The global innovation 1000 making ideas work

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forthcoming in issue 69 WinTer 2012


Making Ideas Work
The early stages of innovation can be challenging. But Booz & Company’s annual study of R&D spending reveals that successful innovators bring clarity to a process often described as fuzzy and vague.

by barry jaruzelski, john loehr, and richard holman


strategy+businessissue 69

feature innovation


The early stages of innovation can be challenging. But Booz & Company’s annual study of R&D spending reveals that successful innovators bring clarity to a process often described as fuzzy and vague.
by Barry Jaruzelski, John Loehr, and Richard Holman
Illustration by Francesco Bongiorni

feature innovation
2Every economic downturn comes with the same

refrain: The world, we’re told, is losing its creative capacity, hurting our chances for a speedy recovery. Yet inevitably, when worries about innovation erosion surface, some company rises up with a great new product, technology, or service to prove the naysayers wrong. And all too often, observers simply fail to pay attention to the many companiesthat make successful innovation part of their regular practice — indeed, their operating model — in ways that don’t necessarily make big headlines.

Those companies are the quiet stars of our annual Global Innovation 1000 study of R&D spending. As our study has consistently shown over the past eight years, there is no long-term correlation between the amount of money a company spends on itsinnovation efforts and its overall financial performance; instead, what matters is how companies use that money and other resources, as well as the quality of their talent, processes, and decision making. Those are the things that determine their ability to execute their innova-

Barry Jaruzelski is a senior partner with Booz & Company in Florham Park, N.J., and theglobal leader of the firm’s engineered products and services business. He created the Global Innovation 1000 study in 2005, and continues to lead the research. He works with high-tech and industrial clients on corporate and product strategy and the transformation of core innovation processes.

John Loehr is a partner with Booz & Company based in Chicago, and is the global leaderof the firm’s innovation practice. He works with automotive, industrial, and technology companies to help them build competitive innovation capabilities and to resolve critical decisions in their product and market strategies.

Richard Holman is a partner with Booz & Company based in Florham Park, N.J. As a senior leader of the firm’s innovation practice, he works withclients in highly engineered products sectors such as aerospace, industrials, high tech, and healthcare on innovation capability building, new product development efficiency and effectiveness, and product management.

Also contributing to this article were s+b contributing editor Edward H. Baker and Booz & Company senior associate Marc Johnson and senior consultant Jane Kim.

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tion agendas. 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 traditionalpre-recession levels. Of course, some companies get more bang for their innovation investment buck than others. Over the past few years, we have carefully analyzed the innovation strategies, capabilities, and cultural factors that enable some companies to consistently achieve superior financial results. This year, to further clarify those performance drivers, we surveyed nearly 700 companies and...
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