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:
- Less than 10% of companies are High-Leverage Innovators.
- Companies are getting better at squeezing benefits from their R&D spending.
- Deep pockets can be dry wells. Money cannot buy effective innovation.
- Bigger can be better. Scale provides advantages to R&D spenders.
- 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.
- One size does not fit all. R&D budget levels vary substantially and there is no consensus on the right level of innovation investment.
- 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.