Innovation, is it the key to a company’s continuous growth?

The 2011 Global Innovation 1000: Why Culture is Key

Source: http://www.booz.com/global/home/what_we_think/innovation_1000_2011

Year after year, certain companies succeed in producing innovative new products and services, and in so doing generate superior financial results. As our annual Global Innovation 1000 study, now in its seventh year, has consistently demonstrated, the success of these companies is not a matter of how much these companies spend on research and development, but rather how they spend it. This year, we took under consideration two particular qualities — strategic alignment and a culture that supports innovation — that truly innovative companies have put in place that allow them to outperform the competition.

Every company among the Innovation 1000 follows one of three innovation strategies — need seeker, market reader, or technology driver. While no one or another of these strategies offers superior results, companies within each strategic category perform at very different levels. And, no matter a firm’s innovation strategy —culture is key to innovation success, and its impact on performance is measurable. Specifically, the 44 percent of companies who reported that their innovation strategies are clearly aligned with their business goals —and that their cultures strongly support those innovation goals — delivered 33 percent higher enterprise value growth and 17 percent higher profit growth on five-year measures than those lacking such tight alignment.

Booz & Company also asked innovation leaders participating in the survey to name the companies they considered to be the most innovative in the world. For the second year in a row, Apple led the top 10, followed by Google and 3M. This year, Facebook was named one of the world’s most innovative companies, entering the list at number 10. In a comparison of the firms voted the 10 most innovative versus the top 10 global R&D spenders, Booz & Company found that the most innovative firms outperformed the top 10 R&D spenders across three key financial metrics over a 5-year period — revenue growth, EBITDA as a percentage of revenue and market cap growth.

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