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Innovation 2007

A BCG Management Survey
August 01, 2007 by Jim Andrew, Harold L. Sirkin, Knut Haanæs, and David C. Michael
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Innovation is a key differentiator—perhaps the key differentiator—in the marketplace, separating winning companies from the also-rans. It takes a wide array of forms, from new-service and product development to the reinvention of business processes and the launch of entirely new business models. It is the subject of endless discussion among executives—How can we make our company more innovative?—and the target of ever-increasing amounts of corporate spending. And it is destined to become even more important as competitive pressures rise across virtually all industries.

Our latest annual survey on the topic, to which 2,468 senior executives representing 58 countries and all major industries responded, sheds new light on how companies are pursuing innovation—how they’re going about it, what they’re emphasizing, and what’s working and what isn’t. Among its key findings:

  • Innovation remains a top strategic focus for the majority of companies, with 66 percent of respondents to our survey ranking it one of their top-three strategic priorities.

  • Consistent with that finding, 67 percent of respondents said their companies will increase spending on innovation in 2007.

  • Simultaneously, many executives—over half of those we surveyed—remain unsatisfied with the financial returns on their company’s investments in innovation.

  • A risk-averse corporate culture, lengthy product-development times, and a lack of internal coordination are the three biggest stumbling blocks facing companies seeking to improve their return on innovation.

  • Respondents ranked Apple, Google, Toyota Motor, General Electric, and Microsoft, in that order, as the world’s five most innovative companies.