On October 22, Booz & Co published the 2013 Global Innovation 1000 study. This years study reflects the increasing importance of knowledge based, digitally oriented companies and it demonstrates that it is not how much companies spend on research and development that determines success. What really matters is how those R&D funds are invested in capabilities, talent, process, and tools.
In addition to the recurring analysis of R&D spending trends, the ninth annual study of the world’s 1,000 largest publicly listed corporate R&D spenders focuses on the digital enablers of the innovation process. How the most successful companies are and are not using digital tools and processes to improve speed, decrease cost, enhance quality, reduce complexity, and sharpen insight into customer and market needs to improve their innovation efforts.
These new digital tools are driving change, but not in isolation; they are joining another group that has been around for years and is already well established at most companies. Productivity enablers such as computer-aided design (CAD) software used in the design and tooling stages of product development and project management tools that help track time lines, workflows, milestones, and spending have a long track record of helping companies boost the efficiency of their innovation processes, particularly at the back end when they are developing products.
The result? Digital tools are influencing every stage of the innovation life cycle, from collecting and analyzing customer insights, to generating and vetting ideas, to designing and manufacturing new products, and, finally, to tracking products’ success once launched. Companies have a real opportunity, perhaps even an imperative, to rethink their digital tool kit. Indeed, we in Bearing are seeing the first signs of a digital revolution that will transform how innovation is done when we do customer projects where we utilize our own Innovation Navigator tool in client assessments. Click on the logotype on the left to find out more about the IN2 tool.
Below is the top ten list from the report
Apple and Google took top honors for the fourth consecutive year, but there were some noticeable shake-ups. Samsung displaced 3M from the number three spot, increasing its steady rise in the rankings. Amazon also made a significant move up, jumping six spots into fourth place. New to the list this year was Tesla, Motors making its debut in the number nine slot, having spent fully two-thirds of its $413 million in revenue on R&D, typical for a company that’s essentially still in start-up mode. Facebook returned at number 10 after being outside the top ten last year.
Apple boosted its R&D spending by almost US $1 billion this year, to $3.4 billion, raising its rank among the Global Innovation 1000 from 53rd to 43rd. Apple has seen its share price fluctuate significantly, due in part to the fact that its iPhone market share has come under increasing pressure from Android phones, and that it has not launched a new disruptive innovation since 2010. Perhaps as a result, Booz & Company reports just 62 percent of survey respondents named Apple as the top innovator this year, down considerably from the 80 percent who did so last year. But the company remains strong, and time will tell how it responds to rising pressures.
Other key findings from the 2013 report:
Regionally, companies headquartered in China increased R&D spending by 35.8 percent and added 50 percent more companies to the Global Innovation 1000 from 2012 to 2013. This is the highest percentage increases of any major country. Although China’s spending growth rate remains significantly higher than that of any other region, this is the second-lowest increase for the country in the last five years.
Ninety percent of R&D spending worldwide was from companies headquartered in North America, Europe, and Japan.
R&D spending in Europe grew by 4.5 percent despite the region’s ongoing economic crises, slower than the global average.
Japan’s R&D spending decreased by 3.6 percent, marking the first time since the 2008-09 recession that any major economy reported a decrease in R&D spending.
Computers & electronics, healthcare, and automotive remained the three largest industries in terms of total R&D spend, representing 65 percent of the global total.