first?
7. What value does it deliver and within what timeframe?
8. How does it contribute to the balance of the total portfolio?

Not every answer needs to be fully known at the start. It should, however, be clear which assumptions are still uncertain and how those can be tested efficiently.

Early validation makes priorities more comparable

Many portfolios compare projects that are on paper in the same phase but that in substance have very different levels of evidence. One concept is based on customer research and a working prototype. Another consists mainly of an attractive business case and a broad technical assumption.

When those projects are assessed in the same way, the choice seems objective but in reality different levels of uncertainty are being compared. An accurate revenue forecast does not make a technically unproven concept predictable.

Early validation helps to make that difference visible. A feasibility study, proof of principle, material test, architecture study or initial manufacturability analysis can be sufficient to confirm or refute a key assumption. The aim at this stage is not to fully develop the product. The aim is to gather better information for the next decision with a limited investment.

That turns prioritisation from a debate based on conviction into a process based on evidence. Projects with strong results can be purposefully accelerated. Projects with solvable risks receive a new research question. Initiatives whose core proves infeasible can be stopped before they tie up capacity for a long time.

Stop criteria are as important as selection criteria

Organisations often spend a lot of attention on starting projects, but considerably less on ending them. A project gains approval based on an expected market, an internal sponsor and an initial budget. After that, stopping becomes increasingly difficult.

That is partly because teams have already invested time, knowledge and reputation in the initiative. New information is then used to defend the existing course, while the original assumptions may no longer be tenable. Influential sponsors can also create exceptions for projects in which they are personally heavily involved.

McKinsey describes how portfolios can thereby develop a long tail of initiatives with low expected returns. Those projects take capacity away from more promising initiatives. In one practical example a manufacturer even appointed an independent responsible person who systematically recorded all ongoing projects and recurring causes of inefficiency, failure and limited market potential.

Good stop criteria are therefore defined in advance. Which technical performance must be demonstrated at a certain moment? Which customer need must be confirmed? What maximum cost price, investment or lead time is acceptable? And which change in market, regulation or strategy calls for a new assessment?

Stopping does not automatically mean a project has failed. When an early test shows that an idea is not feasible or insufficiently valuable, the project has in fact produced important information at relatively low cost. Failure only occurs when weak assumptions are left unchallenged for too long and continue to consume capacity structurally.

Not every good project needs to start now

A sharp portfolio choice has more outcomes than just continue or stop. An initiative can be valuable, but not fit current capacity, timing or strategic focus. In that case deliberate postponement is better than starting the project half-heartedly.

This distinction is important because an overfull pipeline often arises from a desire not to lose opportunities. By opening every attractive initiative in advance, it formally continues to exist. At the same time expectations arise among management, commercial teams and developers, while the necessary resources are lacking.

A credible roadmap therefore makes visible which projects are actively being executed, which first need additional validation, which are intentionally waiting and which have been terminated. Postponed projects should also have a clear trigger for reconsideration, for example the release of capacity, achieving a revenue target or the availability of a new technology.

This keeps an opportunity available without it immediately occupying execution capacity.

More budget does not automatically solve a lack of focus

When projects slow down, extra budget or extra capacity seems a logical solution. That may be necessary, but only after it is clear which projects are truly priorities. Otherwise the same fragmentation continues on a larger scale.

A recent McKinsey study of 1,017 senior managers shows that nearly half report that only a quarter or fewer of innovation projects reach the market on time. At the same time companies could free up 12 to 20 percent of their innovation or R&D budget by critically re-evaluating their portfolio for better-performing projects.

The greatest gain is therefore not always in investing more. Often space first arises by reassessing existing investments. After that additional capacity can be deployed purposefully to bring promising projects through critical development phases faster.

External expertise can add value in two ways. First, specialist knowledge can help investigate technical uncertainties more quickly. Second, flexible development capacity can prevent an important project from being delayed because internal experts are spread across too many tasks. An external partner does not replace portfolio strategy, but can ensure decisions are made earlier on technical facts and that chosen projects actually make progress.

Focus requires better decisions, not less ambition

A smaller number of active projects does not mean an organisation is less innovative. On the contrary. By concentrating capacity, validating assumptions early and reassessing projects in time, more room is created for the initiatives that can truly make a difference.

Commercial value, technical feasibility and manufacturing readiness must be connected from the start. A project does not deserve priority only because the idea is attractive, but because there is a credible route from customer need to a working, manufacturable and scalable product.

PEZY helps organisations make that route concrete early. By bringing together product design, engineering, plastics expertise, prototyping and industrialisation, critical assumptions can be investigated earlier. This creates a firmer foundation for the decision to accelerate, adapt, postpone or stop a project.

The central question is therefore not how many innovation projects an organisation can start. The more important question is which projects have sufficient value and evidence to deserve the available people, resources and attention.