Measuring Innovation 2006
72% of companies worldwide will increase spending on innovation in 2006, and 41 percent will increase spending significantly, according to a recent survey of senior management conducted by The Boston Consulting Group.
The study’s full set of findings, based on responses from more than 1,000 senior executives from 63 countries and all major industries, is summarized in two new reports, “Innovation 2006” and a companion piece on metrics, “Measuring Innovation 2006”.
The Boston Consulting Group completed its third annual global survey of senior executives on innovation and the innovation-to-cash (ITC) process, which covers the many interrelated activities involved in turning ideas into financial returns. “Innovation 2006” details and analyzes that survey’s findings and provides a framework to guide executives who are seeking to improve their companies’ innovation capabilities.
Some of the report’s key findings include the following:
- Innovation remains a top strategic focus for many companies, with 72 percent of the executives we surveyed ranking it a top-three strategic priority versus 66 percent in 2005.
- Seventy-two percent of respondents said their companies will increase spending on innovation in 2006.
- At the same time, many executives—nearly half of those surveyed—remain unsatisfied with the financial returns on their companies’ investments in innovation.
- Executives consider Apple Computer, Google, 3M, Toyota Motor, and Microsoft the world’s most innovative companies, with Apple the clear leader.
- Globalization, organizational issues (such as metrics and measurement, structure, and people), and leadership remain three of the biggest challenges facing companies that are seeking to become more innovative.
A companion report to Innovation 2006, “Measuring Innovation 2006” summarizes and analyzes the findings of a separate survey devoted solely to on innovation metrics and measurement.. It also offers ideas to help companies improve their current practices.
The key findings of the second report include the following:
- Innovation is widely undermeasured, and few firms—even those that attempt to track innovation rigorously—are confident they’re doing it right.
- The majority of companies that do use metrics typically use only a handful—i.e., five or fewer.
- The three metrics that executives consider most valuable are time to market, new product sales, and return on investment in innovation.
- Few companies tie employee incentives to innovation metrics.
- The potential for most companies to improve their measurement practices—and, as a result, boost their return on innovation spending—is sizable.