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Archived updates for Tuesday, May 10, 2005

BCG Innovation Survey 2005

According to the Boston Consulting Group's second annual global survey of senior executives on innovation and the innovation-to-cash process, 50% of executives are not satisfied with the financial return on their innovation investments. Nonetheless, 66% said that innovation is one of their company’s top three strategic priorities for 2005—including 19 percent who said it was their companies’ single most important initiative. Other key findings include:
  • Seventy-four percent of the executives surveyed
    said that their companies will increase spending on
    innovation in 2005, up from 64 percent in 2004.
  • Almost 90 percent of the executives surveyed said
    that generating organic growth through innovation
    has become essential for success in their industry.
  • However, less than half of the executives surveyed
    said that they were satisfied with the financial
    returns on their investments in innovation.
  • Executives ranked Apple, 3M, GE, Microsoft, and
    Sony as the most innovative companies. Apple
    rose to the top spot from number five last year.
  • Globalization and organizational issues were
    cited as two of the biggest challenges facing many
    companies in 2005.

One of the biggest problems identified by the servey is measurement. Few companies believe
they have the right metrics for innovation in place and less than half of the executives in their survey said that their company carefully tracked the financial returns on innovation at all. However, according to the report,

Despite the many uncertainties of innovation, it is possible to assess, at the outset, the likely impact of different approaches to managing the full innovation-to-cash ("ITC") process. In our experience, this assessment typically is best accomplished by examining the cash curve of an innovation. A cash curve depicts the cumulative cash investments and returns for an innovation over time—it runs from the very beginning of development until the point at which the product or service is removed from the market. Since management’s decisions affect the shape of the cash curve, companies can use it to openly discuss how to manage the curve, and the resulting returns, and make the required decisions and tradeoffs.

But for that type of analysis, they probably have to sell you your own survey.
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