Innovation key to success, says Bain

More than 90 per cent of executives think innovation is the key to corporate success - but two thirds are dissatisfied with their track record on creativity.

Research from consulting firm Bain and Company among senior executives from 200 global companies has found that conventional methods to spark innovation are falling short.

Two thirds of the survey's respondents admitted dissatisfaction with the quality of their innovations or the frequency with which they came up with new products or services.

Eight out of 10 rated "becoming more innovative" in their top three business priorities, and 91 per cent said increasing their company's capacity for innovation was critical to creating future competitive advantage and earning profits.

Bain and Company director Darrell Rigby told vnunet.com that innovation was one of the biggest issues facing companies in today's competitive environment driven by shortening product lifecycles - particularly among technology companies.

Companies that had slashed research and development (R&D) budgets during the economic downturn were "mortgaging their futures", Rigby said.

Even those planning to increase their R&D spend when the economy picks up could fall behind their competitors, and those counting on acquisitions to buy in new ideas in the upturn are likely to be disappointed with the outcome.

"Academic studies show that every $1 spent on R&D leads to $2 of profit and a $5 increase in market value over seven years.

"If you can't afford to continue to invest the same amount you need to find other ways to get return from your R&D dollars," Rigby said.

The consultancy says breaking the 'not invented here' syndrome is key to higher quality and lower cost innovations.

Opening up innovation borders to vendors, customers and even competitors can help businesses improve the speed, cost and quality of innovation.

"Companies like IBM have learnt that they can export their innovation rather than letting it gather dust.

"When countries reduce their trade barriers they see a dramatic increase in gross domestic product. This is a similar concept," Rigby said.

See also:

IBM turns research into business

Big Blue to pump $1bn into On Demand Innovation Services  21 Nov 2002

Comment: Think-tanks turn their sights on IT

It seems the great and the good of Blairite Britain are agreed that IT can transform society, but are divided over how best to harness that power, says James Woudhuysen  15 Nov 2002

UK tech R&D 'streets behind' the US

Firms should look at organic growth rather than acquisition  14 Oct 2002

Like this story? Spread the news by clicking below:

 del.icio.us     Digg this     reddit!