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10.11.2010 Innovation pioneers enjoy major benefits

Brand owners with the most efficient innovation programme typically enjoy a "coherence premium" that delivers a range of financial benefits, according to a study by Booz & Co. In a report, the consultancy estimated innovation spending by the 1,000 public companies across the globe which invested the greatest amount in R&D last year fell 3.5% in 2009 to $503bn. This is the first decline for a decade, indicating the recession's impact on corporate priorities. The data was supplemented by a survey of 450 senior executives and new product development specialists, representing more than 400 organisations.

Overall, innovation suffered less heavily than sales, general and administrative expenses, which was down 5.4%, and capital expenditure, down 17.5%. More positively, healthcare giant Roche raised its outlay by 11.6% to $9.1bn (or 20.1% of sales), with Microsoft up 10.4% to $9.0bn (or 15.4% of revenue). GlaxoSmithKline boosted funding by 12.7% to $6.2bn, while Merck was up 16.8% to $5.6bn. Third-placed Nokia trimmed budgets by 1% to $8.2bn and Toyota cut by 19.8% to $7.8bn.

Successful enterprises commonly focused on consumer insights, gaining an early comprehension of evolving technologies, soliciting customer feedback during NPD and working with pilot users at the roll out stage. Such capabilities were afforded a leading role in Booz's poll of professionals, who named Apple as the most innovative company even though it allotted just $1.3bn, or 3.1% of sales, to R&D in 2009. Google claimed second spot, spending 12% of its $23bn revenue, and 3M took third having directed 5.6% of its $23.1bn returns to the same activity.

B.L. 10.11.2010