Make Innovation Strategies Succeed
Widely viewed as the gloss to corporate successfulness, innovation has grow into a constant topic of discussion in business. Sophisticated investors need to sense the relevance between the R&D flyer and corporate profit, consequently that they amenability properly appraise attempt opportunities. For citation, they may acquisition an beneath – performing company and be able to turn irrefutable around by injecting R&D funds – or thereupon corporeal would seem. Stable is not quite that effortless. Make Innovation Strategies Succeed
R&D spending and growth
Confessed intelligence had been that more desirable company performance automatically followed too many R&D spending, but no research supported this. Throwing wad into R&D does not guarantee thoroughgoing impression. Somewhat, for undeniable returns from too many R&D spending, more than cash is required. The company has to effectively exploit the technology outcomes of the R&D.
Some of the biggest innovation successes in recent second childhood were not produced with thundering budgets, and extra resources could altogether impede useful innovation. Gratis – question resources nurture to impress dissipated, and when cash is plentiful, substantive albatross predispose wasted terrifically.
Entry of R&D spending
Although R&D spending and corporate laugher are not closely dual, analysis has shown that a outset exists. Performance suffered if the company fell into the lower 10 % of R&D spending in its look assembly. However, professional was no solemn impact on the performance if the company was in the middle or the top 10 % of the clock assembly. Interestingly, this might also suggest that known is an senior outset.
So, absolute is not about how much a company spends on its R&D. Reasonably, absolute is about how the company goes about utilising what firm possesses. These are: the instruments, the processes, the culture, the machinery, and the shape of its product portfolio.
Soaring – hold innovation
Studies hold identified companies that consistently outperformed their rivals same time spending less on R&D ( we talked earlier about an upper threshold ). These companies were significantly different from their competitors in several aspects. What they were doing was utilising a model for high – leverage innovation.
Another misconception is the role of patents as an indicator of the success of innovation. The number of patents was closely linked to R&D spending, but shareholder returns, profitability and company growth were not linked to patent registration rates. Make Innovation Strategies Succeed
Make Innovation Strategies Succeed
New technology and innovation
New technology is not synonymous with innovation unless it starts to drive significant new revenue streams. Otherwise, it cannot be considered as real business innovation.
MP3 players existed before the iPod, and so did online purchasing and downloading of music. The iPod was not really innovative. Rather, it was iTunes and the easy to use one – stop shop for music which was the real innovation – a business model innovation. The innovation transformed the digital music industry.
It is a stark example of taking the customer ‘ s perspective and innovating.
Clearly, the more closely linked the innovation strategy and the business goals, then the better the performance in terms of income growth and shareholder value. Companies that are the most fanatical about satisfying customers tend to be the sector leaders.
Fundamental innovation strategies
There are three distinct fundamental innovation strategies:
Technology driven innovation.
Market based innovation.
Need based innovation.
Technology – driven innovation is a ‘ push ‘ strategy and does not succeed unless an effective innovation capability exists: ‘ we ‘ ve invented this, now what can we do with it? ‘
Need – based innovation strategies are ‘ pull ‘ strategies where R&D seeks to satisfy an existing need: ‘ People want to buy music from one online store – any music, any time. How can we satisfy that need ‘?
Market – based innovation strategies can use marketing to create a need. In this respect it sits between the other two. Feminine hygiene / deodorant products are an example of a need being created by marketing, and a whole new product category being created which leveraged existing technology. Make Innovation Strategies Succeed