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Innovation vs. R&D

Real Innovation Requires More Than an R&D Budget

Gina O'Connor, Babson CollegeNovember 19, 2019July 9, 2020
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It’s hard to find a CEO today who doesn’t tout the importance of innovation, yet many seem stumped by how to achieve it. A widely cited McKinsey survey from 2008 found that 84% of executives believed that innovation was critical to their business’s growth, but only 6% were satisfied with their company’s current innovation performance. A more recent study by KPMG and Innovation Leader asked executives to rate how advanced their companies’ innovation efforts were on a five-point scale. Nearly 60% of respondents said they were at the earliest stages (ad hoc, which was one point, or emerging, two points) while only 2% said their innovation activities were optimized (5 points).

Having studied innovation at more than 40 companies over the last 25 years, I believe the disconnect between ambition and execution comes from an overly narrow view of what innovation entails and a tendency to conflate innovation and R&D. When business leaders don’t see breakthrough results from their R&D divisions, they take it as a sign that long-term investments in innovation don’t pay off and cut R&D spending.

In reality, innovation is much bigger than R&D…

Read the full article at Harvard Business Review.

This article was produced by Footnote in partnership with Babson College.

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Contributed by

Gina O'Connor

Gina O'Connor

Professor of Innovation Management, Entrepreneurship Department
Babson College

Gina is a Professor of Innovation Management at Babson College. She conducts research and develops curricula that facilitate learning for graduate students and executives based on her findings on Breakthrough Innovation capabilities in large mature companies. Before joining Babson, Gina spent 29 years at the Lally School of Management at Rensselaer Polytechnic Institute and earned her Ph.D. in Marketing and Corporate Strategy at NYU.

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