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Organizations often face considerable difficulty in maintaining their innovative edge in the face of changing markets, technologies and demand. Companies with consistent product innovation deliver strong shareholder returns. Over the past 20 years, 16% of the Fortune Global 500 companies turned in annual averages of at least 5% organic sales growth. The shareholder returns of these firms were almost double those of the other Global 500 firms (Study conducted by Center for Organizational Excellence, Switzerland). Such success relies on concurrent innovation in Processes, Products, and Business Models. Typically, Process Innovation serves as the primary driver for product innovation and business model restructuring.

Several companies believe that increasing their R&D expenditure would enhance product innovation and hence new product development. However, a recent study of public companies representing almost 60% of global R&D expenditures found that above a certain minimal level, there is generally no correlation between R&D spending and financial metrics such as sales or profit growth.

Yet some companies seem to be better at envisioning and creating great new products while spending less to do it. As a percentage of sales, Apple spends less on R&D than the average in its industry. The R&D budgets for two of Detroit’s beleaguered Big Three have been consistently higher than the automotive industry average.

Productivity in an organization has a direct correlation with the morale and motivation amongst all members of the team. If people feel valued and realize how their work has a direct impact on the bottom-line, then thought, behavior and action are all aligned in the right direction.

Fear in an organization might produce results in the short run but will destroy the business in the long run. In addition, it will kill all innovation. It is crucial to have a shared vision, complete alignment on strategy and clarity on goals for every team and every individual. When such a culture is created, people will take more ownership and productivity will show marked improvement.

Innovation word cloud

At DestinHaus, we believe that Productivity and Innovation go hand-in-hand in every organization. We work on increasing the level of both in tandem and in creating the right culture such that the client organization can continue on that journey long after we have completed our assignment with them.

When we are brought in to evaluate the productivity in an organization and to suggest ways to improve it, the first thing we do is to examine the culture and the leadership that are prevalent. In a very short amount of time, we can diagnose the problem and prescribe the appropriate course of action with the end goal of getting executives and employees to think big again.

HAUS STAT 211: Half of all worldwide R&D spending in the past 10 years has been in the healthcare and electronics industries.