The fact that Booz does an annual survey of the world's "biggest R&D spender" probably slipped my mind - I recall reading about past surveys several years ago - but thankfully I had a chance to catch up on the latest trends from the most recent results. I would certainly encourage everyone to hit the links and check out the original work. You will be enriched for having taken the time to do so. The graphs and illustrations of the results and concepts are well worth the calories you'll burn clicking over to the page. What I will try to do here is to pull a few of the key points that resonated with me and relate them to some of the things I see out in my neck of the industrial woods.
The three modes share some commonalities in their execution. Part of the survey asked respondents to rank the most important capabilities for each stage of the R&D value chain. The clear winners were
- a deep understanding of the customer's needs during the ideation phase,
- ongoing assessments of the market potential during project selection,
- strong engagements with customers to prove the validity of concepts during product development, and
- to work with carefully selected pilot users to roll-out products carefully during commercialization.
Where the three modes differ is in their particular focus at the various stages of the R&D cycle. Need seekers will focus the majority of their attention on the ideation and project selection phases to be certain they are aligning their innovation efforts to the specific articulated needs of their customer base. Market readers are clearly all about stepping back and taking a comprehensive view of their markets and assessing the potential for projects they select to pursue. Technology drivers, while always striving to meet the un-met, and often un-articulated, needs of their customers by delivering breakthrough innovations, are still focused on the customer when it comes to validating their concepts and rolling out new products.
Another essential ingredient which distinguishes those that are successful from those who are not is the degree to which they focus. The survey concluded that "the poorest-performing companies (the bottom 25%) take a less focused approach to the most critical innovation capabilities." No surprise there. If there is one thing that we all should have hammered into our minds these days is that to be great at anything we do, it takes relentless focus to hone the one or two key skills or capabilities that will give us the edge to win. When it comes to innovation, focus implies that companies should choose the capabilities that are most important to their specific innovation strategy, and then execute them well.
On the whole, the surveyed executives agreed that there are "three customer- and market-oriented capabilities that matter most:
- Gathering customer insight during the ideation stage
- Assessing market potential during the selection stage
- Engaging with customers during the development stage"
From my perspective, sitting in the midst of a B2B, industrial, capital equipment sector of the economy, the lessons from the article ring true, in spite of the fact that none of the companies that top the survey hail from that space. True that two of the "top ten most innovative companies" are Samsung and Intel (9th and 10th respectively), so at least there is exposure from the end-user portion of the food chain. In an industry where the roadmaps are reasonably well defined as to which way technology is heading and the types of challenges that will have to be overcome to continue on the path we have navigated throughout most of the history of this industry, having a well defined innovation strategy tightly coupled to an over-arching business strategy is paramount. But while our industry matures (and it hasn't necessarily been a graceful aging process), we see trends that speak clearly that our companies need to break out of their molds. When 75% of the CapEx is derived from the top three consumers, and the market splits along lines of Logic/Memory and Foundry/Captive, it is clear to see how the growth in "sockets" (pieces of real-estate in fabs to park tools) is on a fixed, low-slope trajectory. What is called for is a way to leverage the core business practices that the top companies in our sector exhibit, part of which is a sound innovation strategy. The companies that are creative enough to find new promising outlets for that capability will be handsomely rewarded.
And that's the way business go . . .