How can companies boost innovation?

Research_and_Development_by_z3292802

When it comes to company innovation, the best advice may be this: It can’t be bought.

But it can be learned.

Each year for the last ten, Strategy& has polled the 1000 global companies with the highest R&D spend on their habits and trends regarding innovation. After a decade, it’s a data set that provides interesting insights — many counterintuitive — into what works and what doesn’t when it comes to corporate innovating.

“You cannot spend your way to success with R&D dollars alone.”

First the bad news: You cannot spend your way to success with R&D dollars alone. In fact, when measured as an “innovation intensity” ratio of R&D spend and revenues, the slope was negative — the more companies spent, the worse they did. I thought that was an astonishing finding. Presumably what happened is that R&D spend was the core of a strategy that could have been balanced better.

It turns out, balance is key.

 

Now the good news: Innovation can be learned. Of the 1000 companies in the survey, 44% said they got “better” at innovation over the years. Thirty-two percent felt “much better,” and nearly a quarter of those who improved felt they’d mastered the practice of innovation.

“Innovation can be learned.”

Fully 73% saw room to improve by shifting from product to service innovation, or incremental to breakthrough innovation. That’s an interesting statistic because a lot is packed into it.

Changing an offering from product to service involves a lot of work internally — the kind of thing my organizational effectiveness colleagues at Slalom Consulting have a field day contemplating. And moving from incremental innovation to breakthrough offerings involves more than a culture shift — it involves new processes, capabilities, cooperation and insights into customer needs.

But for companies that are just starting out — or trying to improve the mojo they’ve started building — there are steps you can take that move the company closer to the promised land without investing everything.

Balance is one key. The right plan is another.

Let’s explore them together in the next post.

– James Janega
@JamesJanega

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