Companies are trying to make the most of their innovation budgets, but many are holding steady or cutting back on innovation investments while still intending to generate higher returns, a McKinsey survey finds. Among all surveyed organizations, 37 percent indicated they would increase innovation spending, but 53 percent would maintain investments in innovation, and 8 percent would trim spending, note Senior Partner Matt Banholzer and coauthors. Healthcare, consumer goods, and technology sectors led the way in willingness to spend on innovation.
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A horizontal bar chart shows changes in organizations' innovation investments over the coming 12 months, with data represented as a percentage of respondents. The chart includes the following categories: “Increasing spending on innovation to drive growth,” “Planning to increase growth without increasing innovation spending,” “Maintaining the current level of innovation spending and expect to maintain the current level of growth,” “Reducing innovation spending to trim costs,” “Reducing innovation spending because it is a lower priority,” and “Don't know/not applicable.” The data are segmented by industry, including: healthcare, pharma, and medical products; consumer goods and retail; technology, media, and telecom; energy and materials; business, legal, and professional services; financial services; advanced industries; travel, logistics, and infrastructure; all other industries; and total.
For the total, 37% of respondents are increasing spending on innovation to drive growth, 29% are planning to increase growth without increasing innovation spending, 24% are maintaining the current level of innovation spending and expect to maintain the current level of growth, 6% are reducing innovation spending to trim costs, and 2% are reducing innovation spending because it is a lower priority.
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Source: McKinsey Innovation Survey, 2024–25, n = 1,017.
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To read the article, see “Investing in innovation: Three ways to do more with less,” June 5, 2025.