More Innovation stats - Boston Consulting Group A press release by BCG has given some interesting stats on corporate innovation (study of 500 execs, 47 countries, all major industries):
- 73% of companies will increase innovation spending (64% in 2004)
- Average increase in spending = 15%
- Consumer Products and Technology lead spending increases, Telecoms lagged.
- Asia Pacific area will see most increase in 2005
- 67% of companies ranked innovation as one of their company's top 3 strategic priorities
- However, only 49% said they were happy with the financial return so far
The 3 biggest problems they've identified so far?:
1) Moving quickly from idea generation to initial sales
2) Leveraging suppliers for new ideas
3) appropriately balancing risks, timeframes, and returns
"It's a positive sign that companies continue to invest heavily in innovation," said Jim Andrew, a Senior Vice President at BCG, a global management consulting firm. "The problem is that if the returns continue to disappoint, senior executives may begin to rethink their plans. Unless companies improve their approach to innovation, increased investment may in fact lead to increased disappointment."
Monday, December 27, 2004
Thursday, December 23, 2004
Tuesday, December 21, 2004
What is... Idea Management? - Editorial - CMO Magazine Elaine Cummings pens this excellent primer on Idea Management, which concisely tackles the questions most people ask when they first hear of the term "idea management". If you're only just starting to research this area, a brief look at this article will serve you well!
Sunday, December 19, 2004
How Their Garden Grows - CFO IT - Winter 2004 Issue - CFO.com WR Grace talks about how they've generated new product ideas over the last year that have the potential to achieve sales of $6 million.
Friday, December 10, 2004
Six Sigma 101 With Six Sigma being applied and referred to in the same breath as innovation more and more, it's useful to know exactly what Six Sigma is - and this introduction to the subject in Sales and Marketing magazine does an admirable version of a 101-type class - enjoy!
Thursday, December 02, 2004
Fast Company Innovation Awards - December 2004
It seems like Fast Company and Monitor Group have joined forces to come up with an Innovation Scorecard with which to rate companies' innovation past and present to find out what are the top innovation companies in each industry. This series of reports (published once every 3 months) will look at one industry at a time, and for its inaugural version, has chosen the Telecoms industry to look at.
As Monitor's CEO says, "Competitive advantage roots best in soil nourished by disciplined, sustained innovation -- in assets, their configuration, the offerings they make possible, and the business models that support them, but such discipline is impossible to sustain without rigorous -- and relentless -- efforts to measure and improve performance along all relevant dimensions." - an admirable, and totally correct, statement.
It's a shame then, that having understood the importance of measurement to innovation, that they've developed and applied such a badly thought out and sloppily applied scorecard.
According to the article, they (presumably Monitor Group) assessed 119 public companies on "three 'crucial' criteria":
1) How they fared over the past five years?
2) How do the next five years look?
3) How have companies invested in R&D? and what are expectations for growth?
oh yes - and 4) What is their capacity for innovation?
Now, besides the inability to count criteria, there are several problems with the above statements. For starters, Financial performance bears little direct correlation to innovation capability and capacity, neither past nor future. Although innovations in themselves can affect a company's bottom line in profound ways, financial measurements alone can be too easily affected by one-off blips, accounting treatments, lucky accidents, and external factors. For example, US companies that are have significant presence in Europe, are currently getting a nice rise in their expected earnings from the weakness of the dollar in comparison to the Euro. A sale over there is counting for far more than it used to. Seeing as the dollar seems unlikely to regain strength any time soon, financially, things would look pretty good for these companies too. Now does this mean that these companies are more innovative all of a sudden? Of course not, yet financial results and forecasts dominate the Scorecard's criteria..
Their other main criteria is R&D Spending as a % of Revenue. The problem with this is that it assumes that R&D will provide all the innovation, and as such, is a very blinkered view of innovation within a company. It ignores a company's ability to innovate around it's marketing, packaging, business models, internal processes, etc.
For example, Apple, although occasionally innovative on the product side (which would be reflected in the R&D spend), it is far more innovative on the marketing side, where it bulges its biggest muscles. Dell, hardly innovative in products nor marketing, has exhibited most of its innovations in the area of Business Model Innovation. For both commpanies, their true innovation capacity and capability would be totally underplayed by a simplistic look at its R&D spend.
There's a train of thought that used to pervade in the Knowledge Management market that says "it doesn't matter if it's not 100% accurate, it's more important to at least get started just measuring something" - it seems like this scorecard has embraced that concept in full...
It seems like Fast Company and Monitor Group have joined forces to come up with an Innovation Scorecard with which to rate companies' innovation past and present to find out what are the top innovation companies in each industry. This series of reports (published once every 3 months) will look at one industry at a time, and for its inaugural version, has chosen the Telecoms industry to look at.
As Monitor's CEO says, "Competitive advantage roots best in soil nourished by disciplined, sustained innovation -- in assets, their configuration, the offerings they make possible, and the business models that support them, but such discipline is impossible to sustain without rigorous -- and relentless -- efforts to measure and improve performance along all relevant dimensions." - an admirable, and totally correct, statement.
It's a shame then, that having understood the importance of measurement to innovation, that they've developed and applied such a badly thought out and sloppily applied scorecard.
According to the article, they (presumably Monitor Group) assessed 119 public companies on "three 'crucial' criteria":
1) How they fared over the past five years?
2) How do the next five years look?
3) How have companies invested in R&D? and what are expectations for growth?
oh yes - and 4) What is their capacity for innovation?
Now, besides the inability to count criteria, there are several problems with the above statements. For starters, Financial performance bears little direct correlation to innovation capability and capacity, neither past nor future. Although innovations in themselves can affect a company's bottom line in profound ways, financial measurements alone can be too easily affected by one-off blips, accounting treatments, lucky accidents, and external factors. For example, US companies that are have significant presence in Europe, are currently getting a nice rise in their expected earnings from the weakness of the dollar in comparison to the Euro. A sale over there is counting for far more than it used to. Seeing as the dollar seems unlikely to regain strength any time soon, financially, things would look pretty good for these companies too. Now does this mean that these companies are more innovative all of a sudden? Of course not, yet financial results and forecasts dominate the Scorecard's criteria..
Their other main criteria is R&D Spending as a % of Revenue. The problem with this is that it assumes that R&D will provide all the innovation, and as such, is a very blinkered view of innovation within a company. It ignores a company's ability to innovate around it's marketing, packaging, business models, internal processes, etc.
For example, Apple, although occasionally innovative on the product side (which would be reflected in the R&D spend), it is far more innovative on the marketing side, where it bulges its biggest muscles. Dell, hardly innovative in products nor marketing, has exhibited most of its innovations in the area of Business Model Innovation. For both commpanies, their true innovation capacity and capability would be totally underplayed by a simplistic look at its R&D spend.
There's a train of thought that used to pervade in the Knowledge Management market that says "it doesn't matter if it's not 100% accurate, it's more important to at least get started just measuring something" - it seems like this scorecard has embraced that concept in full...
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