Report: How to Achieve Superior Financial Performance While Spending Less on R&D

by David Eckoff · 0 comments

The San Francisco Chronicle has a good article today on innovation: “Watching their P’s and Q’s over R&D Google, Apple among best firms at turning cost-efficient research into products

The premise of spending less and getting more is the key finding to emerge from a study released by the Booz Allen Hamilton consulting firm. Titled “Smart Spenders,” the report identified the R&D practices that produced the best revenue, profit and stock price appreciation while keeping research outlays as a percentage of sales below the averages for any given industry.

Key findings of the study include:

  1. Less than 10% of companies are High-Leverage Innovators.

  2. Companies are getting better at squeezing benefits from their R&D spending.
  3. Deep pockets can be dry wells. Money cannot buy effective innovation.
  4. Bigger can be better. Scale provides advantages to R&D spenders.
  5. Patents generally don’t drive profits. There is no statistical relationship between the number or even the quality of patents and overall corporate financial performance.
  6. One size does not fit all. R&D budget levels vary substantially and there is no consensus on the right level of innovation investment.
  7. Effective innovators excel at four key elements.The high-leverage innovators distinguish themselves by building strong capabilities in the four principal elements of innovation: ideation, project selection, product development, and commercialization.
  • Download the full reportSmart Spenders: The Global Innovation 1000
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