« Tranches and tranches - and safety of intangibles | Main | Expectations »
December 11, 2007
Global Innovation 1000
The latest Booz Allen Hamilton innovation report is out -- The Customer Connection: The Global Innovation 1000 -- and the results sound familiar:
In 2006, as in the two previous years of our annual study of the Booz Allen Hamilton Global Innovation 1000 — the 1,000 publicly held companies around the world that spent the most on research and development — overall corporate revenues among these companies increased 10 percent. Once again, their overall spending on research and development also rose, to US$447 billion this year. And as in years past, we found no statistically significant connection between the amount of money a company spent on innovation and its financial performance.
In other words, just throwing money at innovation doesn't work. But the B-A-H report talks about what does work: listening to your customers:
We also compiled a list of high-leverage innovators, as we did last year. These were the companies that, compared to other companies in 2006, got a significantly bigger performance bang for their R&D buck. The high-leverage innovators consistently achieve better sustained financial performance than their industry peers while spending less on R&D. We’ve spoken to executives at a number of these companies, including Black & Decker. When listing the reasons for their success, they all mention two key factors. The first is strategic alignment: They work hard to align their innovation strategies closely to overall corporate strategy. The second is customer focus: They all have processes in place to pay close attention to their customers in every phase of the innovation value chain, from idea generation to product development to marketing.
The study breaks these innovation strategies into three types:
Need Seekers: These companies actively engage current and potential customers to shape new products, services, and processes; they strive to be first to market with those products.
Market Readers: These companies watch their markets carefully, but they maintain a more cautious approach, focusing largely on creating value through incremental change.
Technology Drivers: These companies follow the direction suggested by their technological capabilities, leveraging their investment in research and development to drive breakthrough innovation and incremental change, often seeking to solve the unarticulated needs of their customers.
The report goes on to describe each of these three strategies and give an example of a company in each category. Unfortunately, the report does not give the breakdown by strategy of all 110 companies listed as "high leverage innovators." It would be interesting to see which companies are following which strategy - and if they clustered by industry.
In any event, the report is yet another piece of evidence of what some of us have been saying for some time: innovation isn't just about technology and it isn't just about R&D spending. The companies get that. Maybe some day the policymakers will as well.
Posted by Ken Jarboe at December 11, 2007 7:35 AM
Trackback Pings
TrackBack URL for this entry:
http://www.athenaalliance.org/mt/mt-tb.cgi/1694