After growing almost 10 percent for the second consecutive year, total R&D investment among the world’s top innovation spenders continues to grow robustly, according to the 2012 Global Innovation 1000 study. This eighth annual analysis of corporate R&D spending was released today by global management consulting firm Booz & Company.
The study examined the 1,000 public companies that spent the most on research and development in 2011 and found that innovation spending reached an all-time high of US$603 billion during the year, up from $550 billion in 2010. This is an increase of 9.6 percent over 2010 and is the second consecutive year of growth. This rebound comes after spending dropped 3.5 percent between 2008 and 2009 during the height of the Great Recession.
Booz & Company also surveyed nearly 700 innovation leaders from companies worldwide to determine which companies those leaders see as the most innovative companies in the world. Apple, Google, and 3M topped the list for the third consecutive year. The most innovative companies are seldom the biggest spenders, the study confirms. When compared to the 10 companies that spent the most on R&D, the Top 10 most innovative companies outperformed across key financial metrics, including revenue growth, market cap growth, and profit as a percentage of revenue.
“Consistent with our study findings from previous years, there is no long-term correlation between the amount spent on innovation and an organization’s overall financial success,” said Barry Jaruzelski, senior partner at Booz & Company and global leader of the Engineered Products & Services practice. He also noted that “what really matters is not the amount spent, but how those R&D funds are invested in talent, process, and tools.”
“R&D spending does not ensure increased financial gains, nor does it guarantee innovation success,” added John Loehr, Partner at Booz & Company and global leader of the firm’s Innovation practice. “Case in point: Apple, Google, and 3M ranked 53rd, 26th, and 86th, respectively, in R&D spending among the Global Innovation 1000 companies.”