How to improve innovation

Article

Innovation specialist Frederik Vernersson spoke of key factors that affect a company’s innovation performance.

Photo: Arne Hyckenberg

“What does it take to outperform competitors?”

This was the primary question in Fredrik Vernersson’s presentation: ‘ Global Innovation 1000 – How the top innovators keep winning.’

A Senior Executive Advisor at Booz & Company, Vernersson’s applied research into the field broke down one common myth.

“There is no correlation between what you spend on R&D and operating margin or growth. It is not about how much money you spend. Instead, it is about how you manage and align your capabilities, your talent, knowledge and tools,” he said.

Vernersson presented some of the massive investments put into innovation:

The top 1,000 companies spend approximately USD 1,000 billion on R&D per year, of which US companies account for 48 percent. By industry, computing and electronics account for 27 percent, health care 22 percent, automotive 15 percent and telecom two percent.

Then Vernersson divided the world’s top innovative companies into three categories. The ‘Need Seekers’ are the ones who consistently strive to be the first movers. Examples: Apple and Xerox

Then come the ‘Market Readers,’ companies like Visteon who scan new trends in technology and who apply them to new fields. Touch screen technology in cars, for example.

And the last category was the ‘Tech Drivers,’ companies like Google that leverage technology for breakthrough change.

In his studies, Vernersson discovered that winners and losers in the innovation game all conduct customer insight studies, followed tech trends, and engaged with the customer, so these attributes in themselves are not differentiating.

Vernersson proceeded to show how Tech Drivers account for 47 percent of the top 1,000 innovative companies compared to 27 percent for Need Seekers and 26 percent for Market Readers.

“At the same time, there is no dominant strategy across or within industry sectors. You’ll find all three categories of company in all industries. It is all about execution and finding the right capabilities,” he said.

Key learning:

“Make sure that your innovation strategy is tied back to what your company can deliver, and focus on the capabilities that drive performance in the marketplace, and excel in the execution.”