Getting the Fundamentals Right for a Sustainable and Advantaged Business
Growth Drives Innovation and Vice-Versa
It is important to understand the connection between innovation and growth. New ideas create new products and services that grow a company. This growth is necessary because companies borrow money to go into, and to stay, in business. Interest on these loans has to be paid from new revenue streams that innovation creates. Without growth in profits corporations and their management teams cease to exist. The inherent need for continuous innovation gets build right into a corporation’s fabric right at its start.
Innovation Leaders Feel the Pressure to Create Growth
Using innovation to effectively grow a company is one of the top problems facing R&D entities. Technology Management Trends Surveys conducted by the Industrial Research Institute (IRI) from 1990 to 2007 consistently show that using R&D to effectively grow a company as one of the top problems facing R&D leaders. The “Five Drivers of R&D” figure shows the drivers that CEO’s placed on their R&D leadership.
In the chart, the early 1990’s, activities related to measuring and improving R&D by reengineering efforts was the dominant factor. They shifted to a focus on service and speed in R&D through the mid-1990’s as shown in the second row. The top row, growing business through innovation, has always been large and continues to get larger as companies compete on the basic value of the new products and services they bring to customers and consumers. This survey is based on polling the industrial research Institute’s membership of over several hundred US corporations. These corporations account for some 60 to 75% of all US industrial R&D spending. The leaders of these organizations clearly see, and feel the pressure from their CEO’s to grow the business through innovation. In no uncertain terms “growth is clear driver coming from business leaders”.
Procter & Gamble’s CTOs through the years have been quite frank in describing their role at the company. At the CEOs direction, they understand that the success of Procter & Gamble hinges largely on the productivity of the R&D organization and its ability to develop breakthrough innovations. These new products are to delight consumers around the world. Innovation provides consumers benefits that they value, and from their adoption of new products, Procter & Gamble benefits from sustainable growth in both market share and profits. Without this growth the financial underpinnings of the Corporation would crumble.