Across industries, engineering organizations are expected to deliver more innovation with fewer resources. Products are increasingly software driven, development cycles are shortening and competition is accelerating. At the same time, the cost and complexity of research and development continue to grow. Global R&D spending has increased steadily over the past decade, yet many organizations still struggle to turn these investments into faster innovation or stronger competitive advantage. For engineering leaders, the challenge is balancing speed, cost and growing technical complexity.
To understand how organizations are navigating these pressures, we spoke with Camilla Maricic, Head of South - Sweden within the Connectivity business area at Knowit, who works closely with engineering organizations across telecom, automotive and connected products.
From her perspective, the pressure facing engineering organizations today is not driven by a single factor but by several structural shifts happening at once.
“The main shift we see is the combination of cost efficiency demands and the need to maintain innovation. Many R&D organizations are navigating changing market conditions and increasing pressure to deliver faster,” she explains. These dynamics are reshaping how companies think about engineering capability and how innovation is delivered.
One of the defining tensions inside modern R&D organizations is the need to balance efficiency with innovation. Economic uncertainty, evolving trade relationships and supply chain disruptions are forcing companies to reassess how they invest in development. At the same time, they must continue delivering new products and capabilities in order to remain competitive.
“It is a hard market to navigate. You have financial pressure, efficiency pressure and the need to accelerate time to market at the same time,” Camilla notes. These pressures often collide with another challenge that many engineering organizations face: technical debt.
As a result, many R&D organizations find themselves balancing several priorities simultaneously. They must maintain existing systems, modernize legacy platforms and continue developing new capabilities, often under increasing cost pressure.
In this environment, success is no longer defined by the size of an engineering organization.
The winning R&D organizations are not necessarily those with the largest teams. They are the ones that create the greatest engineering leverage i.e. the ability to turn expertise, tools and collaboration into faster innovation.
In this environment, time to market has become one of the most important competitive factors.
In many technology-driven industries, the value of innovation is closely tied to how quickly it reaches the market. Companies that move faster from concept to product often gain a significant advantage over competitors that take longer to execute (McKinsey & Company, 2018).
Accelerating development, however, requires more than simply increasing the pace of work. It often requires organizations to rethink how engineering teams are structured, how development processes are organized and how capabilities are scaled.
In regions such as the United States and China, innovation often follows a model where technologies move rapidly from experimentation to market deployment. In Europe, innovation tends to operate within a stronger regulatory framework, which can influence how quickly new technologies reach the market.
At the same time, countries such as Sweden and the broader Nordic region rely heavily on innovation to remain competitive internationally. Strong investment in research and development has historically been one of the ways smaller economies maintain technological leadership.
However, smaller markets can also face structural limitations when it comes to scaling specialised engineering capability. Talent pools may be smaller and in certain sectors regulatory or security requirements further limit access to specialised skills. This means organizations often need to look beyond their internal teams when building new capabilities.
Universities, research institutions and industry partnerships are therefore becoming increasingly important parts of the innovation ecosystem. Companies are investing more actively in these collaborations in order to access new knowledge and adapt to rapidly evolving technologies.
Taken together, these developments are reshaping how organizations approach R&D. Traditional models where development happens entirely within internal teams are becoming harder to sustain as technologies become more specialised and product ecosystems more complex.
Instead, engineering capability is increasingly built through collaboration across organizations, combining internal expertise with external capabilities and specialised knowledge.
From Camilla’s perspective, this shift reflects a broader change in how innovation ecosystems operate. Engineering capability is no longer confined within the boundaries of a single organization. It increasingly emerges through collaboration across networks of partners and specialised technology providers.
These dynamics are one of the reasons why new delivery models such as Extended R&D are gaining attention. Rather than focusing only on adding individual consultants to projects, these models aim to combine engineering expertise, delivery capability and long-term collaboration to help organizations scale innovation more effectively.
In the next article in this series, we explore how Extended R&D is emerging as a strategic model for organizations looking to accelerate development while strengthening their internal capabilities.
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