Every year, the Booz & Company study continues to affirm that there is no correlation between how much a company spends on R&D and its overall financial performance. Apple, for instance, has consistently been named the most innovative company in the study, yet it spends just 2.2% of its revenue on R&D, well below the 6.5% of revenue spent by the computing and electronics industry as a whole. So what does work?
Companies that directly engage customers in hopes of understanding their needs and wants, and then try to be first to market with their new products, tend to be more effective in their early-stage innovation efforts.
A company must first strive to get its innovation and overall business strategies on the same page; about 20% of companies surveyed still don’t have an innovation strategy. Then it must make sure it has the agility to carry it out, and make sure its culture and organization are on board.
Timing is also important – making sure that the right products and technologies get into the marketplace at the right time; the ability to decide which innovation projects to develop and which to kill is essential.
Finally, companies that match their innovation strategy with what they are able to implement perform considerably better than those companies who do not do this. Successful innovation doesn’t require flashy new techniques like social networking, just the knowledge of what works and what doesn’t, and the determination to stick to these principles.
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