Booz & Company’ s annual study of R&D spending reveals successful innovators and brings clarity to a process often described as fuzzy and vague. In 2011, corporate spending among the Global Innovation 1000 increased 9.6 percent over the previous year, slightly faster than the 9.3 percent gain in 2010. But because corporate revenues grew by a robust 13 percent last year ‘” even faster than the year before ‘” R&D intensity, or the percentage of sales that companies spend on innovation, actually declined to traditional pre-recession levels.
This year the goal of the survey was to gain insights into the early stages of innovation ‘” when companies generate ideas and then decide which ones to develop.
Where innovation ideas come from?
The most common method, by a substantial margin, was “direct observations of customers,’ ranked number one by 42 percent of all respondents. “Traditional market research’ was a rather distant second, at 31 percent. The survey also looked at the kinds of external networks companies turned to at the ideation stage; again, the most common was talking to customers, followed by working with channel partners. Finally, when asked what internal mechanisms their company used, most respondents pointed to “innovation champions’ ‘” people assigned to coordinate the capture, development, and internal promotion of new ideas ‘” followed by “cross-functional collaboration’ among different business units.
From Ideas to Products
Three-quarters of all companies depend on internal networks for help in vetting ideas for further development ‘” an unsurprising result given that most companies, even Need Seekers, simply do not go far afield for conversion of their ideas, and some might even see going afield as a risk. The only external mechanism that many companies report using is “leading customer reviews,’ in which top customers are given an early glimpse into the development pipeline.
The survey results show that the smaller companies in the Global Innovation 1000 (the companies ranked 101 to 1,000) report themselves to be twice as effective at the conversion stage as their largest peers (the companies ranked in the top 100), no doubt because the organizational issues are less complex, and ultimately less bureaucratic.
View below authors Barry Jaruzelski and John Loehr discussing the results of the survey:
The Global Innovation 1000: 2012 The-Global-Innovation-1000-Making-Ideas-Work