Innovation isn't this abstract thing that some companies have and some don't.
Innovation is actually a business skill that executives and employees can develop and master.
So says Booz & Company management consultants Barry Jaruzelski, John Loehr, and Richard Holman. The authors of Booz's annual "Global Innovation 1,000 report" named the most innovative companies in the world for 2012 and studied what makes them so.
In addition to looking at what these 1,000 companies do right, it also surveyed some 700 companies not on the list to find out how they come up with new products and services.
No. 10: Innovative companies systematically create new ideas
Any company can come up with one or two great ideas. But to do so year after year requires systems for:
- Generating ideas.
- Choosing which ideas to pursue.
- Iterating on those ideas in response to feedback.
- Knowing that customers will buy new products before investing in production.
- Measuring success.
Simply put, innovative companies create systems for all five steps.
No. 9: Innovative companies spend R&D money thoughtfully, not profligately
The 10 most innovative companies aren't the ones that spend the most on R&D.
Of the list of the most innovative (Apple, Google, 3M, Samsung, General Electric, Microsoft, Toyota, Procter & Gamble, IBM, and Amazon), only three of them — Toyota, Microsoft, and Samsung — are among the companies with the biggest R&D budgets, as listed in this chart from Booz. (Click here to see the chart.)
For example, Apple, Google, and 3M together spent $9.2 billion on R&D. Samsung alone spent $9.0 billion in total.
Yet Samsung was ranked as more innovative.
No. 8: Innovative companies generate ideas in three basic ways
Innovative companies fall into three categories, according to how they most frequently generate ideas, Booz finds:
- Need Seekers talk to customers to find out what they want and generate new products based on that. Examples include Apple and Procter & Gamble.
- Market Readers closely watch the market and then quickly create incremental improvements on hot up-and-coming ideas already in the market. Examples include Hyundai and Caterpillar.
- Technology Drivers create brand-new stuff by letting their tech experts experiment. This includes Google and Bosch.
See the rest of the story at Business Insider
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