Achieving the objectives of science, technology, and innovation (STI) at the national level demands a focused approach toward developing transformative capacities and strengthening a competitive advantage. In Iran’s 7th National Development Plan, transformative areas has been introduced to guide the allocation of national resources, capacities, and policies toward STI priorities. However, a content analysis of upstream policy documents, together with findings from two focus group discussions conducted in the winter of 2025, indicates the presence of a set of institutional, policy, financial, operational, and cultural challenges that hinder the realization of these objectives. At the policy level, the absence of transparent criteria for selecting priority domains, the proliferation and fragmentation of priorities, and the weak linkage between defined missions and the country’s actual socio-economic needs have undermined policy effectiveness. At the institutional level, overlapping mandates among decision-making bodies, inter-organizational fragmentation, weak inter-agency coordination, and the lack of accountability mechanisms have impeded policy coherence. From a financial perspective, heavy reliance on public funding and the absence of a sustainable and diversified research and development financing system have slowed progress in strategic domains. Furthermore, the gap between academia and industry, along with weak demand–supply linkages, has resulted in inefficiencies in implementation and innovation commercialization processes. Our results indicate that achieving the goals of the 7th Plan requires concentration on a handful of nationally capable priority domains, establishing a supra-organizational coordinating body, designing an integrated monitoring and evaluation framework, and developing diversified and sustainable financing mechanisms for research and innovation. In addition, fostering a culture of trust and collaboration among scientific, industrial, and executive institutions is a prerequisite for the effective development of driver and transformative technologies. Our findings provide recommendations for the priority-setting processes in the subsequent development plans.