Strategy&: Top innovative R&D spending companies

05 November 2014 Consultancy.uk

While Volkswagen is again ranked #1 of the top 20 R&D spending companies, the German automotive firm does not rank as a top 10 most innovative company. The two lists that are compiled by Strategy& show very different top 10’s, indicating that high spending not necessarily translates to best-practice innovation. Only three top spending companies made the top 10 most innovative list, of which only Samsung is found in both top 5’s.

In its recently launched ‘Global Innovation 1000 Study’, consulting firm Strategy& concludes that although R&D spending has reached an all-time high of $647 billion in 2014, the growth percentage has declined over the past four years, to the second lowest growth rate in the past decade, a mere 1.4%.

R&D and Revenue

According to Strategy&, this declining growth rate is a ‘big company phenomenon’ as the top 100 innovation spenders accounted for less than 1% of the total 2014 increase in R&D spending, a number that in 2013 was as high as 45%. Although the growth number dropped significantly among the big companies, they still account for a large percentage of total R&D spending. The top 20 R&D spending companies, as identified by the Strategy& in its report, still accounted for more than 25% of the total R&D spending in 2014.

The top 20 list, a list compiled by the consulting firm on an annual basis, shows that the two biggest spenders of 2013 have held their positions. Volkswagen is still ranked #1 with a spending of $13.5 billion, which is an increase of 18.9% compared to 2013. Samsung is again found on #2, as it increased its spending with 28% to $13.4 billion. Roche dropped two places to #5, giving both Intel and Microsoft the possibility to move up a place, respectively to #3 and #4. The top 20 list stayed fairly consistent compared to 2013, with Amazon (#14), Ford (#15), and Cisco (#20) the most notable newcomers.

The Top 20 R&D Spenders

Comparing the top 10 of the R&D spending list to the top 10 Most Innovative companies reveals an interesting observation. The #1 in R&D spending, Volkswagen is not found in the top 10 most innovative list, while Samsung, #2 in spending, is ranked the fourth most innovative company. The list is led by Apple (#1), Google (#2) and Amazon (#3). Comparison of the two lists shows that the most innovative companies do not necessarily spend the most money, and vice versa. The only companies found in both rankings are Samsung, Microsoft and Google.

Innovation capabilities
A reason for the disparity could be found in the fact that companies are improving their innovation skills. Around 76% of 500 innovation leaders say that are better at innovation today than a decade ago. Barry Jaruzelski, Senior Partner at Strategy& and a co-author of the report, explains: “Companies say they’re better at innovating today than they were a decade ago. It seems that companies can now do more with less, allowing them to moderate spending growth while still achieving results.”

The 10 Most Innovative Companies 2014 vs The Top 10 R&D Spenders 2014

Profile

More news on

×

Two thirds of UK employees not empowered enough to innovate

18 March 2019 Consultancy.uk

A culture of equality can drive innovation at work, but only a third of UK employees feel empowered to innovate at present. This demonstrates a significant disconnect between workers and their bosses in the UK, with 76% of business leaders also claiming they empower employees to be innovative.

Despite innovation increasingly being seen as integral to the survival of businesses, innovation remains relatively difficult to achieve. A lagging disconnect between management and staff remains the driving force behind this. One study by PA Consulting previously confirmed that while 66% of companies believe they will not survive without innovation, only 24% said they had the skills needed for that, and only half thought they had the right leadership in place to change that in time.

In order to find a way around this problem, global consultancy Accenture has completed its own study into innovation, polling around 700 bosses and workers across the UK to do so. The key finding of the research is that companies with a culture of equality can see an individual’s willingness and ability to innovate improved by seven times that of the least equitable workplace cultures. At the same time, an innovation mindset is almost twice as high in the most-equal companies as in typical ones.

91% of employees want to innovate but just 34% in typical United Kingdom companies feel empowered to

What remains clear, however, is that most companies are failing to adequately create an equal culture, where staff of all ranks feel comfortable contributing new ideas. 91% of employees want to innovate but just 34% in typical UK companies feel empowered to. That is higher in the most equal companies, where 75% of staff feel confident making suggestions, compared to just 5% of the least equal, and 34% of typical companies. Since those equal companies are comparatively fewer, when averaged out, only a third of UK staff feel they are empowered to innovate.

That figure stands in stark contrast to the perceptions of UK executives, however.  76% of business leaders in Britain believe that they do indeed regularly empower their employees to innovate. As a result, it seems that leaders mistakenly believe that some circumstances encourage innovation more than they actually do. For instance, they overestimate financial rewards and underestimate purpose.

The opportunity which is presented by addressing this divorce is enormous. Accenture calculates that global gross domestic product would increase by up to £6 trillion over 10 years if the innovation mindset in all countries were raised by 10%.Top 10 workplace culture factors - by strength of impact on innovation mindsetAccording to Accenture, the best way to impact positively on a company’s innovation mindset is through the provision of relevant training – associated with a 10.5% uplift to staff’s confidence innovating. Allowing the freedom for employees to be creative followed, contributing an 8.1% boost, while ensuring that training times are flexible and the firm allows a healthy work-life balance both see a more than 7% improvement. Similarly, remote working being available and being common practice will buoy creativity by 6.9% – further demonstrating the importance of flexible working to improve innovation culture at a firm.

Commenting on the report, Rebecca Tully, executive sponsor for Human Capital and Diversity for Accenture in the UK and Ireland, said, “Our research reveals that a workplace culture of equality is an overlooked driver of innovation within companies. By understanding what motivates their employees and fostering an environment where people feel empowered, business leaders have the opportunity to unleash the innovation required to compete effectively in an era of disruption.”

The research came as part of a global survey by Accenture, which queried more than 18,000 professionals in 27 countries and 150 C-suite executives in eight countries. The overall research determined that an empowering environment is by far the most important of the three culture-of-equality categories in increasing an innovation mindset, which consists of six elements: purpose, autonomy, resources, inspiration, collaboration and experimentation. The more empowering the workplace environment, the higher the innovation mindset score.