Commoditization, margin pressure and growth requirements are creating pressure to be (and to be considered) “innovative.” Many companies tout their new innovation initiatives and cultures, but few are able to truly capitalize on innovation in order to drive profitable organic growth. Too often, innovation is promoted within an enterprise as an end, but the means is neglected – i.e., equipping the enterprise to generate returns that innovation promises (e.g., returns equal the most famously successful, innovative companies). When budgets and investments are made, management and shareholder expectations rise accordingly.
Research findings have determined that success (defined as positive measurable returns) from innovation efforts is not necessarily correlated to size of investment. Instead, the proper approach, capabilities, and systems are much stronger predictors of sustained innovation performance than R&D budgets.
Innovation efforts generate sustained positive results when organizations are able to identify and successfully implement the right innovation system – striking a balance across the four strategic factors of Leadership, Process, People, and Leverage, and overlaying an appropriate organizational model and approach.
A properly developed and tuned system, coupled with a well-considered innovation strategy (giving direction for the innovation system), results in an exceptional return to shareholders. For instance, Apple’s renowned innovation system helped them outpace industry competitors and the NASDAQ to generate $125B in shareholder value between 2002 and 2007, despite R&D expenditures one tenth the size of a number of their competitors’ R&D budgets. To generate results, approach, capabilities, and systems trump spend levels.
Sigmastrat helps companies to organize and build improved innovation systems that will support excellence in innovation and maximize return on investment.