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.
– James Janega