Are you struggling with where you can create a first mover market advantage in 2012? Before you choose, consider reading Booz & Co.’s newest “Global Innovation 1000” report. It debunks the myth that there is a direct correlation between R&D spending and higher levels of innovation. These findings will help you determine where to invest your resources and grow.
The data gathering process is ostensibly comprehensive. For the sixth consecutive year, Booz & Co. identified 1000 publicly traded global companies who invest the most in R&D. They also conducted a Web-based survey of senior managers and R&D professionals from 400 companies around the globe.
Survey respondents ranked Apple, Google, and 3M as the top three innovators, yet their 2010 R&D spending was $1.78B–a much lower level than Microsoft’s $8.71B. Microsoft ranked number five among the top innovator’s list. According to Booz, “we found that the most innovative firms outperformed the top 10 R&D spenders across three key financial metrics over a 5-year period ñ revenue growth, EBITDA as a percentage of revenue and market cap growth.”
The report’s essential message is that highly innovative companies are effective at driving strategic alignment and innovative cultures.They share two top goals in common: “superior product performance” and “superior product quality.” Culturally, they share a “strong identification with the customer.” In other words, top innovators share an overall customer experience orientation.Companies working closely with customers to develop solutions and get them to market first display the highest levels of profitability and enterprise value. Booz likes call this category of innovation leaders “Need Seekers.”
Here is what B2B companies can learn from these findings:
- The lines between marketing and innovation are becoming even more blurred. Customer engagement in the innovation process is no longer a “nice to have;” it is essential. Strategic marketing and product planning are great touch points where you can engage them.
- Innovation is a state of mind, not a designated R&D budget line item. If your culture fosters open mindedness, transparency, and lifelong learning, your probability of innovation success will increase.If you are uncomfortable with this mindset, accept your growth limitations, or staff differently.
- R&D investment increases will not guarantee growth. Innovation-driven growth happens in the strangest of places. Perhaps your next fresh idea could emerge from a customer onsite visit or an executive luncheon. Consider increasing the percentage of time spent attending select industry and customer conferences, briefings, and status meetings.
- Turn to technology companies — and, more specifically, Silicon Valley firms — for inspiration. Six out of ten most innovative companies occupy that space (although you could argue that GE occupies the technology niche as well). Find ways to study these companies, interview their thought leaders, and attend their conferences.
Consider how you are going to incorporate innovation into every 2012 marketing strategy and program. The best ideas may just live outside the four walls of your office.
You will find the Booz & Co. report here:
This post originally appeared on fastcompany.com.