Academic journal article Research-Technology Management

The Customer Connection: The Global Innovation 1000

Academic journal article Research-Technology Management

The Customer Connection: The Global Innovation 1000

Article excerpt

The Customer Connection: The Global Innovation 1000; Barry Jaruzelski and Kevin Dehoff; Booz Allen Hamilton; Strategy + business 49, Winter 2007, 84 pp. at www.boozailen.com

Booz Allen Hamilton's third annual study of the world's 1,000 largest publicly-held corporate R&D spenders and the impact of innovation on corporate performance finds two primary success factors: aligning the innovation model to corporate strategy and listening to customers "every step of the way" (see page 4, "World R&D Spending Rising," this issue). Other key findings of this year's study include:

* R&D spending caught up to sales growth in 2006 for the first time in four years. For the Global Innovation 1000, R&D spending rose last year by $40 billion to $447 billion, a 10 percent increase, matching sales growth of 10 percent.

* North American companies increased their absolute R&D spending by $21 billion, while China and India increased spending by only $400 million--still, a 25.7 percent increase over last year.

* Although "money alone does not lead to effective innovation," companies that tightly align their innovation and corporate strategies had 40 percent higher operating income growth and 100 percent higher shareholder returns over the last three years than companies whose strategies were less aligned.

* 2006 saw a 25 percent increase in "High-Leverage Innovators"--those that outperform their peers over a five-year period while spending less on R&D as a percentage of sales than their industry medians. …

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