Money alone can not buy innovation: some take aways

August 17th, 2012 by Dr. Taly Weiss

Filed under Apple, brands, Emerging markets, innovation, Predictions, Trend Spots, Trends Review

In the next weeks I plan to share few insights from our continuous research on business innovation (making it worthy to innovate) and organizational innovation (making innovation work inside the organization).

Western companies spent a sum of $550 billion on R&D in 2010 with little in return: the three industries that spent the most on R&D (computing/electronics, healthcare and automotive) struggled to develop a steady stream of breaking innovation and bring compensating profits.

Now, lets take Apple as an example. Apple, the most innovative country in the world (Booz and Company, 2010, BCG innovation survey 2010) ranks low as 70th in the world in R&D spending. Apple spent $758 million on R&D during Q1 2012, only 1.6% from overall sales of $46.3 billion (compare that to the $2.3 billion Microsoft spent on research and development during the same quarter). Apple’s startup mentality (even with 60,000+ employees), their unique empowering culture where every employee is involved in the act of innovation, and their ability to focus only at few chosen grounds at a time, helps them spend less and get much more in return

Take way 1: Companies presume that spending much in R&D is necessary in order to produce something new. But following leading companies financial success, many of them are not able to maintain profits nor produce new profits. And that is even before we consider the near future, when we will see the outcomes of strengthening competition from companies in emerging markets, all highly focused on innovation.