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R&D spending does not make you innovative

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In corporate life it is often significantly easier to measure the inputs rather than the outputs.  It means we still often have situations where employees are judged on the hours they put in rather than how productive they are in those hours, or that enterprise social networks are judged by how much they’re used rather than what comes out of that use.

It is often no different when it comes to innovation, with success often coached in terms of R&D spending rather than the impact that spending has.  The Strategy&Innovation 1000 studies highlight just how futile this approach is however.  It shows that there is no link whatsoever between the amount of money you spend on R&D and the innovation that comes out the other end.

Of course, if spending isn’t a factor, what is?  The study highlights five factors that they believe are crucial to being innovative.

  1. Strategic alignment – the study believes that the best innovators are very careful to ensure that any innovation they embark upon is clearly and closely aligned with the business aims of the organization.  It sounds quite an obvious first step, but it’s a crucial one that many get wrong.
  2. Innovative capabilities – once you know what it is you want to achieve, the study suggests that it is then important to have the capabilities to accomplish this.  You need to be able to engage with customers; generate new ideas; turn them into products, and successfully launch them.  These capabilities should also be looked at individually rather than copying what your rivals have.
  3. Strong partnerships – the report continues by suggesting that innovation seldom happens in isolation, and as such it’s important that you develop an excellent partnership network, whether that is with suppliers, distributors, educational institutions, customers or other groups, it’s increasingly likely that your innovations will come from outside.
  4. Designed for innovation – next up is the way your organization is designed.  I’ve written before about the challenge many organizations face when it comes to innovating alongside their cash cow products.  What’s required for innovation is often completely polar to what is required for efficiency.  Make sure your organization is set up appropriately to minimize potential clashes.
  5. Cultural alignment – it’s hard to mention innovation without talking about culture, and the report finishes by highlighting how the best innovators create a culture of thinking and conversation, which underpins risk taking and creativity.  Of course, this is often a lot easier said than done, but still.

The researchers believe that few organizations are actually good at, or indeed able to focus on more than a couple of these at any one time.  With each of the five needing to work in unison, the researchers developed a tool that profiles your organization, and how they score in each of the areas.The tool looks primarily at culture and attitude of employees, creating a profile of the organization based upon the answers provided by employees.  The researchers believe the tool provides an accurate representation of the innovative capabilities of an organization after testing it on a variety of known organizations.

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