#rosegger

Ein guter Gedanke macht froh, erst recht eine gute Tat. Peter Rosegger

Peter Rosegger (31 July 1843 – 26 June 1918) 

Austrian writer and poet from the province of Styria. He was a son of a mountain farmer and grew up in the woodlands and mountains of Alpl. Rosegger went on to become a most prolific poet and author as well as an insightful teacher and visionary.

He was nominated for the Nobel Prize in Literature three times. He was nearly awarded the Nobel Prize in 1913 and is (at least among the people of Styria) something like a national hero to this day. (Wikipedia)

Innovation can be defined as the application of new ideas to the products, processes, or other aspects of the activities of a firm that lead to increased “value.” What is value? It is in a broad sense higher value added for the firm and also benefits to consumers or other firms. 

As we all know there are two types of innovation: 

Product innovation: the introduction of a new product, or a significant qualitative change in an existing product. 

Process innovation: the introduction of a new process for making or delivering goods and services. 

Sometimes also a third dimension is identified:organizational change within the firm. As former IBMer who worked in the Organization Change Management division, I would like to believe that it is important. And if we think about it, we could define it as the firm's ability to constantly renew itself, quickly respond to market trends, and modifying its organizational structure to execute, or better commercialize, ideas. So I question myself, how good is the idea of a new product or process when it is never released to the market or never implemented in the organization?! Whether organizational change is an innovation category by itself or just part of the execution, I guess we can agree that it is crucial to the entire innovation process. 

So how is a new idea or process developed? Rosegger provided an example of an innovation process in his book The Economics of Production and Innovation: 

It is clearly depicted that stages 1 to 3 happen in the R&D departments where basic research discovers a new idea that are then tested in prototypes. Does that mean companies that spend a lot on R&D are automatically innovators?

Lets look at the Top 15 companies in terms of R&D spending (2009) according to Booz & Company:

In 2009 Roche, a European company in the healthcare sector, is leading in terms of R&D investment. The holding spent $9.1 billion on R&D which equals 20% of their sales. However, according to a survey from Booz & Company the bulk of R&D remains concentrated among American companies ($ 193 billion), closely followed by Europe ($161 billion). With $137 billion, the majority is spent in the computing/electronics industry. Healthcare places second with $112 billion.

Are these companies also perceived as the most innovative ones? Have a look at the results of Booz & Company's survey where they questioned more than 450 innovation executives in more than 400 companies across 10 industries to name the three companies they considered to be the most innovative in the world:

Apple is considered the most innovative company but spent only 3.1% of sales on R&D. If we compare this list to the top 15 R&D spenders, only five names match. 

The results are clear! The Top spenders are not outperforming their industry peers on three different indicators of financial success; the companies that are perceived to be highly innovative are clearly successful in creating new products and bringing them to market. Some spend more than others to accomplish this goal, but the real winners, financially speaking, are those companies, like Apple, Google, and 3M, that can innovate successfully without breaking the bank. Maybe these companies have a better internal structure to execute idea? Maybe they have better or more diverse ideas? Or maybe these companies are organization change innovators that master changing their organizational structure (incl. technology) to generate good ideas, listen to the customer, build a product pipeline by prioritizing the ideas, and then launching successfully.