The Boston Consulting Group, in partnership with BusinessWeek, has released their fifth annual report on innovation, “Innovation 2008: Is the Tide Turning?” The report covers the entirety of the innovation processes that are critical to turning ideas into financial returns including idea generation, new product development, portfolio and life-cycle management, organizational alignment and demands on leaders.
As always, the BCG report provides some great insights on the state of innovation in business. Key findings from the report include the following:
- Innovation remains at or near the top of most companies’ agendas, with the majority (66%) considering it one of their three most important strategic priorities.
- Fewer than half of executives (43%) are satisfied with the financial return on their investment in innovation.
- Rising dissatisfaction with the return on their investments in innovation may be taking a toll on companies’ willingness to spend
- Executives consider lengthy development times, a risk-averse corporate culture, difficulty selecting the right ideas to commercialize, and a lack of internal coordination to be the biggest factors driving down the return on innovation spending.
- For the second straight year, executives ranked Apple, Google and Toyota the world’s three most innovative companies, with Apple once again on top.
- Most companies have the means to greatly boost their return on innovation spending and, in the process, gain a decisive competitive advantage but few are acting with the commitment necessary to achieve that.
There is much excellent detail in the report supporting these observations. It is a bit discomforting that the reality or perception of innovation’s poor return on investment continues to be a mainstream meme. The trend of the past few years showing continued erosion in satisfaction levels with the return on innovation combined with a deceleration in the rate of investment in innovation suggests that many companies are finding it difficult to establish sustainable innovation programs.
On the other hand, it is good to see that innovation remains top of mind with companies, whatever the issues with measuring it’s success. With product and service life-cycles growing ever shorter and investments in human, intellectual and structural capital being constantly challenged by macro-economic drivers that are often out of their control, enterprises must invest more in innovation, not less.
Full of insight and some good charts, you can read the whole report here.
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